Green bonds help cities fund Earth Day vision

Wed, 2015-04-22 06:00 -- Doug Cooley

As the buzz around climate change grows louder, cities around the world are celebrating Earth Day. To refresh your memory, Earth Day made its debut on this date in 1970 and, some would say, launched the modern  environmental movement.

Yet, while eco-conscious community members engage in Earth Day Festivals and other go-green hoopla, a low-profile player called the “green bond” may be the thing that helps make the Earth Day message a reality for cities in the decades to come.

Green bonds are a fixed-income investment tool that international development banks, such as the European Investment Bank and World Bank, began offering in 2007. The financing mechanism aims at funding environmentally friendly projects. Some folks refer to green bonds as “climate bonds.”

Today state and city governments -- along with corporations -- are also selling green bonds. As shown in the chart here, total issuance in 2014 skyrocketed to $36 billion, more than triple the previous year's level.

Green bonds part of New York debt program

One prominent example of the growing popularity of financing projects with green bonds is New York City.  It may soon become the first large city in the nation to issue green bonds as part of an ongoing debt program.

“A green bond program would help lower the city's carbon footprint and fund future resiliency projects -- from hardening our sewage treatment plants and installing bioswales, to undertaking energy efficiency and conservation projects in city buildings, “ said NYC comptroller Scott Stringer in a recent Huffington Post piece. “Green bonds would also help to attract a new generation of investors who want to see social return on their investments as well as financial gain.“

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Our Smart Cities Financing Guide looks closely at the how cities can use green bonds to fund important sustainability projects. The Financing Guide is free with your Smart Cities Council registration. Register for free now!