Green bonds are attracting investors with an appetite or need to invest in projects that have positive environmental effects. There is no subsidy or credit associated with a green bond designation, but there is potentially a marketing advantage that could lead to lower costs – in particular, lower interest costs.
Over time, the process for attaining green bond status is becoming more uniform. For example, Climate Bonds Initiative (www.climatebonds.net) and S&P Global Ratings (www.spglobal.com) have programs for evaluating eco-friendly projects. Just last year, the City of Portland obtained a green evaluation score from S&P Global Ratings in connection with refunding certain of its 2010 bonds. The bonds were issued in connection with a U.S. Green Building Council Leadership in Energy and Environmental Design (“LEED”) Gold Certified Jetport terminal expansion project. While the “green bond” designation was related to the LEED certification, S&P Global Ratings evaluated and scored the environmental benefits.
Next time your municipality is considering financing or refinancing an eco-friendly project, including a green construction, transportation, water, waste, or energy-efficient project, it might be worthwhile investigating the benefits of a green bond designation.
