Environmental Finance's Green Bonds Americas conference hosted some 240 delegates in New York to discuss the issues shaping the green bonds market in the region.
Opening remarks delivered by Environmental Finance editor Peter Cripps revealed that issuance in the US green bond market has broken through $50 billion despite slowing slightly this year, according to the Green Bond Database. (See the slide deck here.)
Ann Marie Griffith, head of fixed income and executive board member at the US arm of asset manager APG, said one of the key drivers for growth has come from developing markets, as countries such as Brazil and Mexico in the Americas region, but also India and China, saw the "huge potential" for growing their economies using green issues.
"One thing we would like to see more of is additional corporate issuance. The Apple transaction [of $1.5 billion in February 2016] was a real watershed moment, [but] we would like to see more issuance in the green bond market from corporates," said Griffith.
"I don't know if there is a political impact [restricting corporate issuance] or if it is the fact that the corporate market itself is so wide open for issuance that companies don't see the need to go through the rigorous amount of work it takes to issue a green bond," Griffith said.
Guillaume Pichard, director of capital markets for the Province of Quebec, told the conference that the work it took to get its inaugural $500 million green bond issued in February, was justified by the publicity benefits. 10% of the buyers were "new names to the Quebec brand" – many of these subsequently bought the Province's later non-green issues, he said.
"We underestimated the benefit the issue would have in terms of getting the attention it did. The publicity went around the globe, and that shed very good light on the expertise in Quebec in addressing climate change," said Pichard.
Stephen Liberatore, managing director and lead portfolio manager at Nuveen, delivered a keynote speech appraising 10 years of green bonds. He said the municipal green bond market, boosted by issues such as Quebec's, "is one of the fastest growing markets and has almost unlimited potential" for growth, while new products such as asset-backed securities are attracting a broad cohort of new investors.
The ongoing diversification of the market means that "in almost every asset class, in almost every form, investors have the opportunity to 'get to green'", Liberatore added.
Pichard and Elizabeth Wallace, senior manager of funding and foreign exchange in Ontario Financing Authority's capital markets division, both confirmed at the conference that plans have been laid by the Canadian city of Ottawa to issue a bond of up to C$150 million before the end of 2017.
Wallace is pushing her employer's efforts to help develop a Canadian dollar green bond market, and said the Province is planning to issue another green bond before the end of this fiscal year.
Meanwhile, the conference was rich in debate about the scope for green bond standards and taxonomies that quantify their impacts.
John Shideler, who has been named convenor of a working group aiming to devise an International Standards Organisation (ISO) green bond standard, alongside his role as climate services manager at NSF Sustainability, told the audience that the ISO standard will draw inspiration from the Green Bond Principles, which aim to "clarify the approach of green bond issuance", and the Climate Bond Standards.
Shideler said the ISO standard may be ready for voluntary adoption by companies or public bodies by 2019.
Similarly, the EIB, as an institution with representation on the European Commission's High-Level Expert Group on Sustainable Finance, is helping draw up a Europe-wide standard for green bonds.
"A big impediment for the market to grow is the multiple taxonomies and definitions that exist in the market," said Irene Sanchez Aizpurua, head of the development bank's division for investor relations and marketing for its capital markets department.
HSBC's Divya Bendre argued that there was not necessarily a strong case to move toward a single standard for greenness, while Christa Clapp, head of climate finance at second opinion provider CICERO, said her organisation does not use a taxonomy because "CICERO really wants to see allowance [within standards] for creative solutions".
An online poll of the audience found that 63% of respondents thought the market needs to converge around a single standard.
