Sustainability On The Rise: An Analysis of the Green Bond Market Performance

Global Risk Institute

About this Report

Investors increasingly recognize the important role green bonds can play in achieving attractive returns. This is evidenced by studies showing that the value of the green bond market increased five-fold from 2007 to 2021. The recent federal budget program announced several new initiatives supporting sustainability – such as renewable energy, electric vehicles and electrification of industrialized processes. Green bonds provide numerous benefits to investors, including tax incentives, positioning an organization to meet ESG standards and providing opportunities to enhance ROI. The US green bond market tends to price bonds at a premium, whereas the Canadian green bond market tends to price at a discount. This discount has been narrowing, demonstrating that investors are increasingly willing to pay a higher price for green bonds in Canada. Demand continues for green financing as investing picks up in our post-pandemic world, offering an optimistic outlook and potential for green bonds as a sustainable investment option.