In light of intensifying environmental and financial pressures, a growing number of corporates are seeking economically sustainable properties that can reduce energy costs as well as fulfil corporate social responsibility commitments. With this in mind, the issuance of green bonds – debt instruments whose proceeds are used to fund environmentally sustainable projects – have been identified as one potential solution to successfully align investor and tenant interests, yet their use has been limited.
In a feature for the RICS Property Journal, Michael Wilkins, head of environment and climate risk research, S&P Global Ratings, outlines the reasons why green bonds are not materialising – with the lack of both the necessary levels of standardisation and bond governance procedures being the key inhibitors.
Thankfully, Wilkins believes S&P Global Ratings’ green evaluation tool – expected to be released this summer – could be crucial in restoring market confidence. Wilkins writes: “The ability of investors to benchmark the “greenness” and credit quality of their bond portfolio should lead to greater transparency and ultimately bolster market growth in this nascent sector.”
The full article can be found in the March-April 2017 issue of the RICS Property Journal on pages 22-23.