Private capital is increasingly seeking out opportunities to finance green projects. This opens the door to getting more vital infrastructure built with less outlay of public funds. Government also has an important role in establishing standards and models that will make green bond issues more viable for private issuers.
At the same time, there’s an urgent need here in Canada to insulate our financial sector and broader economy from potential asset re-valuation shocks as decarbonisation accelerates. A combination of stress-testing and transparency is needed to manage this uniquely large Canadian vulnerability.
SOLUTIONS WE PROMOTE
- Quantifying the size and nature of the Canadian green bond market, to remove any doubts about the potential for sufficient liquidity and efficiency – issuance capacity in 2017/18 found to be >$55B.
- Establishing standards for use of green bonds proceeds, and making government grants available to offset additional issuance costs that currently act as a deterrent to market entry.
- Implementing Financial Stability Board and other disclosure recommendations for financial institutions, to better mitigate risk on matters such as loan-book exposure to high- vs. low-carbon loans, and to provide insight on degree of alignment with societal climate change objectives.
EXAMPLES OF SUCCESSFUL ACTION
- Ontario and Quebec announce green bond issues.
- Singapore central bank covers costs of external reviews for green bond issuance.
- Connecticut Green Bank accelerates growth of green energy for home and building owners.
- US Build America Bonds subsidizes interest payments for American cities investing in infrastructure projects, supporting $181 billion in financing for cities (see Centre for American Progress and Bloomberg).
- Green is the New Black: RBC Capital Markets Report
- Bonds and Climate Change: State of the Market 2016
- Financing the Transition to a Green Economy: Their Word is Their (Green) Bond?
- Task Force on Climate-Related Financial Disclosures
See also our general Resources page.