S&P Issues New Green Bonding Criteria

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The Greening of Wall Street continues a positive trajectory as Standard & Poor’s issues its new Green Evaluation Analytical Approach, designed to credit rate Green Bonds used to finance projects with environmental benefits. This is a positive development for the environment and for socially conscious investors, as it creates clearer performance standards for infrastructure projects that claim to promote environmental benefits (e.g., carbon, water, waste, biodiversity).  As these standards become normalized, it will invariably encourage more private investment in the environment by instilling greater confidence in green markets.

S&P’s ranking criteria assess not only the environmental benefits of a project, but the transparency (use of proceeds and reporting comprehensiveness) and governance (management of proceeds and impact assessment).  This is similar to Moody’s Green Bonds Assessment rolled out last year.

According to the OECD, Green Bonds exceeded $40B in 2015, while the climate-aligned bond market exceeded $600B.

Based on a recent Brookings Report titled Green Bonds Take Root, the public is increasingly embracing green bonds as a mainstay of municipal bond financing.  For example, earlier this year, under the leadership of George Hawkins, DC Water issued its second certified green bond to raise $350M to finance a portion of the DC Clean Rivers Project.

This comes at an opportune time as the Trump Administration seeks to catalyze trillions of USDs in new infrastructure investment.