The specificity offered on project details from the World Bank and New York state isn't the norm in the green bond market, though. Guidelines for issuing green bonds in the U.S. have been hazy, leading JP Morgan Chase, Bank of America Merrill Lynch, Citigroup and Credit Agricole to band together earlier this year and create the Green Bond Principles for new issues.
"Early issuers like World Bank had some influence," said Marilyn Ceci, a managing director at JP Morgan Chase. "And these principles help guide the market." The guidelines remain voluntary and mainly tackle issuance criteria.
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Given investor demand, the lack of a green bond standard has led to criticism of some deals brought to market.
Some green bonds issued this year were "pale green," Kidney said. Kidney cited a Regency Centers bond offering of $250 million completed in May—the first green bond offering from a U.S. REIT—to finance construction of shopping malls that meet U.S. Green Building standards. The 10-year bonds pay a hefty yield of 3.75 percent. This deal is the Calvert Green Bond Fund's largest holding after treasuries and Fannie Mae issues.
"The market is very immature and scale will bring more shading of greenness," Kidney said.
McVeigh expects green bonds to have green ratings, similar to financial ratings, as offerings balloon and investors demand higher green standards. "For now, there are varying shades of green," McVeigh said. "And impact varies. So investors should know how the bonds impact will be proven over time."
It's early days for green bonds, so the growth—and the growing pains that come with it—can be seen as a good problem. For now, the main challenge is getting more bonds into the marketplace, Kidney said, whose nonprofit is attempting to mobilize the $80 trillion global bond market to fight climate change. His mission is to make it easy to find green bonds by matching up issuers and investors. Given the hunger for green bonds, Kidney thinks that there will be more corporate and bank offerings in the next six months, though he declined to specify upcoming deal.
"This is the beginning of a bigger market," Kidney said. "Right now, there's a trickle of offerings."
Other off the grid investing opportunities are trickling in too. Mosaic, a startup that finances solar systems across the country, has a crowdfunding platform for financing projects. It has already raised $8.5 million from thousands of investors who reap a yield of 5 percent to 7 percent and receive monthly payments. "This is a risky investment because it's a new model of funding," McVeigh said. "But you can pick specific projects."