Green with Envy: Canada’s Green Bond Market Is Growing into a Global PlayerProject Finance
Addressing climate change requires strategic thinking, public- and private-sector coordination and global cooperation. As part of the global strategy to reduce greenhouse gas (GHG) emissions, Canada, along with most countries, adopted the 2015 Paris Agreement and has committed to reducing its GHG emissions through policy (e.g., carbon tax), regulatory measures and support for clean technologies and innovation. As policies and attitudes toward climate change shift, many mainstream investors are seeing the potential economic opportunities of a clean or low-GHG economy, and a growing number are looking to invest in projects or businesses meeting certain environmental, social and governance (ESG) investment standards. One way the markets have responded to climate change is green bonds, which are bonds designated specifically to fund projects that benefit the environment, including renewable energy and energy efficiency; pollution prevention; forestry, fishery and agricultural sustainability; and other projects designed to reduce GHG emissions. Green bonds are generally asset-linked and backed by the issuer’s entire balance sheet.