World Environment Month draws to a close – are we any closer to saving the environment?

June is designated as the environment month by the United Nations. As a result of this designation, three specific dates are acknowledged in this month across the world regarding the environment: June 5, World Environment Day; June 8, World Oceans Day and June 17, World Desertification Day. 

The Three Days of the Environment

While June 5 is the best known of this triad, it is interesting to explore the origins of the other two dates as well. 

The concept for World Oceans Day was originally proposed in 1992 by Canada's International Centre for Ocean Development and the Ocean Institute of Canada at the Earth Summit, the UN Conference on Environment and Development, in Rio de Janeiro, Brazil. With 70% of our planet being ocean, and with 70% of our oxygen coming from this precious resource, the importance of ‘greening the blue’ cannot be overemphasised. 

Credit: United Nations (Finalist of the World Oceans Day Photo Competition 2017 / Dragos Dumitrescu, Romania)

The World Desertification Day, which incidentally celebrated its 25th anniversary this year, arose from a Convention to Combat Desertification (UNCCD) adopted by the international community in Paris on 17 June 1994. A day to celebrate and protect land, biodiversity and climate, the World Desertification Day (also known as the World Day to Combat Desertification and Drought), reminds us that desertification and drought are problems of global dimension in that they affect all regions of the world.

As the World Environment Month draws to a close, it is important to ask ourselves if we are any closer to saving the environment. Has this month brought us any signs showing us that this concerted effort to discuss critical environmental issues, explore new dimensions of existing problems, and put the minds and might of so many individuals behind these global challenges is actually bearing fruit?

Green bonds on a growth spurt

There may be a green shoot of hope. Bloomberg released an article earlier this month noting that, after more than a decade, it appears that green bonds may finally be taking root. “So far this year, countries, companies and local governments across the globe have sold about US $89 billion of bonds to fund projects that are good for the environment,” notes the article. And this comes after the movement almost had an obituary written for it just a year ago, by the same author, stating that “the green bond market appeared to be stuck in infancy because of self-designating and a general lack of enforcement.”

It is not clear what has caused such a resounding uptick in the green bond market, but what does come across clear as daylight is that more than a third of total issuance in the first five months of 2019 came from countries other than established issuers, which have typically been China, France, the U.S., Germany, the Netherlands and Sweden. 

Indeed, the movement truly appears to be taking on a global aspect as, within just one week, issuers on four continents have laid out plans to borrow: South America saw Chile buy a 30-year green deal to market, Asia’s Korea Electric Power Corp. priced US$500 million of five-year securities, Europe witnessed Portuguese issuer EDP Finance B.V. set up investor calls for its green-bond debut and North America played its part as Connecticut outlined plans to issue US$250 million of top-rated green bonds for water and wastewater projects.

Ultimately, it is high time that countries and companies react to the UN’s October report, which argued that the world has 12 years to avert catastrophic climate damage. This positive upswing in the green-bond market may come across as a delayed reaction, but it is a reaction that is long awaited and heartily welcomed nevertheless.

Why should green bonds get a break?

To provide a brief background to green bonds, it was in November 2008 that the World Bank issued a green bond that created the blueprint for the market. In the decade since, green bonds have come a long way, emerging as a unique and responsible investment opportunity that can help tackle climate change.

Credit: GreenTechnica

Green bonds enable investors to purchase securities debt earmarked for projects which support a low carbon economy and help finance a myriad of different initiatives, including among many others, renewable energy, pollution prevention, energy efficiency and biodiversity preservation. As such, their importance cannot be emphasised enough.

As more and more countries come together to issue regulations to support green bonds, the market looks set to get a greater growth spurt. Last year, the European Commission took a leadership position with the release of its March 2018 report, “An Action Plan on Financing Sustainable Growth,” a roadmap of reforms for green financial products that include taxonomies, standards and best practices.

Individually, countries such as France, the UK, Germany and Sweden have all recently issued guidelines aimed at driving a green transition. In August 2016, China released its own set of guidelines and policies, further enshrining green investment as part of the country’s national development strategy. These guidelines and policies are critical to driving investor confidence and helping issuers track their progress against environmental policy goals. 

Giving a further impetus to the green bonds market and the ecosystem powering it, just this month, a panel of experts on sustainable financing appointed by the Canadian government released a report that said green bonds should have tax breaks like US municipal debt to create a more well-functioning market.

A greener future beckons

As green bonds look set to get their place under the sun, it may not be too optimistic to conclude that the green shoots of hope that have sprouted in this environment month for the global green movement are here to stay.