`Green Bonds’ Redefine Meaning of Positive Returns

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July 23 (Bloomberg) -- Marilyn Ceci, managing director/head of green bonds at JPMorgan, and Manuel Lewin, head of responsible investment at Zurich Insurance, explain the process behind environmentally friendly green bonds that use proceeds to fund sustainable, energy efficient projects. They speak on “In The Loop.”

One of the experts on what they are.

What is a green bond?

A bond in which the use of proceeds are used for climate friendly agenda, mitigate climate change.

There are several types.

The use of proceeds is now the largest, which you already mentioned.

We also have revenue green bonds and project bonds.

So, i raise money and use it to fund a green project here that is what you're talking about in terms of taking off.

That is right.

It would be a standard bond documentation you have the within that, a special demarcation for the use of proceeds.

Different from a bond backed by a cash flow or green.

That is right.

Your investor would take the risk of the project.

The use of proceeds bonds, it is a credit risk.

Lie to you like them?

Ice cream bonds are a fantastic opportunity to do well in financial terms, but at the same time also doing good, having a tangible positive impact on the environment here that may give you an example.

A project that receives funding, and this is from the world bank.

One i really like is in mexico.

A project to replace up to 2 million in inefficient appliances, air conditioning units, 45 million light pole spirit over the lifetime of the project, three point 3 million tons will be avoided.

He still like to make the money.

You get a higher yield.

What is the real upside financially for you?

As said, these bonds issue credit risk tom and we just want to see the green bonds being priced on the curve and that is what we have seen so far.

We are getting compensated for the step we are taking and that is what we are asking.

To you get a higher yield for that or is it comparable?

You have to compare it to a similar bond by the same issuer.

It is absolutely conference -- comparable.

How do you know if this stuff is actually really green?

We saw toyota issue green bonds that the money came from dirty cars and then made its way to green cars.

That created some cons -- controversy in the environment.

Let toyota did was a fantastic transaction.

They have committed to the proceeds of that.

That should be channeled toward financing and leasing energy efficient vehicles.

They are really targeting that, to create leadership in the.

Investor interpretation.

From the investor perspective, it is really about transparency.

It is really important to us.

We are looking for a transparency to allocate that money.

Equally importantly, ma'am pass the products are having, we want to know how many kinds of co2 emissions are being avoided.

Earlier this year, j.p. morgan securities set up green bond principles to outline this is what they are and what you can expect.

Do you feel confident in what you have done?

It has been emerging and tremendous prosperity.

The group that address those principles has appointed a secretary, announced in the markets, who will be gathering a broad feedback.

International capital markets association will be managing stakeholder feedback.

We encourage people to take that feedback.

The biggest risks on the financial market perspective?

What are you worried about?

We are not worried about anything eerily like green bonds and have been very happy with development in the market and have been happy to see the broadening of the issuing base.

It is a true opportunity to make green bonds and include -- intro goal part.

This text has been automatically generated. It may not be 100% accurate.


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