A GLANCE AT Green BondsOn by
As visitors will know, I am increasingly worried about the environment changes. Environmentally friendly risks dominated the recent World Economic Forum Global Risk Report 2019 (pdf). The authors of the statement were so concerned they said “of all the risks, it is in relation to the environment that the global world is most obviously sleepwalking into catastrophe”.
The report from the IPCC last October made clear that if we allow global warming to go up above 1.5C, it could be far more dangerous than we thought simply a few years previously. Over recent months I’ve begun to make a few changes to my portfolio to reflect my concern about these issues and have been exploring a few ‘green’ investment options.
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We have just seen the hottest month on record in Australia accompanied by unprecedented flooding in Queensland. In Canada and US there’s been extreme cold weather from a polar vortex caused by warming of the Arctic region. If nothing much changes, we are currently on monitor to reach 1. 5C by 2040 and then 2.0C by 2060. We clearly need to make some big changes over another decade to avoid a worst-case situation. The global community is beginning to implement some of these changes and businesses and government authorities are giving an answer to the challenges so I remain optimistic.
On a personal level, I introduced several green money to my profile this past year and I intend to boost the green allocation of my portfolio to at least 10% by the end of this 12 months. However, both are collateral based therefore I would like to have a little more balance so I have been considering green bonds, also referred to as environment bonds.
Much like typical bonds, it is a connection which generally offers a set rate of return for a specific time period however with the green bonds, the amount of money raised is specifically earmarked for climate-related tasks. These could be for projects to aid a range of green initiatives such as energy efficiency, renewable energy, sustainable agriculture, cleaner transport, safety of ecosystems and friendly technology environmentally.
These bonds have been around for over a decade and are mostly only open to institutional investors such as pension funds. 167bn for green projects. 2.Season to 2035 to tackle environment change 4 trillion EVERY. Access to these bonds is still mainly for institutional investors like the large pension and insurer’s funds. However several exchange traded funds have been launched for the united kingdom retail investor before 12 months. VanEck Vectors Green Bond (GRNB) predicated on US market.
So today, I dipped a toe in the water with a short purchase of the offering from Lyxor for my ISA. This has been funded from a sale of my keeping in City of London trust. I am certain more green relationship funds will be produced available to the retail trader over the year ahead or two so will hold back for some time and just observe how I choose this for the time being.