Solactive AG has launched today the Solactive Green Bond Index, first index in the market to provide exposure to green bonds.
The green bond concept was developed in 2007 by the World Bank and the European Investment Bank. Green bonds are now commonly defined as fixed-income securities that raise capital for a project with specific environmental benefits, where the proceeds go to climate mitigation or adaptation efforts. Green bonds are part of the overall climate themed bond market, which has been rapidly increasing over the last years, amounting to currently USD 346 billion, with a further growth expectation according to the Climate Bonds Initiative.
The Climate Bonds Initiative is a not for profit organization working at mobilizing the bond market for climate change solutions. The organization runs several investor-focused projects, including a regular monitoring and in-depth analysis of the climate-themed bonds market – see their 2013 Report “Bonds and Climate Change – the State of the Market,” funded by HSBC.
Astrid Ludwig, Head of the Bond & Complex Team at Solactive, said: “Most of the responsible investment products available so far have been launched on the equity space. We are enthusiastic at the idea of offering this new, innovative index solution which clearly fills a gap in the market, as we see a tremendous interest generated by green bonds.”
Sean Kidney, CEO of the Climate Bonds Initiative, said: “As it enters its next stage of growth, the green bonds sector needs more than ever an ecosystem of services for investors. We’re thrilled with the launch of the Solactive Green Bond Index, as green bond indices are a good starting point for those wishing to create financial products in that space.”
The Index universe is composed of all bonds that are categorized as green bonds, according to the Climate Bonds Initiative. To be included in the Index, bonds need to have an amount outstanding of at least 100 million USD and a minimum remaining time to maturity of 6 months. Convertible bonds and inflation-linked bonds are excluded. All bonds are weighted according to their market value with a maximum of 5% per bond.
For more information, please visit the Solactive Green Bond Index webpage.
Solactive is also planning on launching a Solactive Climate Themed Bond Index later on this year