Lofty green bond goals need to be global

News and opinion on finance

One trillion dollars in green investments by 2020 – that is the goal Christiana Figueres, the UN’s former climate change chief, put forward again at the launch of the Green Bond Pledge in March. 

The pledge, developed by a range of sustainability groups, including Mission 2020 that Figueres is now part of, calls for agencies, governments and companies to commit to making infrastructure and capital projects climate resilient, and to support a green bond market by using them for infrastructure financing. 

It’s a lofty goal. The green bond market stands at $155 billion and is expected to hit $200 billion by the end of 2018. That means the market must increase five-fold during 2019 to hit the $1 trillion target (if we are talking green bonds alone). 

It is important to be ambitious when it comes to serious challenges like climate change, but sometimes it feels like these pledges are made in an echo chamber. 

The groups behind the pledge, for example, are based in the US and Europe, but the largest infrastructure projects are happening in Asia. According to the World Bank, China, Japan and India make up almost 40% of the world’s infrastructure needs by 2040. China alone is expected to need $28 trillion in infrastructure investment. 


And while China looked like it was running with the green bond baton for a while, that enthusiasm seemed to stumble last year. A report from Standard & Poor’s in February showed the country’s green bond issuance expanded a modest 0.9% from a year earlier, with its contribution to the overall global market falling to 15% in 2017 from 26% in 2016. 

Could the US pick up that baton? It has an infrastructure gap of some $3.8 trillion, says the World Bank, and the green bond market growth there outpaced China last year. As the second largest emitter of greenhouse gases in the world, getting the US committed to green infrastructure is important. 

But it is hard to take some of these pledges seriously when Asia is not represented. India ranks ninth in green bond issuance, for example, and Japan does not even make the top 10. Though it established green bond guidelines last year, Japan only issued two yen-denominated deals. 

Climate change is a global issue; coalitions of sustainability groups spanning the Pacific must be made or these pledges and goals will seem half-baked. 

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