The market for green bonds in Europe could reach as much as $1.4 trillion dollars by 2020, according to Rick Lacaille, Global Chief Investment Officer (CIO) of State Street Global Advisors (SSGA), one of the world’s largest fixed income managers. Speaking yesterday at the United Nations Environment Programme Finance Initiative’s Global Roundtable in Washington DC, Lacaille launched SSGA’s own green bond investment strategy, which he said had followed meetings with investors in the US and Europe. The fund manager’s High Quality Green Bond Strategy seeks to approximate the duration of its benchmark, the Barclays Capital U.S. Treasury Index, through investments in green bonds and other debt instruments issued by supranational or multilateral development banks. In the past two years, SSGA said the nascent green bond market has grown to reach approximately $12bn in total, but that interest was growing rapidly.Green bond issuers generally finance two sorts of projects: those seeking to mitigate climate change or projects seeking to adapt to its effects. SSGA said its green bond fund would be supported by its five-strong ESG team, which it says runs $122bn in overall ESG assets. Other recent entrants into the green bond market include Bank of America Merrill Lynch and the Nordic Investment Bank. Investors will shortly be able to check whether so-called green bonds support agreed CO2 reduction targets with the launch of a Climate Bond Standard in London on November 24. UK Climate Change Minister Greg Barker will be present at the launch. An unspecified bank is close to issuing a new $300 million green bond denominated in Australian dollars based on the new green standard. Compliant assets will include wind farms and solar energy plants. Licensed third party verifiers will review proposed bonds to confirm their compliance.
SSGA says Europe’s green bond market could reach $1.4trn by 2020 as it launches strategy
Global CIO Rick Lacaille unveils new bond product at UNEPFI conference.