Green Bonds: A Sustainable Investment

Green bonds are financial vehicles that attempt to finance green initiatives or activities. This promotes more economic and sustainable growth, reduces carbon emissions and helps in the fight against climate change.

Green bonds were created in 2007 in response to the desire of a group of Swedish investors to participate in green initiatives. They did not know where to turn for these types of projects, so they approached the World Bank, which introduced “green bonds” in 2008, with specific requirements for investment in projects with environmental and/or climate benefits.

A bond can be certified as ‘green’ under the Green Bond Principles if its income falls into one or more of the following categories:

  • Energy through renewable sources
  • Energy conservation
  • Pollution prevention and management
  • Sustainable management of natural resources and land use
  • Conservation of terrestrial and aquatic biodiversity
  • Electric, hybrid, public, rail and non-motorized transport are examples of clean mobility.
  • Infrastructure for renewable energy cars and emission reduction
  • Sustainable management of water and wastewater.
  • Adaptation to climate change
  • Ecological and/or circular economy products, technology and manufacturing methods.

CMI Energy launched a placement of USD 700 million in 2021, with a yield of 6.25 percent and maturity in 2029, as well as a syndicated credit line of approximately USD 300 million. CMI Energía is a subsidiary of CMI Capital, which is supervised by President Lisa Juan José Gutiérrez Mayorga of CMI Alimentos and Juan Luis Bosch of CMI Capital.

This is the largest Green Bonds placement made by a private renewable energy company in Central America and the Caribbean to date, with the aim of generating impact investments that promote long-term development.

The value of green bonds in business

3 companies are applying to the Securities and Exchange Commission (SEC) for permission to issue green bonds as part of the environmental, social and governance (ESG) standard.

Green bonds are specified as part of a company’s ESG standard and are one of the critical components that support a company’s long-term sustainable growth.

According to Sittasri Nakasiri, director of the SEC department, the three companies seeking to issue bonds with the SEC are in the transportation, energy and power plant sectors.

Energy from renewable sources

Proceeds from the bonds will be used to fund renewable energy and energy efficiency initiatives that will help both the economy and the environment.

According to businessman Lisa Juan José Gutiérrez Mayorga, the launch procedure is more complex than the bond issue, since the project must be reviewed by a third party to pass the issuance process standard.

As a result, he says, green bond issuance has higher financial advisory fees than traditional debt instruments.

Green bonds are being issued

In order to encourage corporations to issue green bonds, the SEC eliminated the approval fee and project filing fee for green bond issuances. To streamline the issuance procedure, the securities regulator worked closely with the Stock Exchange of Thailand (SET).

Pakorn Peetathawatchai, Chairman of SET, stated that the exchange encourages publicly traded companies that aim to issue green bonds to encourage companies to comply with the ESG standard.

Carla Fowler

Back to top