For Immediate Release

New report finds USD174bn of climate-themed bonds
The climate-themed bond market is broader and deeper than expectedLondon 31st May - The Climate Bonds Initiative, in association with HSBC
Climate Change Centre of Excellence, today launches a new report on thecurrent size and future prospects for climate-themed bonds.
The Report gives a snapshot of the climate-themed bond markets’ size, thekey investments themes and regional market, and finally identifies three keyways to accelerate market expansion.
“Investor interest in the link between bonds and climate change isgrowing and this report shows that the value of climate-themed bonds is 24
times bigger than the ‘green bonds’ issued by development banks”, says Nick
Robins, Director at the HSBC Climate Change Centre of Excellence.
The report identifies seven climate themes – energy, transport, building andindustry, climate finance, water, waste and pollution controls, agriculture andforestry – in which bond investors can tap current opportunities.
“The climate-themed bond market is dominated by USD119bn of transport
bonds, almost entirely from railway bonds, and USD29bn of low carbon
energy bonds. Together these themes make up 85% of the market”, says
Sean Kidney, Chair at the Climate Bonds Initiative.
“This re-framing of the investable universe could help to overcome aperception among investors that climate-themed bonds are a nichemarket”, says Nick Robins.
Sean Kidney adds that “A large amount of bonds in low-carbon energy andfinance could be included if utilities and banks clearly linked corporate bonds
to climate-aligned assets.”
The Report found that 67% of the market originates in Europe, followed byUSA (17%), Russia, Canada and China all at 3% each. UK institutions haveissued the largest amount of climate-themed bond with 23% of the global
total.
“Institutional Investors, with their USD71 trillion in assets – including pension
funds and insurance companies – have an important role to play in financing
the low-carbon transition through bonds”, says Sean Kidney. “The bondmarket is now worth USD99 trillion compared to USD55 trillion for equities – areversal of where we were a few years ago and a number of factors such as
Basel III could prompt a greater use of bond markets for climate financing”.
“As markets and technologies mature, investor attention will focus
increasingly on bond markets as an expression of the climate investment
theme”, says Nick Robins.
The Report also identifies three ways to grow the market: standards,aggregation and policy support.
“Bond investors need scale”, says Sean Kidney. “Renewable energy andenergy efficiency markets are much more disaggregated than traditionalenergy sectors – we need to promote the aggregation of those small projects
into larger offerings suitable for the appetite of the big investors.
Standardization is a must. The development of internationally recognizedclimate terms and definitions and third-party certification of these bonds would
help investors select bond investments that fund climate change solutions
while minimizing the perception of reputational risk”.
Governments can also help to reduce perceptions of policy risk in a number ofways, for example by providing fiscal support for qualifying bonds or by
allocating public finance to enhance the credit of qualifying bonds.
-EndsUseful Links:
View and download full report: http://climatebonds.net/2012/05/hsbc-climatebonds-report/
Climate Bonds Initiative website www.climatebonds.net
Formediainterviews: Sean
Initiative, sean@climatebonds.net

Kidney,Chair,

ClimateBonds

About Climate Bonds Initiative:
The Climate Bonds Initiative is an investor-focused not-for-profit, promoting
large-scale investment in the low-carbon economy. The Climate Bonds
Initiative is developing:• Proposals for governance architecture — regulatory mechanisms,
standards, tax policies, green banks — that will support a rapid scaling
up of investment.
• Models for engineering investibility in projects and assets necessary for
attracting bond financing such as renewable energy, energy efficiency
and forestry.

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