More companies are turning to green bonds to finance their projects. Here's how they work. This editorial article is part of Financing a SustainableFuture series in partnership with BofA_News.
The sale of green bonds — a form of debt that funds renewable-energy projects like wind or solar farms, for example — entered another stratosphere in 2021.
Investors, too, are demanding more green, as they want exposure to companies charting a path toward a zero-carbon economy. Banks, too, must help companies establish a green-bond framework that outlines which projects are eligible for green proceeds and comply with principles outlined by entities like the International Capital Market Association or the Climate Bonds Initiative.
In circumstances like this, borrowers can leverage that investor demand to extract a cheaper interest rate on their green bond, which can make all the extra work worthwhile.BNP Paribas
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