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Monday, April 18, 2016

Strategic CSR - Green bonds

This Friday is Earth Day. As such, this week's Newsletters will focus on sustainability issues.
The article in the url below indicates a subtle shift in corporate thinking regarding climate change. Beyond a recognition that it is occurring, it signals a willingness to invest in a solution (at the firm-level). Specifically, it indicates a willingness to issue new debt in order to invest in those solutions:
"Apple's $1.5bn green bond, announced last month, will fund several initiatives, including the company's conversion to 100% renewable energy, installation of more energy efficient heating and cooling systems and an increase in the company's use of biodegradable materials. A green bond, like a typical bond, is simply a way to borrow money, but it's issued specifically to fund environmental projects."
Along with the firm's recent announcement of a new recycling program and a reduction in e-waste (see here), Apple is increasingly taking the lead on sustainability issues:
"Lisa Jackson, Apple's vice president of environment, policy and social initiatives, told Reuters that the company decided to issue its green bond after December's UN Climate Summit in Paris, during which hundreds of companies pledged to fight climate change. With its bond sale, Apple has become the largest US company to have issued a green bond – although Toyota still holds the crown for the largest corporate green bond ever offered in the US with its $1.75bn green bond issued in 2014."
And, as a result of the increased corporate support, the value of green bonds that are being issued has grown exponentially (see this chart):
"The green bond market is still in its infancy. According to Climate Bonds Initiative, a UK nonprofit that tracks the market, the first green bond was issued in 2007, and the first corporate issuance didn't come along until 2013. Since then, a handful of high profile companies have jumped on the bandwagon, including EDF, a French power company, and Bank of America, which used the proceeds to loan money to cities and other businesses for installing solar panels, wind turbines and LED lighting."
This growth is predicted to continue into 2016 and beyond:
"According to Climate Bonds Initiative, the market, including government-issued bonds, reached an all-time high of $41.8bn in 2015, up from $36.6bn in 2014 and $11bn in 2013. Financial services company HSBC predicts between $55bn and $80bn worth of green bonds will be issued around the world in 2016, while the Climate Bonds Initiative believes sales will exceed $100bn."
Take care
David Chandler & Bill Werther
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Can Apple's $1.5bn green bond initiative inspire more environmental investments?
By Alison Moodie
March 20, 2016
The Guardian