China Issues Green Bonds to Address Environmental Issues

As the fixed income space is making more strides in the environmental, social impact and governance (ESG) space, China is doing its part by offering more green bonds.

Per a report, “China has around 8 trillion yuan (about 1.12 trillion U.S. dollars) of green bonds to finance activities to cope with climate change, said Xie Zhenhua, China’s special representative for climate change affairs.”

It’s certainly opening the eyes of major ESG purveyors where capital meets social impact.

“In terms of green bonds, I think it’s pretty impressive,” said Henry M. Paulson Jr., chairman of the Paulson Institute. “They need to create vehicles to attract private capital and they’ve done a really good job.”

Paulson also made light of China being now the second largest issuer of green bonds globally.

“When I was treasury secretary, I pushed very hard to eliminate the tariffs on environmental goods and services, and this would be a win for the economy and the environment,” said Paulson.

Evolution in the ESG Space

The ESG space is experiencing an evolution with a global outreach. The growth of environmental, social and governance (ESG) funds is not relegated to simply growing in size, but the actual definition is expanding as well. While climate and sustainability still dominate topically, factors like health and wellbeing benchmarks have been formally added to the GRESB Real Estate Assessment (the ESG benchmark used by the real estate industry worldwide).

Real estate is becoming a key purveyor of promoting health awareness as part of ESG efforts.

According to a Green Health Partnership report, the “private real estate sector is an important partner in efforts to create health-promoting communities. Real estate investors and companies are increasingly interested in understanding their ESG (Environmental, Social, Governance) performance driven by the belief that demonstrating corporate social responsibility for issues like environmental sustainability positively impacts the bottom line.”

The GRESB Real Estate Assessment is an ESG benchmark used annually by over 100 institutional investors. Now more than ever, these indexes are being used by funds to give investors more insight into their focus on ESG as it becomes a more prominent component that will guide capital allocation decisions.

“The 2019 GRESB Real Estate Assessment provides a new level of transparency around the approach to health and well-being taken by the 1005 global real estate companies, REITS, funds and developers that participated, covering more than 100,000 individual real estate assets and representing USD 4.1 trillion AUM (assets under management),” Green Health Partnership noted on their site.

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