By Paul Davies and Andrew Westgate

Green bonds, which tie the proceeds of the issuance to investments that have positive environmental and/or climate benefits, are a rapidly growing asset class. Recent figures have corroborated the narrative of growth predicted by industry experts.

In the first quarter of 2016, green bonds totalling US$17 billion were issued globally – three times the total amount issued in the same period in 2015, almost half of which are attributed to Chinese issuers. Banks continue to dominate issuances, but a recent corporate issuance shows the burgeoning development of the asset class.

Zhejiang Geely – perhaps best known in the UK as the owner of the London Taxi Company, manufacturer of London’s iconic black taxi cabs – recently issued US$400 million of green bonds. The funds will be used in part to develop green taxis in Europe, but also to fund electric vehicle design in Asia.

By Paul Davies and Andrew Westgate

China has launched a green bond pilot initiative via the Shanghai Stock Exchange, encouraging further foreign investment in a rapidly growing asset class and paving the way for issuances by non-financial institutions.

This initiative closely follows the publication of green bond guidelines in December 2015 by the National Association of Financial Market Institutional Investors (NAFMII). The Shanghai green bond stock exchange initiative and the guidelines go hand-in-hand with China’s efforts to transition towards a green and low carbon economy.