The green bond market is in its adolescence—and at 13 years old, it’s going through a growth spurt. While there is no question that the rapid uptake of sustainable investing is impressive, the long-term health of this endeavor relies on one thing: Satisfying both issuers and investors alike that funds are being used to drive projects that have sustainability at their core.
In other words, transparency is imperative if sustainable finance is to reach maturity.
The reason for this is self-evident because the distinguishing feature of green bonds is that they are debt securities designed to finance specific projects. But how can investors be confident that their funds are being used as promised? And who will be minding the store?
Many parties who support sustainable finance recognized the need for clear-cut answers from the time the first green bond was issued in 2008. Just a year later, the Sustainable Stock Exchanges (SSE) Initiative was launched in partnership with the UN. The SSE set out to establish “a global platform for exploring how exchanges, in collaboration with investors, companies (issuers), regulators, policymakers and relevant international organizations, can enhance performance” on environmental, social and governance (ESG) issues.
As the sustainable finance marketplace accelerated, other organizations sought to refine standards for measuring the authenticity of these instruments. In 2014, for example, a group of investment banks developed four criteria for...
Read Full Story: https://www.nasdaq.com/articles/transparency-pays-in-the-age-of-sustainable-investing-2021-09-06
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