What are green bonds funding – and not funding?

GLF Live with Paul Chahine

For the full GLF Live series, visit here.

In the small but growing field of sustainable finance, green bonds could be said to be one of the most “mainstream” financial instruments. In 2019, 12 years after the European Investment Bank issued the first green bond – a bond whose proceeds are invested in projects that yield environmental benefits – global issuance reached USD 259 billion.

But what exactly are these projects? Are investors using green bonds to the greatest effect in combatting climate change?

A new report from the Luxembourg Green Exchange examines these questions through the latest data on green bonds, most significant being that only about 3 percent of green bond proceeds go toward sustainable land use and biodiversity, while the vast majority are invested in energy, buildings and transportation.

In this GLF Live, report co-author Paul Chahine explained how the report’s findings fit into the bigger financial picture of how money is being spent to restructure global systems and reduce greenhouse gas emissions – where the money is going, and where, in some cases, it should be going instead.

Economist and climate finance expert Paul Chahine is currently the sustainability research manager at the Luxembourg Green Exchange (LGX). Before joining the LGX team, Paul refined his experience in climate finance as a consultant for the European Investment Bank climate team working mainly on climate finance tracking methodologies. Paul represents LGX in several working group and lead the LGX Academy initiative.

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