5 - What are green bonds?
[Speaker 1] Yes! Call me Bond. Green Bond.
[Speaker 2] Green Bond? Nice try. It’s already taken.
[Speaker 1] Nope. Pretty sure I just invented it.
[Speaker 2] Think again, buddy! The bank beat you to it. A green bond is actually a type of bond, a loan, if you like. Except the money that is raised goes towards financing green projects.
[Speaker 1] Green projects?
[Speaker 2] Like building a wind farm or financing research and eco-friendly engines, thermal insulation, renewable energy. That kind of stuff.
[Speaker 1] Okay, so it's a bit like when I took out a loan to replace my oil boiler with a heat pump.
[Speaker 2] Exactly.
[Speaker 1] Ha, got it! And you get tax breaks, right?
[Speaker 2] No, but green projects are more appealing to investors because of their positive impact on the environment. It's also highly regulated to make sure the projects funded by green bonds meet the criteria set by the United Nations.
[Speaker 1] And how do we know that these green bonds are actually being used for green projects?
[Speaker 2] Trust me, there are loads of checks to make sure there's no green washing going on. That could prevent those from investing in green projects because it looks good to invest. It would be like getting a tax break for replacing your oil boiler with a coal boiler.
[Speaker 1] Do all companies do green bonds?
[Speaker 2] It's actually fairly recent. It's only been around for 10 or 12 years, but it's really starting to take off.
[Speaker 1] So, is it a good investment? Does it work?
[Speaker 2] Yes. People are more environmentally conscious these days. Companies are also using green bonds to promote their business, particularly in projects the public doesn't know about. It's a good way to boost their image and reputation.
[Speaker 1] Do you think I could issue a green bond? You know, for my image?
[Speaker 2] Well, no, you can't. It's only for businesses. As for your image, watch… All right! Now I'm called Bond. Green Bond.