New technical document analyzes the state of the green bond market

The document is intended to disclose the role banks are playing in promoting this financial instrument.

February 27, 2019.- Although over a decade has passed since the first green bond issue was launched, it is in the past five years that growth in the use of this financial instrument has been strongest. There are several reasons for this, according to a recent technical document published by ALIDE, particularly the greater consciousness and consensus among the countries regarding the many problems created by climate change.

The document prepared by the Economic Studies and Information Program and entitled “Green Bond Market: Who are the players?” seeks to disclose the role that banks are playing in promoting this financial instrument and the environmental financing market.

It states that green bond growth is part of a scenario of major international environmental financing initiatives like the Paris greement and the United Nations Sustainable Development Goals (SDGs). Even so, there is an important gap in financing that must be bridged and will require the use of a combination of public and private capital.

Development banks are key institutions in this scenario because of their coordination role, capacity to get the private actor to invest in mitigation efforts, and margin for innovation in the creation and use of specialized instruments. Proof of the latter can be found in the growth of green bonds, which doubled in 2016 and increased by 74% in 2017.

In this way, the document addresses the state of the green bond market from several viewpoints, including the types of bonds issued, the international standards applied to this instrument, the potential for the market’s development, and how the efforts of banks fit into this internationally important scenario.

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ALIDE is the community of financial institutions that generates banking solutions for the development of Latin America and the Caribbean. The activities that it promotes and carries out seek the cohesion and strengthening of the action and participation of financial institutions in the economic and social development process in the region. ALIDE encourages regional integration and financial cooperation with other regions of the world to achieve the mobilization of resources and technology for the development of Latin America and the Caribbean.