Green Bonds are fixed income instruments whose proceeds are earmarked exclusively for projects with environmental benefits, mostly related to climate change mitigation or adaptation but also to natural resources depletion, loss of bio-diversity, and air, water or soil pollution.
Green bonds deliver several benefits to both issuers and investors;

Benefits of Green Bonds

Benefits for InvestorsBenefits for Issuers
Enhanced risk management and improved long-term financial returnsInvestor diversification across regions and types- Green Bonds enable issuers raise capital from a broader base on investors.
Addressing climate risk: Green bonds help mitigate climate change-related risks in the portfolio due to changing policies such as carbon taxation which could lead to stranded assets.Lower Cost of Capital-green bonds enable issuers to raise large amounts on the capital markets at much lower costs than other instruments.
Green Bonds give investors a chance to direct capital to climate change solutionsStickier Pool of Investors – Green bond investors invest for the long term, which is a major benefit for infrastructure projects seeking longer term investments.
Investments in green bonds matches long-term liabilities and will also help build a sustainable society for pensioners to retire into.Reputational benefits – Green credentials  enhance issuer reputation overall and can be part of a wider sustainability strategy
Asset allocation thresholds – Investments in green bonds have enabled institutional investors to exceed asset allocation thresholds especially when investing in emerging marketsTighter yields – given the demand for green bonds, there has been strong pricing achieved by recent green bond issuance
Alignment with National Development Agenda, the Institutional Investor Stewardship Code as well as International recognition as an innovator in green finance.

Green Bonds Issuance Steps

  • Identify qualifying green projects and assets
  • Develop the issuers Green Bonds Framework
  • Arrange for independent verification
  • Set up tracking and reporting
  • Issue of green bond
  • Monitor use of proceeds and report annually

Differences between a Corporate Bond and Green Bond

Current Issuances

In line with our commitment to connect capital to opportunities in the region, the NSE listedthe first green bond market in East and Central Africa in 2020.

Details of the issuance include:

IssuerIssue DateTermCouponMaturity Date
Acorn Holdings LimitedOctober 20195 years12.25%October 2024

More information on green bonds:
Green Bonds Guide
Green Bonds Program Kenya Background Document