Are Your Bonds Green, Social or Sustainable? And Climate Resilient Too?

October 22, 2024 03:45 AM AEDT | By 3BL

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Are Your Bonds Green, Social or Sustainable? And Climate Resilient Too? — Image source: Kalkine Media

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by R. Paul Herman and Liana Lan, HIP Investor Ratings LLC

When sailing your portfolio into the future, would you want a top-heavy boat? Or a boat that is stable through the waves of future risks? “Green bonds,” “social bonds” and “sustainability bonds” – these labels bring comfort to impact investors. Yet, are all green, social and sustainability bonds fully safe for the forthcoming 30 years?

Our HIP Investor Ratings of 270,000 bonds – whether issued by more than 100,000 municipalities, 14,000 corporates, or 200 sovereigns – evaluate the possible future risks and future opportunities of the underlying issuers and use of proceeds. As of August 30, 2024, HIP has evaluated 11,487 bonds that are labeled “green,” “social” or “sustainability-linked,” which seek to bring solutions like reducing pollution, delivering cleaner water, spurring more affordable housing, or bringing climate action forward to society as well as to your portfolio.

These positive impacts can build a better world and could bring more stable income and a higher-confidence of principal repayments in the future. Yet they also need to be evaluated for climate risk and resilience.

This article also looks at- 1) What Green, Social and Sustainable Bonds are Funding. 2) Climate Risks Persist, Possibly Offset with Resilience. 3) How Credit Ratings Seem to Ignore Higher Climate Risks. 4) Are Green, Social and Sustainability Bonds also Climate Resilient?

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