RE Royalties Green Bonds Are Fighting Climate Change

January 13, 2021

We are increasingly facing the cataclysmic effects of climate change. Climate experts agree that limiting CO2 emissions and other greenhouse gases will help in reducing temperature rises to achieve sustainable levels. As part of the 21st century, it has been one of the biggest challenges that we all should help resolve. Governments, communities, and individuals must do their part to bring about this change. Various stockholders from different parts of the globe are no exception. In fact, the finance industry has come up with a solution wherein investment decision-making can now be based on environmental considerations. This is what we call green bonds, and RE Royalties Green Bond offering will help investors climate proof their portfolio.

What are RE Royalties Green Bonds?

RE Royalties Green Bonds will be used to finance investments made in renewable energy generation, energy efficiency management and sustainable infrastructure. As an investor, you can take advantage of the growing renewable energy sector, while making a measurable impact on the environment. The senior-secured Green Bonds will have a 5-year term and offer investors 6% interest, calculated annually, and paid quarterly. The minimum investment is $5,000 and the Green Bonds are eligible for registered accounts such as RRSP, TFSA, RRIF and RESP.

Green bonds have made it easier for companies and investors to do their part in this quest for sustainability. This type of bond works like a regular bond where a debt instrument is issued by a government or private entities. However, from the name itself, “green” indicates a bond used for “green” projects. This refers to environmental-friendly projects or activities. This can include projects like renewable energy, emission reductions, power plants, climate adaptation projects, and so on. Some of the objectives of green bonds are targeted at energy efficiency, environmental sustainability, and pollution prevention.

Green Bonds Have A Strong Pedigree And Strong Social Adjusted Interest Rates

In 2007, green bonds were initially introduced by some development banks such as the European Investment Bank and the World Bank. Eventually, corporate entities have also started participating which helped in making this financial instrument more accessible. Investors around the world are attracted to this tax-exempt bond. It is a more attractive investment compared to taxable bonds as it provides a solution to existing environmental and social issues. Green bonds typically carry a lower interest rate causing the market for these bonds to grow rapidly. Investors are learning how to invest their money responsibly. Moreover, companies are seeing the benefits of green bonds.

Green bond issues have been growing constantly since 2014. It is expected to hit $370 billion this year. So far, a French multinational electric utility named ENGIE has been the largest issuer of green bonds in 2019. Moreover, multinational companies such as Apple and Bank of America have been making headlines for being issuers of record levels of green bonds with $1.7 and $9.8 billion, respectively.

These environment-friendly bonds have grown so much but currently remain only 1 percent of the global bond market. Some tend to “greenwash” or question how “green” these bonds are since there are no universally accepted standards yet. Despite criticisms, the market for green bonds is surging. Green bonds are certainly an innovative financial instrument to help achieve global and national targets and are worth investing in.

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