Rating

8

Qualities

  • Analytical
  • Eye Opening
  • Background

Recommendation

The business of underwriting sustainable environmental initiatives is sizable. Globally, green bond issuance in 2019 exceeded $250 billion. But these evolving, innovative securities are sophisticated, and as specialization increases, consistent methods of evaluating issues and issuers are crucial to integrating these assets into investment portfolios. This authoritative essay by fund managers Afsaneh Beschloss and Mina Mashayekhi sounds an important caution: While investors welcome the growth and variety of such instruments, they should temper their enthusiasm with some rigorous homework.

Summary

The World Bank and the European Investment Bank issued the first green bonds. 

In the late 2000s, these global organizations took on a challenge to develop a new category of investment instruments that would appeal to both institutional investors and environmental groups. They produced a “bond prototype tied to environmental impact.”

The market for green bonds has since thrived. From 2008 to 2018, government and institutional bond issues to support environmentally friendly projects totaled some $521 billion, with 2019 issuance alone exceeding $250 billion.

Securities innovation and complexity are becoming hallmarks of this...

About the Authors

Afsaneh Beschloss is the founder and CEO of Rock Creek, an asset management firm, where Mina Mashayekhi is a senior adviser.


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