New Waves: The ESG Megatrend Meets Green Bonds
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New Waves: The ESG Megatrend Meets Green Bonds

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Rise of Responsible ESG Investing

New Waves: The ESG Megatrend Meets Green Bonds

It’s clear that sustainable investing has been thrown into the limelight.

Increasingly, investors are seeing both the financial and social imperative for sustainable investing. In particular, the rapid growth of green bonds—a fixed income investment that is designed to raise funds for the climate or environment—is booming.

The above infographic from Raconteur navigates the growing green bond market against the backdrop of the broader ESG (environmental, social, and governance) investing shift.

Gathering Steam

By the end of 2020, $45 trillion in assets will adhere to sustainable practices, including ESG principles.

Despite the loss of confidence from COVID-19, investors flocked to sustainable-focused funds.In fact, global fund flows hit record levels for Q2 of 2020—surpassing $71 billion.

The fund flows are not without financial warrant. Between April 2015 and April 2019, average returns of socially responsible investments (SRI) outperformed their non-SRI peers. At the same time, 94% of sustainable indices realized stronger returns than their benchmarks between January and March 2020.

The accelerating demand for sustainable investments may seem like old news, but green bonds offer a new avenue.

What Are Green Bonds?

Green bonds raise money for climate and environmental projects, and are issued by governments, corporations, and financial institutions.

Multilateral development banks, which include the European Investment Bank and the World Bank, initially brought them to market in 2007, though they had a slow start. However, in 2019, new issues of green bonds topped $258 billion worldwide—jumping 51% in one year.

Across the green bond market there is a broad spectrum of different debt instruments. These include private placements, covered bonds, and green loans.

Green private placements occur when the sale of bonds are made to private investors, rather than through public offerings. Green covered bonds, on the other hand, are bonds that are backed by a group of assets that are sustainably-focused. Green loans are forms of loans that are meant to finance green projects.

Overall, green bonds can be diversified across a number of different sectors.

The Top Purposes for Green Bonds

What are the top sectors for green bond issuance?

Category20152019
Alternative energy$30.4B$143.8B
Green building$10.7B$63.5B
Sustainable transport$3.7B$58.7B
Energy efficiency$9.5B$47.6B
Sustainable water$3.1B$23.8B
Pollution prevention$1.4B$18.1B
Climate adaptation$1.8B$15.0B
Sustainable forestry/agriculture$1.1B$11.3B

Source: MSCI

Alternative energy, accounting for over $143 billion in green bonds, outpaces all other sectors by a wide margin. Within four years, renewable energy bond issuance has more than quadrupled.

Meanwhile, green building bonds are garnering attention. These instruments finance the construction of energy efficient buildings. Within the industry, a notable green building certification system is the LEED standard, also internationally recognized. Often, real estate investment trusts (REITs) are involved in issuing green building bonds.

Interestingly, Big Tech is also becoming more active within the green bond landscape. Google’s parent company, Alphabet, has issued a record $5.8 billion in corporate sustainability bonds to fund everything from energy efficiency projects to affordable housing.

The Top 10 Countries for Green Bonds

On a country-by-country level, green bonds are most common in the U.S., China, and France.

RankCountryGreen Bond Issuance2018-2019 Change (Amount)
1🇺🇸U.S.$50.6B44%
2🇨🇳China$30.1B1%
3🇫🇷France$29.5B113%
4🇩🇪Germany$18.7B144%
5🇳🇱Netherlands$15.1B105%
6🇸🇪Sweden$10.3B66%
7🇯🇵Japan$7.2B73%
8🇨🇦Canada$7B63%
9🇮🇹Italy$6.8B128%
10🇪🇸Spain$6.5B3%
Top 10 Total$181.8B49%

Source: Climate Bonds Initiative

Germany issued its first multi-billion dollar government green bonds in just 2019. One catalyst behind this was the European Central Bank’s announcement that the environment would become a “mission critical” priority going forward.

This may contribute to the fact that both Germany and France saw the biggest change between 2018 and 2019.

Opening the Floodgates

As sustainable investing becomes front and center on the global agenda, questions about its impact on returns have arisen.

During times of both extreme exuberance and market crisis, companies with higher sustainability ratings have outperformed their respective benchmark. However, there is still a long way to go. Even with the record issuance of green bonds in 2019, they make up just 3% of all global bonds issued.

As demand for sustainable investments quickly grows, could it spell a watershed decade ahead for green bonds?

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Mapped: 30 Years of Deforestation and Forest Growth, by Country

Where are the world’s forests still shrinking, and where are they seeing net gains? We map deforestation by country between 1990-2020.

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Global Deforestation and Forest Growth over 30 Years

Forests are the great carbon capturers of our planet, and they are a key source of wildlife habitats and vital resources for people around the world.

But deforestation is threatening this natural infrastructure, releasing carbon into the atmosphere while simultaneously reducing wildlife diversity and making our environment more susceptible to environmental disasters.

This graphic looks at global deforestation and forest growth over the past 30 years, mapping out the net forest change by country and region using data from the UN’s Food and Agriculture Organization (FAO).

The State of Deforestation by Region

Today, forests make up around 31% of the Earth’s total land area, spanning 15.68 million square miles (40.6 million km²). Over the past three decades, the world lost a bit more than 4% (685,300 square miles) of its forests, which equates to an area about half the size of India.

Europe and Asia were the only two regions which had significant overall forest growth during this time period, while Oceania saw no significant change and North and Central America saw a slight reduction.

RegionForest area change (1990-2020)Percentage change in forest area
Asia+146,718 sq mi+6.64%
Europe+88,803 sq mi+2.34%
Oceania+1,057 sq mi+0.0015%
North America and Central America-7,722 sq mi-0.34%
South America and the Caribbean-501,932 sq mi-13.30%
Africa-409,268 sq mi-14.29%
Global total-685,401 sq mi-4.19%

Source: UN Food and Agriculture Organization

Africa along with South America and the Caribbean were the regions with the greatest amount of net forest loss, both losing more than 13% of their forests over the past 30 years. This is largely because these two regions have large amounts of forest area available, with the underlying land in high demand for agriculture and cattle-raising.

Although the overall forest loss around the world is massive, the rate of forest loss has slowed down over the past three decades. While an average of 30,116 square miles were lost each year between 1990 to 2000, between 2010 to 2020 that number has dropped to 18,146 square miles, showing that the rate of overall loss has fallen by almost 40%.

The Countries and Drivers of Deforestation and Forest Growth

Despite an overall slowing down of forest loss, certain countries in South America along with the entirety of Africa are still showing an increase in the rate of forest loss. It’s in these regions where most of the countries with the largest reduction in forest area are located:

CountryNet change in forest area (1990-2020)Percentage change in forest area
Brazil-356,287 sq mi-15.67%
Indonesia-101,977 sq mi-22.28%
Democratic Republic of the Congo-94,495 sq mi-16.25%
Angola-48,865 sq mi-15.97%
Tanzania-44,962 sq mi-20.29%
Myanmar-41,213 sq mi-27.22%
Paraguay-36,463 sq mi-36.97%
Bolivia-26,915 sq mi-12.06%
Mozambique-25,614 sq mi-15.29%
Argentina-25,602 sq mi-18.84%

Source: UN Food and Agriculture Organization

Brazil, home to most of the Amazon rainforest, saw 356,287 square miles of net forest loss, largely fueled by farmers using the land to raise cattle for beef. It’s estimated that 80% of the deforested land area of the Amazon has been replaced with pastures, with the resulting beef production known to be among the worst meats for the environment in terms of carbon emissions.

The other great driver of deforestation is seed and palm oil agriculture. These oils account for about 20% of the world’s deforestation carbon emissions, and their production concentrated in Indonesia and Malaysia is now expanding to other Asian countries along with Africa.

While the demand for beef and palm oils drives deforestation, initiatives like the Central African Forest Initiative (CAFI) are providing incentives to protect forest land.

Select countries in the European Union along with the United Kingdom and South Korea have committed $494.7 million to six central African nations (Cameroon, Gabon, Central African Republic, Democratic Republic of the Congo, Equatorial Guinea, and the Republic of Congo) for them to preserve their forests and pursue low emission pathways for sustainable development. The initiative has seen $202 million transferred thus far and an anticipated reduction of 75 million tons of CO2 emissions.

Forests and the Climate Crisis

It’s estimated that forests absorb around 30% of the world’s carbon emissions each year, making them the greatest and most important carbon sinks we have on land. When you pair this with the fact that deforestation contributes around 12% of annual greenhouse gas emissions, the importance of forest preservation becomes even more clear.

But we often forget how much forests protect our environment by acting as natural buffers against extreme weather. Forests increase and ensure rainfall security, making nearby land areas significantly less susceptible to wildfires and natural droughts in hot and dry seasons along with flooding and landslides in wet seasons.

With every dollar invested in landscape restoration yielding up to $30 in benefits, reducing deforestation and investing in reforestation is considered an effective way to reduce the difficulty and costs of meeting climate and environmental protection goals. This is without even considering the benefits of maintaining the world’s largest wildlife habitat and source of species diversity, the home of the nearly 70 million indigenous people who live in forests, and the livelihood of 1.6 billion people who rely on forests every day.

Preserving and Regrowing Forests for the Future

Despite the short-term acceleration in forest loss seen in 2020, there have been positive signs about forest regrowth coming to light. A recent study found that previously deforested land can recuperate its soil fertility in about a decade, and layered plants, trees, and species diversity can recover in around 25-60 years.

Along with this, in some instances these regrowing “secondary forests” can absorb more carbon dioxide than “primary forests”, giving hope that a global reforestation effort can absorb more emissions than previously thought possible.

From better financial incentives for local farmers and ranchers to preserve forest area to larger scale policies and initiatives like CAFI, curbing deforestation and promoting reforestation requires a global effort. Reversing forest loss in the coming decades is a daunting but necessary step towards stabilizing the climate and preserving the environment that billions of animals and people rely on.

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Agriculture

Mapped: Food Production Around the World

Where does your favorite food come from? Here’s an interactive look at global food production.

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global food production

Mapping the World’s Food Production

In a world of nearly 8 billion people, food security is one of the greatest challenges we face.

Roughly 700 million people suffer from hunger every day, lacking access to staple foods like maize, rice, and wheat. While many people often take the availability of food for granted, it’s worth taking a moment to identify and acknowledge where the food we consume comes from.

From staple crops to exotic fruit, this interactive map from Our World in Data shows global food production using data from the United Nations Food and Agriculture Organization (FAO).

A Closer Look at Staple Food Production

Which countries produce the foods that we eat every day? Here’s a look at the top producers of three of the world’s most important staple foods.

Maize (Corn)

Corn or maize is the most widely-grown crop in the Americas, with uses in various industries. While the crop is native to Central America, it is grown in all parts of the world.

Country2019 Production (million tonnes)% of Global Production
U.S. 🇺🇸347.030.2%
China 🇨🇳260.822.7%
Brazil 🇧🇷101.18.8%
Argentina 🇦🇷56.94.9%
Ukraine 🇺🇦35.93.1%

The U.S. is by far the largest corn producer and exporter, with large amounts of corn coming from the states of Iowa, Illinois, and Nebraska. Over 90 million acres of land is used to grow corn, an area nearly the size of Montana.

The U.S. is also the largest consumer of corn, followed by China, the second-largest producer and consumer.

Wheat

First domesticated in the Middle East, wheat is a versatile crop that grows well in temperate climates. Wheat is usually milled into flour, which is then used to make bread, pasta noodles, biscuits, and other common foods.

Country2019 Production (million tonnes)% of Global Production
China 🇨🇳133.617.4%
India 🇮🇳103.613.5%
Russia 🇷🇺74.59.7%
U.S. 🇺🇸52.36.8%
France 🇫🇷40.65.3%

China and India combined for nearly 31% of global wheat production in 2019, with Russia, the U.S., and France producing smaller but significant amounts of the crop.

Rice

Chinese hunter-gatherers first cultivated rice 9,400 years ago along the banks of the Yangtze River. It’s now the third most-produced crop in the world and a staple food for over 3.5 billion people, primarily in Asia.

Country2019 Production (million tonnes)% of Global Production
China 🇨🇳209.627.7%
India 🇮🇳177.723.5%
Indonesia 🇮🇩54.67.2%
Bangladesh 🇧🇩54.67.2%
Vietnam 🇻🇳43.55.8%

It’s no surprise that the countries with the biggest populations are the top producers of rice. Furthermore, 9 of the top 10 rice producers are in Asia, which is a testament to how important it is for people living in the region.

While maize, wheat, and rice are important staple foods, our diets are shaped by various factors, including geography and culture. Explore the origins of the foods you like using the above interactive visualization.

How to Use the Interactive

For an overview of food production for a particular crop, select the crop using the “Food” drop-down menu, and the map will update automatically. Countries with darker shades of green produce more of the crop, and vice versa. You can hover over countries to see more in-depth production statistics.

food production

To zoom into a specific continent, use the drop-down menu on the right where “World” is selected, and select a region of your choice.

For a historical overview of food production, click the play icon on the bottom left corner of the map, and you’ll see how the biggest producers of a crop changed over time.

food production

By clicking the “Chart” button on the bottom left, and selecting the country (or countries) of your choice, you can see production trends over time. You can also look at the data in a tabular format by clicking on the “Table” button.

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