INVESTOR BRIEFING

The document explains that green bonds are fixed-income instruments where proceeds are earmarked for projects with environmental benefits, such as renewable energy and energy efficiency. It details four main types of green bonds—'use of proceeds' bonds, revenue bonds, project bonds, and securitized bonds—and notes that the majority are 'use of proceeds' bonds backed by the issuer's entire balance sheet. The market grew significantly from $11bn in 2013 to $36.6bn by the end of 2014, with major issuers including the European Investment Bank and the World Bank. While the 'Green Bond Principles' provide best practice guidelines, the document highlights a lack of universal definitions for 'green' projects, a gap the Climate Bonds Initiative (CBI) is addressing with sector-specific standards. For investors, green bonds offer a way to meet ESG objectives without necessarily taking on additional project-specific risk, though the secondary market remains thin due to a 'buy-and-hold' investor base.

• The green bond market experienced rapid growth between 2013 and 2014, with issuance increasing from $11bn in 2013 to $36bn in 2014, reaching a total of $36.6bn by the end of 2014.
• Green bonds are categorized into four primary types based on their proceeds and debt recourse: Green 'Use of Proceeds' Bonds (backed by the issuer's balance sheet), Green 'Use of Proceeds' Revenue Bonds (backed by revenue streams like fees or taxes), Green Project Bonds (recourse only to specific project assets), and Green Securitized Bonds (recourse to a group of projects).
• Green bonds typically feature 'flat pricing,' meaning they are priced the same as conventional bonds from the same issuer because they share the same credit profile and are pari passu to vanilla issuances.
• While the 'Green Bond Principles' established in January 2014 provide guidelines for tracking proceeds and reporting, they do not define what constitutes a 'green' project, leaving that determination to the issuer.
• The Climate Bonds Initiative (CBI) is developing sector-specific green standards to address the lack of universal definitions, having already launched standards for wind energy, solar energy, low-carbon buildings, and 'bus rapid transit'.
• Investors face a non-financial risk that proceeds may not be used for genuinely green projects; this can be mitigated by obtaining an independent second opinion from ESG research houses or scientific groups.
• The secondary market for green bonds is currently thin because investors typically adopt a 'buy-and-hold' strategy.

APA

Climate Bonds Initiative (2015). INVESTOR BRIEFING. https://www.climatebonds.net/files/documents/publications/IntroductiontoGreenBonds.pdf

Chicago

Climate Bonds Initiative. INVESTOR BRIEFING. 2015. https://www.climatebonds.net/files/documents/publications/IntroductiontoGreenBonds.pdf.

Wikipedia

{{cite report |author=Climate Bonds Initiative |title=INVESTOR BRIEFING |date=March 2015 |url=https://www.climatebonds.net/files/documents/publications/IntroductiontoGreenBonds.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatebondsinitiative2015investor, author = {{Climate Bonds Initiative}}, title = {{INVESTOR BRIEFING}}, institution = {Climate Bonds Initiative}, year = {2015}, month = mar, url = {https://www.climatebonds.net/files/documents/publications/IntroductiontoGreenBonds.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }