Indexes Sprout Up as Green Bonds Take Root

Investment Risk and Performance Feature Articles
January 2015 | Vol. 2015 | No. 1 | 4 pages
Source: CFA Institute
Deborah Kidd, CFA

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Summary

Green bonds fund assets and activities that address critical climate change issues. Although diminutive in size compared with the overall bond market, the green bond market exploded in 2014, and multiple indexes were launched. Labeled green bonds are structured and rated in the same way as non-green bonds but carry the risk of “greenwashing”—the risk that a bond’s proceeds fund an activity that lacks direct and positive environmental impact.

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