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Keeping track

Most green bonds go to alternative energy projects

Ever wondered what the proceeds of your green bond investments actually do?

MSCI Inc. was wondering, too, and published in a blog last month information on where these bonds were invested.

Working with Barclays and Bloomberg, MSCI has been tracking green bond issuance since 2014 for the Bloomberg Barclays MSCI Green Bond index, writes Remy Briand, Geneva-based managing director, global head of ESG at MSCI, in the blog.

"Most green bonds have been linked to greenhouse gas mitigation projects, but the exact application can vary widely," Mr. Briand said.

In 2017, for example, almost 90% of green bond issuance funded alternative energy, about 70% funded energy efficiency projects, and around 40% of green bond proceeds were used in pollution prevention. These bonds can be used to finance multiple projects.

Mr. Briand added that there are now several active and passive strategies investing in the green bonds market, although they remain "small and specialized. Given the market value of the Bloomberg Barclays MSCI Green Bond index exceeded $160 billion at the end of 2017, it is safe to conclude that a large part of these bonds have been purchased by traditional bond investors, probably as part of their ESG integration efforts," he said.