As investment in Green Bonds continues its rapid rise, there has been some controversy over the exact definition– as we recently reported on Repsol's issuance of a €500 million bond.
Guidelines have been laid out in the Green Bond Principles, signed by 130 of the world’s largest banks and asset managers, designed to define the key characteristics of the financial products. However, standards are inconsistent across the globe.
For instance, the Repsol bond is to be used largely to improve the efficiency of oil refineries. While this reduces their carbon footprint, critics say it should not be termed a green bond as it extends the life of fossil fuel assets—but it still passed the Green Bond Principles. Elsewhere, China has its own rules that can include 'clean coal' facilities.
While there may be uncertainty in some circumstances, investors in the OPEN Cleantech Green Bond can be confident it truly is Green. The €500 million bond ONLY invests in clean technology companies and renewable energy projects.
The OPEN team takes great care to select projects that are well-run, best in their field and meet stringent criteria when it comes to their sustainability and environmental credentials. Indeed, OPEN takes its responsibility to ensuring any projects or companies it backs very seriously indeed.
A four-layer due diligence system is in place that not only thoroughly examines the market prospects, management structure, financial health and growth potential of prospective investments, but also ensures the environmental credentials of the technology or project identified are truly sustainable.
The first three tranches of the OPEN Cleantech €500 Million bond programme have been released after meeting the stringent requirements of the Irish Stock Exchange (ISE). The first three Series of Notes at €50m, £25m and $25m consecutively are now available to brokers, institutions and qualified investors, offering a predictable half-yearly income fixed at 7% per annum; in addition, there is an additional variable income element to further boost the return for the investors.
Issued by OPEN Cleantech Income Securities DAC (OPEN), based in Dublin, Ireland, the OPEN Cleantech Bond follows an income-based strategy in both mature and emerging markets.
Investments are targeted on proven and innovative cleantech and renewable energy technologies, and tangible assets (for example onshore wind and solar photovoltaic plants) which, where available, benefit from government-backed incentives including Power Purchase Agreements (PPAs), Feed-in-Tariffs (FiTs) and Renewables Obligations Certificates (ROCs).