Environment
The Rise of Green Bonds, Explained
They’re laying the groundwork for the future of climate financing.
Seattle-based Sound Transit issued more than $900 million in so-called “green bonds” last week to improve the bus and train system, with a goal of cutting down on carbon emissions from transportation in the region.
The green bond offering, which Sound Transit says is the largest ever by a municipal government, marks a milestone in the growth of a financial instrument that’s only been around for less than a decade. Green bonds work much the same way as any other bond: an institution takes money from investors to finance a project, and pays it back with interest over time. But with green bonds it’s the money’s destination that makes all the difference.