by Benjamin Bailey, Praxis Mutual Funds
When you think about ways to help the planet and its people, fixed income investing rarely comes to mind – but you should! Bonds are no longer just the sleepy, safe and under-visited corner of someone’s portfolio. Today, impact-focused fixed income (or “impact bonds”) offer a rapidly growing opportunity to directly support the kind of change you want in the world. At Praxis Mutual Funds, we have increased our use of these bonds from 12 percent to 36 percent over the past decade, while still maintaining a broadly diversified fixed income portfolio. This reflects the explosive growth and innovation we have seen over this period in green, social and sustainable bonds as a whole – including products that support the green building movement.
The need for impact investments spans many different sectors and industries, but green buildings are among the most important for several reasons. Green buildings can be developed in commercial, industrial and residential areas and are an integral part of reducing our collective energy consumption. According to the International Energy Agency (IEA), the “operation of buildings is responsible for 30 percent of global final energy consumption and 26 percent of global energy-related emissions.”1 Buildings are central to our lives because they are our homes, our workplaces, and the places where we eat and shop. Reducing the use of fossil fuels to heat and cool these buildings makes a crucial contribution to our climate-challenged planet.
Understanding green building bonds – There are four main categories where the impact – and specifically the ‘green’ – bond market intersects with green buildings. Green bonds are securities issued with a clear focus on environmental impact. In some cases, the money has already been spent for the intended green purpose or the issuer has identified specific areas where the money will be used. Three of these four green bond categories relate to green homes, including: multifamily, single-family, and green home improvement loans. The final category of green bonds is non-Agency CMBS (Commercial Mortgage-Backed Security) with green features.
Read the full article here – https://greenmoney.com/connecting-impact-bonds-and-the-green-building-movement