LowEmissionAsphalt-136pg-WhitePaper-May2023

P a g e | 30 Green Bonds - another prominent instrument for financing this private sector investment is the green corporate bond, a long-term fixed income debt security that also is gaining popularity. Green corporate bonds are similar to conventional corporate bonds, but they contain provisions that direct the funding raised from the bond’s issuance towards environmental projects. The issuance of green corporate bonds has grown rapidly in recent years, totaling almost $400 billion in 2021 (Figure 12a) . As of 2021, green corporate bonds account for nearly six percent of global corporate bonds outstanding, up from less than one percent in 2014 (Figure 12b) . During this period of rapid growth, green bonds have been cited as a potential driver of large-scale, rapid climate investment. And there are many very high-quality issuers. Some have been criticized, however, for their lack of standardization, high cost of issuance, and the potential for ”greenwashing” , 54 or misusing a green label for a bond that does not finance eligible green projects. Furthermore, it remains unclear if green bonds actually incentivize green investment, or if they are an instrument that merely identifies green investments that otherwise would have been made and financed with a conventional bond. Figure 12 – Green Corporate Bond Issuance 2014-2021 Source: Federal Reserve 54 greenwashing is the use of carbon offsets of poor quality; low audibility; or ineligible assets or technologies.