Group Promotes Green Finance Initiatives

SIFMA recently hosted a roundtable on green financing with leading financial services participants and members of Congress to drive a discussion between industry and lawmakers on the role of the capital markets in funding green initiatives.

The event was held on Capitol Hill and participants included Senator Chris Murphy (D-CT) and Representatives Carolyn Maloney (D-NY), Chris Gibson (R-NY) and Paul Tonko (D-NY). Industry participants included Kyung-Ah Park, Head of Environmental Markets Group, Goldman Sachs; Kurt Vogt, Managing Director, Sustainable Financing, HSBC; Pat Quinn, Managing Director, Nomura Securities International; Zachary Solomon, Vice President, Public Finance Group, Morgan Stanley.

“The capital markets provide a tremendous opportunity for advancing green initiatives and developing this capacity is essential to meet our common goal of financing sustainable and green growth. Discussions like today’s roundtable highlight the need for dialogue between the public and private sectors in advancing green projects, as more governments in the US, and throughout the world, turn to our global capital markets for funding to improve the vitality of their communities through clean and innovative projects,” said Kenneth E. Bentsen, Jr., president and CEO of SIFMA.

The roundtable emphasized the role of America’s capital markets in providing innovative financing solutions for the green energy sector, in turn fueling economic growth and job creation. Participants covered a variety of topics including an overview of green finance, innovations and trends, opportunities and challenges, and recommendations for next steps.

Innovative examples discussed include DC Water’s Century Green Bond and Hawaii’s Green Energy Market Securitization, both of which were underwritten by Goldman Sachs; HSBC’s Block Island Wind Farm project; and Morgan Stanley’s bond deals with the Commonwealth of Massachusetts and Renovate America asset-backed securitization.

In 2014, the global total of green investment – in both the public and private sector combined – increased by 18% from $331 billion to $391 billion, according to a Climate Policy Initiative (CPI) report. Private investment on its own has moved at an even faster rate, growing by 26% in 2014. It now represents two-thirds of the global market for green finance at $243 billion worldwide.
According to the Climate Bonds Initiative, $41.8 billion green bonds were issued in 2015, the largest amount in a year to date (up from $37 billion in 2014 and $11.5 billion in 2013), and 45.8% of 2015 issuance was toward renewable energy. Europe is the largest issuer region at $18.4 billion issued, followed by the United States with $10.5 billion issued. The U.S. is the largest issuer country of green bonds, driven mainly by municipal green bonds.