Green bonds are taking off – and could help save the planet

Published onJanuary 10, 2018

The “tragedy of the horizons,” a term coined by Canada’s Mark Carney, governor of the Bank of England, has been haunting the financial sector ever since climate change began posing serious threats to the planet. As Carney put it: Can the financial sector address long-term climate change problems when most investments are made for the short term? Behavioural economics has shown us that people lack the ability to think long term, and this has been the Achilles heel in our fight against climate change. However, there’s now evidence that the “tragedy of the horizons” could be overcome due to changes in both our behaviour and our financial system…

…investors assess risk not just in terms of financial risk, but also social, environmental and governance (ESG) issues that may be critical to financial returns. Investors are demanding that investment firms start to factor in ESG components. However, in the age of climate change, notions of risk and stability are constantly changing. Green bonds, debt finance tools that have traditionally been used to raise long-term capital with low risk, may be answering the call for behavioural change in the financial sector.

Source: http://www.eco-business.com/opinion/green-bonds-are-taking-off-and-could-help-save-the-planet/