Green shoots: There are few subjects in the capital markets that have generated more headlines over the past few years than socially responsible investment.
To purchase printed copies or a PDF of this report, please email leonie.welss@lseg.com and shahid.hamid@lseg.com
SRI used to be synonymous with the equities market but it is increasingly important in the bonds space as well. While for now SRI funds remain a niche product, managers believe it is only a matter of time before the analysis they do is seen as an important part of the risk management process for mainstream investors.
The Green Bond Principles have gained widespread support since their initial publication in 2014, although they have deliberately stopped short of a single definition of what constitutes green.
Growing demand for socially responsible investments and an ongoing search for yield are driving greater cross-asset collaboration in SRI activities.
Divergent views on definition may be a minor hindrance, but bonds that seek to enhance social well-being are on the rise.
Supranationals have taken to Green bonds like ducks to water. Now the market for sustainably responsible investing needs corporates to stand up and be counted.
The credit ratings agencies’ entry into the Green bond sector should herald a major shake-up for the incumbent opinion-providers that have been such a crucial lynchpin of the market’s development.
China and India are seeking to tap pools of environmentally conscious capital as regulators work to build a primary market framework. But it is not a straightforward proposition for issuers, as primary Green bonds have yet to show a discrete pricing advantage.
As the world’s leaders gathered in New York in April to sign the Paris climate deal, they will no doubt have been content to use the city’s public transport system to travel to the UN General Assembly, safe in the knowledge that the Mass Transit Authority is doing its bit for the green agenda.