The S&P Green Project Bond Index: Capturing a deeper shade of green

The S&P Green Project Bond Index: Capturing a deeper shade of green

Green project bond indices can serve as the basis for environmentally friendly and sustainable investments by tracking bonds that fund projects with clear environmental benefits, mitigating the impact of climate change without reliance on a green label.

In the future, a large number of green project bonds may be issued without the green label due to the nature of the underlying green assets being financed. It is conceivable that some issuers may also label their green project bonds as “green bonds” if such labeling provides differentiation and funding benefits.

The S&P Green Project Bond Index (GPBI) complements the S&P Green Bond Index (GBI), and together these indices serve as market benchmarks for the evolving green bond universe.

By applying a rigorous, transparent set of criteria related to the green assets being financed, it is possible for the S&P GPBI to identify clearly a slice of the fixed income market that is “green,” but not “green labeled.”

By tracking bonds that fund climate and environmental projects, the S&P GPBI has the potential to meet investor demand for liability matching, inflation protection and stable returns, while meeting environmental objectives.

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