Investing in a green future


reen bonds are a type of title issued by public or private entities, specifically for the financing of sustainability, renewable energy, clean transportation or responsible waste management projects.

This instrument was launched on 5 July 2007 by the European Investment Bank (EIB). Each year more institutions, banks, and corporations come together to create innovative investment ideas and attract more and more investors to promote their use.

In 2016 the International Capital Market Association produced a guide of principles for its use in which four important steps are outlined that must be met at the time of use:

Use of proceeds: everyone who earns of a Green Bond must present all clear and complete legal documentation about the environmental benefits the project will have and how they will be quantified.

The categories in which they can be used include:

  • Renewable energy
  • Energy efficiency
  • Pollution prevention and control
  • Environmentally sustainable management of living natural resources and land use
  • Terrestrial and aquatic biodiversity conservation
  • Sustainable water and wastewater management
  • Climate change adaptation
  • Eco-efficient and/or circular economy adapted products, production technologies and processes
  • Green buildings which meet regional, national or internationally recognized standards or certifications

Process for project evaluation and selection:

The beneficiary must communicate to investors the environmental sustainability objectives, the category to which the project belongs and whether there is any social risk associated with the project

Management of proceeds:

The beneficiary must inform the investor about the use of the funds and their location. The balance of the balance that is made periodically must equal the amounts allocated during each project.


An updated report of all information about the project should be maintained, including the expected impact of the project.

In the same manual the different types of vouchers were presented:

  • Standard Green Use of Proceeds Bond: a standard recourse-to-the-issuer debt obligation aligned with the GBP.
  • Green Revenue Bond: a non-recourse-to-the-issuer debt obligation aligned with the GBP in which the credit exposure in the bond is to the pledged cash flows of the revenue streams, fees, taxes etc., and whose use of proceeds go to related or unrelated Green Project(s).
  • Green Project Bond: a project bond for a single or multiple Green Project(s) for which the investor has direct exposure to the risk of the project(s) with or without potential recourse to the issuer, and that is aligned with the GBP.
  • Green Securitized Bond: a bond collateralized by one or more specific Green Project(s), including but not limited to covered bonds, ABS, MBS, and other structures; and aligned with the GBP. The first source of repayment is generally the cash flows of the assets. This type of bond covers, for example, asset-backed securitizations of rooftop solar PV and/or energy efficiency assets.

This market has grown rapidly over the years. In 2017 it maintained a 78% increase compared to previous years, with issuers from 37 different countries. Moody’s risk rating forecasts an increase in demand for this type of product as well as a doubling in its use.

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