Dr Catarina Araya Cardoso, Lecturer in Economics at the University of Westminster, wrote an article for The Conversation about how green bonds can help finance clean energy so long as the projects they fund are transparent.
Explaining green bonds, she wrote: “Put simply, green sovereign bonds are like any other bonds – a form of government borrowing from investors. The UK is offering a ‘standard’ green bond, which can be bought and sold at any time, and also a type of green saving product, with a three-year interest rate aimed at households. Anyone aged 16 or over with a UK bank will be able to invest anything from £100 to £100,000 in the scheme.”
She added: “It has become an increasingly popular way to raise funds. Green bonds now represent roughly 1% of the total bond market, and since 2016 the number of green bonds issued has been growing at an annual average rate of 60%. Last year, global cumulative issuance (supplying bonds) reached $1 trillion.”
In her concluding remarks, she wrote: “The bonds also send a clear signal about the UK’s broader commitment to its green objectives, which can help inspire additional investor interest in environmental projects. In terms of monitoring projects, the scheme will be open to scrutiny by investors and other organisations, including the media. People with green saving bonds can then actively access the impact of their investments on the environment – while benefitting financially from a fixed and secure return.”
Read the full article on The Conversation’s website.
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