Green Bonds & Social Bonds
These financial instruments are basically obligations-like traditional corporate or government bonds-but enable capital-raising and investment for new and existing projects with environmental benefits. They are mostly issued with a clear “use of proceeds” promise: their proceeds are earmarked and reserved for green projects but are backed by the issuer's whole balance sheet.
In 2016, the Sustainable Development Goals (SDGs) by the United Nations have been defined and a global mission started to end poverty, fight inequality, and tackle climate change. As part of this initiative, leading supranational institutions like the World Bank IFC and other issuers, created bonds which aim solely to finance projects to benefit under-served populations, mostly in in emerging markets, and provide access to essential services such as basic infrastructure, health, and education.
Currently, the GGX displays more than 1,000 Green and Social Bonds on the GGX Finder©. The number of products will be expanded soon.
ESG linked ETFs
Three decades ago, ETFs were born. Since then, they have increasingly become part of the modern financial portfolio as transparent, inexpensive and flexible investment products. Meanwhile, there are more than 300 ETFs availalble which are linked to a dedicated ESG index. Across Europe, ESG ETFs have seen positive inflows every month since January 2017.
Currently, the GGX displays more than 370 ESG ETFs on the GGX Finder©. The number of products and trading venues will be expanded soon.
ESG Mutual Funds
ESG funds are actively managed portfolios of equities and/or bonds for which environmental, social and governance factors have been integrated into the investment process. This means the equities and bonds contained in the fund have passed stringent tests over how sustainable the company or government is regarding its ESG criteria. Currently, there are already more than 4,000 mutual funds available in Europe and the U.S. that are solely aiming to invest in sustainable companies–upward trending.
Currently, the GGX displays more than 5,400 ESG Mutual Funds on the GGX Finder©. The number of products and distribution countries will be expanded over time.
The three elements environment, social and governance are also playing an increasing role in indices. Dedicated ESG indices enable investors to invest in a collection of suitable companies based on clearly defined criteria. The index reflects the performance of these shares accordingly. The selection is made according to filter criteria as to whether and how well companies take into account environmental and social aspects as well as sustainable, positive corporate governance.
Currently, GGX has launched its first stand-alone ESG indices which are also available in the GGX Finder©. The number of indices will be expanded over time.
Green / ESG Lending
Environmental, social and governance factors have become increasingly important for private market investment transactions. Whether it is a private fund investing into a renewable energy project or a private debt vehicle for the mid-market segment, sustainability factors are relevant for investors (limited partners) and lenders/general partners globally.
GGX will add this asset class on to its platform in the near future.