“At the very minimum issuing green bonds for Tesla is a way to highlight its obvious green credentials to an investment community that is thirsty for green bonds,” said Kidney, whose London-based nonprofit aims to grow the environmentally friendly bond market.
Though corporate green bonds continue to lag, issuers globally are expected to sell a record $131 billion green bonds this year, up from from just $5 billion in 2012, BNEF data show. The pickup has been led by development banks, municipalities and sovereign issuers who’ve jumped into the market to meet global climate change goals.
Green Demand
Investors with more than $11 trillion in assets have signed onto the Paris Green Bonds Statement, aimed at boosting issuance in the market. Ethical investors, ranging from millennials to public pensions, increasingly seek out the bonds as a way to offset broader climate risks in their portfolios. Many green offerings are several times oversubscribed and underwriters report rapidly filling order books for green bonds.
“There just aren’t enough green bonds to go around,” BNEF’s Shurey said.
Corporate green bonds have taken hold more quickly at European companies, as issuers there face more pressure from central banks and institutional investors to help lower carbon emissions. In the U.S., companies have been more hesitant amid concerns about backing up their green credentials legally or being accused of “ greenwashing,” or trumping up their commitments to clean energy.
A handful of other automakers including the finance arms of Hyundai Motor Co. and Toyota Motor Corp. have issued green bonds to fund consumer purchases or development of electric vehicles. In those cases, green investors may have needed the label to see that the proceeds were going to projects they supported.
“There is a tacit acceptance by green bond funds that their investible universe is, at least at present, limited,” Alastair Sewell, a senior director at Fitch Ratings’ fund and asset manager rating group in London, said in an email. “In the case of Tesla, were a green bond fund to consider Tesla sufficiently ‘green’ in and of itself, then it might consider the issue despite it not being a labeled green bond.”
This article was provided by Bloomberg News.