ESG Bonds

A growing concern among many issuers is the need for climate-resilient infrastructure. This includes the retrofitting of existing structures to ensure they can withstand current and future changes due to climate change, and additional needed mitigation efforts. State and local governments have been turning to “green bonds” to finance these efforts and the ESG sector of public finance continues to be a growing portion of the market.

According to Bloomberg, U.S. state and local governments have issued $15.3 billion of green bonds since 2010. This includes record issuance in 2016 issuance of $7.6 billion. As Build America Mutual notes, this number is likely to continue to grow due to the lack of understanding and misconceptions of these “green bonds” from issuers.

BAM notes, “Many municipalities are interested in issuing green bonds but have misconceptions about the green bond market. Municipalities are concerned about perceived higher costs and more burdensome compliance and reporting, both to determine if their bonds “qualify” for green bond labeling and to evaluate environmental outcomes of green bond-financed projects.”

Municipal bonds finance the building blocks of a competitive, modern American economy. (Aerial view of the stacked highway, Houston, TX)