Green bonds deliver several benefits to both issuers and investors;
Benefits of Green Bonds
|Benefits for Investors
|Benefits for Issuers
|Enhanced risk management and improved long-term financial returns
|Investor 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 solutions
|Stickier 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 markets
|Tighter 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
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:
|Acorn Holdings Limited