The Bloomberg Barclays MSCI Green Bond Index has been voted as best index for the fifth year running.

Environmental Finance Bond Awards judges continued to value the fact that, in addition to fixed income criteria, MSCI researchers use an independent methodology to assess whether bonds have a net environmental benefit and are truly 'green'. That means the index excludes green bonds that do not meet its criteria.

For example, its alternative energy criteria exclude biomass projects that do not use sustainable biomass (e.g. biomass certified to Sustainable Biomass Programme standards). Similarly, it excludes landfill or incineration without waste-to-energy components.

In 2020, the most common grounds for a bond being considered ineligible for the Index related to its use of proceeds. For example, the 2020 green bond by Stora Enso will use 25% of its proceeds for the manufacturing of products from sustainably managed forests – these include packaging products and wooden products used in construction. But the Index does not consider funding of business-as-usual manufacturing processes to be eligible, even if the raw materials are sourced from certified forests, meaning the bond was ineligible.

The index held on to the top spot in 2020 following a review of its green criteria in 2019. After the 2019 client consultation, new criteria were added to reflect existing market conditions – pure play bonds now need to meet all four principles of the index, in line with the ICMA Green Bond Principles, and it also considers green mortgage-backed securities to be eligible if they have undergone renovations that have resulted in a minimum of 30% improvement in their energy efficiency.

One judge said: "I think the index is the reference for green bonds benchmarks, and I like the fact that they use their internal assessment of greenness to select labelled green bonds and pure play issuers."