The chairman of a U.S. investment firm stood on a Singapore stage last week and delivered a confident assessment: So-called green bonds, he said, are the best way for the financial industry to advance sustainable finance.
The audience, assembled at the UN Environment-partnered "Unlocking Capital For Sustainability" conference, disagreed.
Green bonds are debt instruments designed to raise funds for projects and businesses that have a positive environmental or social impact. With environmental, social and governance investing increasingly going mainstream, green bonds have gained significant traction among firms looking to be more sustainable. Since the category's inception just 10 years ago, the green bond market has rapidly grown to about $500 billion in value.
While that figure may be sizable, it still pales in comparison to the "non-green" portion of the market.
"The growth of the asset class has been significant — I don't think anybody can deny it, since the World Bank 10 years ago issued the first green bonds. But, at the same time, today, they account for about 1 percent of the global market," said Michael Boardman, the group chief financial officer of clean energy developer Sindicatum.
And that small proportion of global finance represented the crux of the argument against green bonds as the best solution to sustainable finance going forward.
"If we think 1 percent of green bonds issued every year will solve our problems, we might as well all go home," Boardman added.
The Sindicatum CFO was squaring off in the conference's "The Green Debate" against Dave Chen, the principal and chairman of U.S.-based sustainable investment firm Equilibrium.