One big company after another is going for it: green finance. They manage to get hundreds of millions or even billions from the market for themselves, with the promise that they will use the money to make themselves more sustainable.
The past weeks: the American supermarket giant Walmart 2 billion dollars (1.72 billion euros), food giant Mondelez, of the Oreo cookies, 2 billion euros and telecom company Verizon 1 billion dollars. They had promised in advance what they would spend the proceeds on. Among other things, Walmart wants to make its supermarkets and transport more efficient, Mondelez is going for waste reduction, Verizon is investing in green energy.
These companies have issued a ‘green bond’. That is just like an ordinary bond (a negotiable loan on which interest is paid), with the difference that the proceeds have to go to sustainability. It must be clear in advance for which specific purposes the money is intended.
She has already preceded a long line of companies. Also Dutch: network operator Tennet raised 1.8 billion euros in May, de Volksbank 500 million a month later. Governments are also making use of the opportunity. And companies that are too small to issue bonds can take out a green loan.
Sustainable financing (besides ‘green’ there are a few more variants) is in demand, both by recipients and lenders. Last year it was a record amount of more than 700 billion dollars internationally. A “spectacular growth” according to Bloomberg. According to the financial news agency, it is 29 percent more than the year before, and more than seven times as much as five years earlier. And the growth is not over yet. Nearly $500 billion has been raised in the first half of this year, according to nonprofit Climate Bonds Initiative. It could just go to the 1,000 billion this year. Green bonds are now so popular, sees Bloomberg, that investors are willing to pay extra for it – a greenium.
What is the significance of this financial hype?
Also read: The price of a ton of CO2 can make – or break the climate
A ‘key role’
It was already clear in 2018: “Investors want to invest more and more money in sustainable projects,” said Minister Wopke Hoekstra (Finance, CDA) at the announcement that the Netherlands would also start issuing green government bonds. It happened in 2019.
The desire to go green has only grown stronger since then. “Investors feel pressure to invest sustainably,” says Amin Mansour, head of strategic products at ING. “A few years ago it was mainly an ethical consideration, but now being unsustainable is also seen as a risk.”
An important reason: the clients of institutional investors such as pension funds want it. Also important: the European Union wants it. Of an ambitious ten-point plan the EU is trying to direct many billions to green destinations. Brussels sees a “key role” for the financial world in the climate crisis. Not only public money, but also private money should help with the transition to a ‘climate neutral, climate resilient’ economy.
“The net is being attracted, around institutional investors and companies,” says debt advisor Ard Burgers of accountancy and consultancy firm PwC. “Now almost everyone realizes that they have to work on it. A few years ago you still had to look for this type of financing with a flashlight.”
Machine in operation
The EU’s action plan, which is being implemented in stages, will bring about a turnaround, expects Hans Biemans, head of sustainable bonds at ING. “If funds want to invest their money sustainably, companies must spend it sustainably. Sustainability is thus anchored in the financing chain, a kind of machine starts to work. At some point, access to capital becomes less for companies that don’t keep up.”
An important part of the action plan went into effect this spring. Wealth managers must disclose how green they are: dark green, light green, or not green at all. The idea is that that last shade becomes less and less attractive. In addition, investors must make clear how they give substance to their ‘greenness’. Which choice or strategy makes them dark or light green?
This is where green bonds come into the picture. Sander Huizinga, who invests in bonds for pension provider PGGM: “Everyone can say: I invest sustainably. But let’s see. That’s a step everyone struggles with. If a substantial part of your investments is in green bonds, that is a clear sustainable element in your strategy.”
Green Airport
There is no discussion about most green bonds – nobody is against more efficient supermarkets, less waste or green energy. But sometimes the question arises as to whether something can be called ‘green’ or ‘sustainable’.
Take an airport. Can they also collect green money? Intuitively you might say: no. Yet it is possible: Schiphol has already issued a green bond twice, in 2018 (500 million euros) and in 2020 (750 million euros). Schiphol wants to use the money to make the buildings more efficient and to invest in electric buses.
Investors weigh it differently. “Of course you are facilitating something very polluting,” says Huizinga of PGGM. “But we have classified this as sustainable.” A green bond from an airline would be going too far for PGGM. “There is currently no sustainable alternative to flying. But making air transport more sustainable starts at the airport itself. We finance that.”
Another Dutch asset manager, Robeco, sees it differently. “We had our doubts, but in the end we didn’t think it was good enough,” said Guido Moret, head of sustainable investment in Robeco’s bond division, about the airport bond. Greenwashing? Not that, says Moret. “It is completely transparent what Schiphol does with that money. They don’t pretend to be better than they are. Greenwashing is when there is no transparency or misinformation is given.”
Sustainability Bible
Schiphol is just one example. There have been more questionable cases, for example in the oil and gas industry. That led to criticism. Because polluting industries that collect green money to become slightly less polluting, is that the intention?
And also broader criticism sounds. Because despite the deluge of sustainable financing, states Climate Bonds Initiative, “the majority of organizations” have not yet made it clear how they want to make their activities carbon neutral. While that’s what matters in the end.
There is no single central authority in the financial world that determines what counts as ‘green’ for everyone. However, the EU is working on rules. There is a new handbook in the making, containing all economic activities that are seen as sustainable: the so-called taxonomy, a kind of sustainability bible. In addition, the EU is working on a Green Bond Standard to enter. The aim is to increase ‘environmental ambitions’. The new taxonomy will be leading in this.
This taxonomy is not yet finished, but it is already in use. The answer to the Schiphol question can already be found there. Does greening an airport count as sustainable? It takes some searching, but activity number 6.17 shows: yes, low carbon airport infrastructure is considered a sustainable destination. So green light.
One big company after another is going for it: green finance. They manage to get hundreds of millions or even billions from the market for themselves, with the promise that they will use the money to make themselves more sustainable.
The past weeks: the American supermarket giant Walmart 2 billion dollars (1.72 billion euros), food giant Mondelez, of the Oreo cookies, 2 billion euros and telecom company Verizon 1 billion dollars. They had promised in advance what they would spend the proceeds on. Among other things, Walmart wants to make its supermarkets and transport more efficient, Mondelez is going for waste reduction, Verizon is investing in green energy.
These companies have issued a ‘green bond’. That is just like an ordinary bond (a negotiable loan on which interest is paid), with the difference that the proceeds have to go to sustainability. It must be clear in advance for which specific purposes the money is intended.
She has already preceded a long line of companies. Also Dutch: network operator Tennet raised 1.8 billion euros in May, de Volksbank 500 million a month later. Governments are also making use of the opportunity. And companies that are too small to issue bonds can take out a green loan.
Sustainable financing (besides ‘green’ there are a few more variants) is in demand, both by recipients and lenders. Last year it was a record amount of more than 700 billion dollars internationally. A “spectacular growth” according to Bloomberg. According to the financial news agency, it is 29 percent more than the year before, and more than seven times as much as five years earlier. And the growth is not over yet. Nearly $500 billion has been raised in the first half of this year, according to nonprofit Climate Bonds Initiative. It could just go to the 1,000 billion this year. Green bonds are now so popular, sees Bloomberg, that investors are willing to pay extra for it – a greenium.
What is the significance of this financial hype?
Also read: The price of a ton of CO2 can make – or break the climate
A ‘key role’
It was already clear in 2018: “Investors want to invest more and more money in sustainable projects,” said Minister Wopke Hoekstra (Finance, CDA) at the announcement that the Netherlands would also start issuing green government bonds. It happened in 2019.
The desire to go green has only grown stronger since then. “Investors feel pressure to invest sustainably,” says Amin Mansour, head of strategic products at ING. “A few years ago it was mainly an ethical consideration, but now being unsustainable is also seen as a risk.”
An important reason: the clients of institutional investors such as pension funds want it. Also important: the European Union wants it. Of an ambitious ten-point plan the EU is trying to direct many billions to green destinations. Brussels sees a “key role” for the financial world in the climate crisis. Not only public money, but also private money should help with the transition to a ‘climate neutral, climate resilient’ economy.
“The net is being attracted, around institutional investors and companies,” says debt advisor Ard Burgers of accountancy and consultancy firm PwC. “Now almost everyone realizes that they have to work on it. A few years ago you still had to look for this type of financing with a flashlight.”
Machine in operation
The EU’s action plan, which is being implemented in stages, will bring about a turnaround, expects Hans Biemans, head of sustainable bonds at ING. “If funds want to invest their money sustainably, companies must spend it sustainably. Sustainability is thus anchored in the financing chain, a kind of machine starts to work. At some point, access to capital becomes less for companies that don’t keep up.”
An important part of the action plan went into effect this spring. Wealth managers must disclose how green they are: dark green, light green, or not green at all. The idea is that that last shade becomes less and less attractive. In addition, investors must make clear how they give substance to their ‘greenness’. Which choice or strategy makes them dark or light green?
This is where green bonds come into the picture. Sander Huizinga, who invests in bonds for pension provider PGGM: “Everyone can say: I invest sustainably. But let’s see. That’s a step everyone struggles with. If a substantial part of your investments is in green bonds, that is a clear sustainable element in your strategy.”
Green Airport
There is no discussion about most green bonds – nobody is against more efficient supermarkets, less waste or green energy. But sometimes the question arises as to whether something can be called ‘green’ or ‘sustainable’.
Take an airport. Can they also collect green money? Intuitively you might say: no. Yet it is possible: Schiphol has already issued a green bond twice, in 2018 (500 million euros) and in 2020 (750 million euros). Schiphol wants to use the money to make the buildings more efficient and to invest in electric buses.
Investors weigh it differently. “Of course you are facilitating something very polluting,” says Huizinga of PGGM. “But we have classified this as sustainable.” A green bond from an airline would be going too far for PGGM. “There is currently no sustainable alternative to flying. But making air transport more sustainable starts at the airport itself. We finance that.”
Another Dutch asset manager, Robeco, sees it differently. “We had our doubts, but in the end we didn’t think it was good enough,” said Guido Moret, head of sustainable investment in Robeco’s bond division, about the airport bond. Greenwashing? Not that, says Moret. “It is completely transparent what Schiphol does with that money. They don’t pretend to be better than they are. Greenwashing is when there is no transparency or misinformation is given.”
Sustainability Bible
Schiphol is just one example. There have been more questionable cases, for example in the oil and gas industry. That led to criticism. Because polluting industries that collect green money to become slightly less polluting, is that the intention?
And also broader criticism sounds. Because despite the deluge of sustainable financing, states Climate Bonds Initiative, “the majority of organizations” have not yet made it clear how they want to make their activities carbon neutral. While that’s what matters in the end.
There is no single central authority in the financial world that determines what counts as ‘green’ for everyone. However, the EU is working on rules. There is a new handbook in the making, containing all economic activities that are seen as sustainable: the so-called taxonomy, a kind of sustainability bible. In addition, the EU is working on a Green Bond Standard to enter. The aim is to increase ‘environmental ambitions’. The new taxonomy will be leading in this.
This taxonomy is not yet finished, but it is already in use. The answer to the Schiphol question can already be found there. Does greening an airport count as sustainable? It takes some searching, but activity number 6.17 shows: yes, low carbon airport infrastructure is considered a sustainable destination. So green light.
One big company after another is going for it: green finance. They manage to get hundreds of millions or even billions from the market for themselves, with the promise that they will use the money to make themselves more sustainable.
The past weeks: the American supermarket giant Walmart 2 billion dollars (1.72 billion euros), food giant Mondelez, of the Oreo cookies, 2 billion euros and telecom company Verizon 1 billion dollars. They had promised in advance what they would spend the proceeds on. Among other things, Walmart wants to make its supermarkets and transport more efficient, Mondelez is going for waste reduction, Verizon is investing in green energy.
These companies have issued a ‘green bond’. That is just like an ordinary bond (a negotiable loan on which interest is paid), with the difference that the proceeds have to go to sustainability. It must be clear in advance for which specific purposes the money is intended.
She has already preceded a long line of companies. Also Dutch: network operator Tennet raised 1.8 billion euros in May, de Volksbank 500 million a month later. Governments are also making use of the opportunity. And companies that are too small to issue bonds can take out a green loan.
Sustainable financing (besides ‘green’ there are a few more variants) is in demand, both by recipients and lenders. Last year it was a record amount of more than 700 billion dollars internationally. A “spectacular growth” according to Bloomberg. According to the financial news agency, it is 29 percent more than the year before, and more than seven times as much as five years earlier. And the growth is not over yet. Nearly $500 billion has been raised in the first half of this year, according to nonprofit Climate Bonds Initiative. It could just go to the 1,000 billion this year. Green bonds are now so popular, sees Bloomberg, that investors are willing to pay extra for it – a greenium.
What is the significance of this financial hype?
Also read: The price of a ton of CO2 can make – or break the climate
A ‘key role’
It was already clear in 2018: “Investors want to invest more and more money in sustainable projects,” said Minister Wopke Hoekstra (Finance, CDA) at the announcement that the Netherlands would also start issuing green government bonds. It happened in 2019.
The desire to go green has only grown stronger since then. “Investors feel pressure to invest sustainably,” says Amin Mansour, head of strategic products at ING. “A few years ago it was mainly an ethical consideration, but now being unsustainable is also seen as a risk.”
An important reason: the clients of institutional investors such as pension funds want it. Also important: the European Union wants it. Of an ambitious ten-point plan the EU is trying to direct many billions to green destinations. Brussels sees a “key role” for the financial world in the climate crisis. Not only public money, but also private money should help with the transition to a ‘climate neutral, climate resilient’ economy.
“The net is being attracted, around institutional investors and companies,” says debt advisor Ard Burgers of accountancy and consultancy firm PwC. “Now almost everyone realizes that they have to work on it. A few years ago you still had to look for this type of financing with a flashlight.”
Machine in operation
The EU’s action plan, which is being implemented in stages, will bring about a turnaround, expects Hans Biemans, head of sustainable bonds at ING. “If funds want to invest their money sustainably, companies must spend it sustainably. Sustainability is thus anchored in the financing chain, a kind of machine starts to work. At some point, access to capital becomes less for companies that don’t keep up.”
An important part of the action plan went into effect this spring. Wealth managers must disclose how green they are: dark green, light green, or not green at all. The idea is that that last shade becomes less and less attractive. In addition, investors must make clear how they give substance to their ‘greenness’. Which choice or strategy makes them dark or light green?
This is where green bonds come into the picture. Sander Huizinga, who invests in bonds for pension provider PGGM: “Everyone can say: I invest sustainably. But let’s see. That’s a step everyone struggles with. If a substantial part of your investments is in green bonds, that is a clear sustainable element in your strategy.”
Green Airport
There is no discussion about most green bonds – nobody is against more efficient supermarkets, less waste or green energy. But sometimes the question arises as to whether something can be called ‘green’ or ‘sustainable’.
Take an airport. Can they also collect green money? Intuitively you might say: no. Yet it is possible: Schiphol has already issued a green bond twice, in 2018 (500 million euros) and in 2020 (750 million euros). Schiphol wants to use the money to make the buildings more efficient and to invest in electric buses.
Investors weigh it differently. “Of course you are facilitating something very polluting,” says Huizinga of PGGM. “But we have classified this as sustainable.” A green bond from an airline would be going too far for PGGM. “There is currently no sustainable alternative to flying. But making air transport more sustainable starts at the airport itself. We finance that.”
Another Dutch asset manager, Robeco, sees it differently. “We had our doubts, but in the end we didn’t think it was good enough,” said Guido Moret, head of sustainable investment in Robeco’s bond division, about the airport bond. Greenwashing? Not that, says Moret. “It is completely transparent what Schiphol does with that money. They don’t pretend to be better than they are. Greenwashing is when there is no transparency or misinformation is given.”
Sustainability Bible
Schiphol is just one example. There have been more questionable cases, for example in the oil and gas industry. That led to criticism. Because polluting industries that collect green money to become slightly less polluting, is that the intention?
And also broader criticism sounds. Because despite the deluge of sustainable financing, states Climate Bonds Initiative, “the majority of organizations” have not yet made it clear how they want to make their activities carbon neutral. While that’s what matters in the end.
There is no single central authority in the financial world that determines what counts as ‘green’ for everyone. However, the EU is working on rules. There is a new handbook in the making, containing all economic activities that are seen as sustainable: the so-called taxonomy, a kind of sustainability bible. In addition, the EU is working on a Green Bond Standard to enter. The aim is to increase ‘environmental ambitions’. The new taxonomy will be leading in this.
This taxonomy is not yet finished, but it is already in use. The answer to the Schiphol question can already be found there. Does greening an airport count as sustainable? It takes some searching, but activity number 6.17 shows: yes, low carbon airport infrastructure is considered a sustainable destination. So green light.
One big company after another is going for it: green finance. They manage to get hundreds of millions or even billions from the market for themselves, with the promise that they will use the money to make themselves more sustainable.
The past weeks: the American supermarket giant Walmart 2 billion dollars (1.72 billion euros), food giant Mondelez, of the Oreo cookies, 2 billion euros and telecom company Verizon 1 billion dollars. They had promised in advance what they would spend the proceeds on. Among other things, Walmart wants to make its supermarkets and transport more efficient, Mondelez is going for waste reduction, Verizon is investing in green energy.
These companies have issued a ‘green bond’. That is just like an ordinary bond (a negotiable loan on which interest is paid), with the difference that the proceeds have to go to sustainability. It must be clear in advance for which specific purposes the money is intended.
She has already preceded a long line of companies. Also Dutch: network operator Tennet raised 1.8 billion euros in May, de Volksbank 500 million a month later. Governments are also making use of the opportunity. And companies that are too small to issue bonds can take out a green loan.
Sustainable financing (besides ‘green’ there are a few more variants) is in demand, both by recipients and lenders. Last year it was a record amount of more than 700 billion dollars internationally. A “spectacular growth” according to Bloomberg. According to the financial news agency, it is 29 percent more than the year before, and more than seven times as much as five years earlier. And the growth is not over yet. Nearly $500 billion has been raised in the first half of this year, according to nonprofit Climate Bonds Initiative. It could just go to the 1,000 billion this year. Green bonds are now so popular, sees Bloomberg, that investors are willing to pay extra for it – a greenium.
What is the significance of this financial hype?
Also read: The price of a ton of CO2 can make – or break the climate
A ‘key role’
It was already clear in 2018: “Investors want to invest more and more money in sustainable projects,” said Minister Wopke Hoekstra (Finance, CDA) at the announcement that the Netherlands would also start issuing green government bonds. It happened in 2019.
The desire to go green has only grown stronger since then. “Investors feel pressure to invest sustainably,” says Amin Mansour, head of strategic products at ING. “A few years ago it was mainly an ethical consideration, but now being unsustainable is also seen as a risk.”
An important reason: the clients of institutional investors such as pension funds want it. Also important: the European Union wants it. Of an ambitious ten-point plan the EU is trying to direct many billions to green destinations. Brussels sees a “key role” for the financial world in the climate crisis. Not only public money, but also private money should help with the transition to a ‘climate neutral, climate resilient’ economy.
“The net is being attracted, around institutional investors and companies,” says debt advisor Ard Burgers of accountancy and consultancy firm PwC. “Now almost everyone realizes that they have to work on it. A few years ago you still had to look for this type of financing with a flashlight.”
Machine in operation
The EU’s action plan, which is being implemented in stages, will bring about a turnaround, expects Hans Biemans, head of sustainable bonds at ING. “If funds want to invest their money sustainably, companies must spend it sustainably. Sustainability is thus anchored in the financing chain, a kind of machine starts to work. At some point, access to capital becomes less for companies that don’t keep up.”
An important part of the action plan went into effect this spring. Wealth managers must disclose how green they are: dark green, light green, or not green at all. The idea is that that last shade becomes less and less attractive. In addition, investors must make clear how they give substance to their ‘greenness’. Which choice or strategy makes them dark or light green?
This is where green bonds come into the picture. Sander Huizinga, who invests in bonds for pension provider PGGM: “Everyone can say: I invest sustainably. But let’s see. That’s a step everyone struggles with. If a substantial part of your investments is in green bonds, that is a clear sustainable element in your strategy.”
Green Airport
There is no discussion about most green bonds – nobody is against more efficient supermarkets, less waste or green energy. But sometimes the question arises as to whether something can be called ‘green’ or ‘sustainable’.
Take an airport. Can they also collect green money? Intuitively you might say: no. Yet it is possible: Schiphol has already issued a green bond twice, in 2018 (500 million euros) and in 2020 (750 million euros). Schiphol wants to use the money to make the buildings more efficient and to invest in electric buses.
Investors weigh it differently. “Of course you are facilitating something very polluting,” says Huizinga of PGGM. “But we have classified this as sustainable.” A green bond from an airline would be going too far for PGGM. “There is currently no sustainable alternative to flying. But making air transport more sustainable starts at the airport itself. We finance that.”
Another Dutch asset manager, Robeco, sees it differently. “We had our doubts, but in the end we didn’t think it was good enough,” said Guido Moret, head of sustainable investment in Robeco’s bond division, about the airport bond. Greenwashing? Not that, says Moret. “It is completely transparent what Schiphol does with that money. They don’t pretend to be better than they are. Greenwashing is when there is no transparency or misinformation is given.”
Sustainability Bible
Schiphol is just one example. There have been more questionable cases, for example in the oil and gas industry. That led to criticism. Because polluting industries that collect green money to become slightly less polluting, is that the intention?
And also broader criticism sounds. Because despite the deluge of sustainable financing, states Climate Bonds Initiative, “the majority of organizations” have not yet made it clear how they want to make their activities carbon neutral. While that’s what matters in the end.
There is no single central authority in the financial world that determines what counts as ‘green’ for everyone. However, the EU is working on rules. There is a new handbook in the making, containing all economic activities that are seen as sustainable: the so-called taxonomy, a kind of sustainability bible. In addition, the EU is working on a Green Bond Standard to enter. The aim is to increase ‘environmental ambitions’. The new taxonomy will be leading in this.
This taxonomy is not yet finished, but it is already in use. The answer to the Schiphol question can already be found there. Does greening an airport count as sustainable? It takes some searching, but activity number 6.17 shows: yes, low carbon airport infrastructure is considered a sustainable destination. So green light.