Green finance is a fast-expanding market. Driven by a global political push and new market dynamics, it is channeling investments into green technologies and infrastructure that support climate and other environmental-related policies. The challenge ahead is huge: The Paris Agreement--signed by 197 countries in December 2015--requires an estimated $1 trillion in annual investment to transition to a low-carbon economy.
In recent years, green bond issuance has become a bellwether of green finance. These self labeled green bonds have been issued to finance new projects and refinance existing projects with a positive environmental contribution. The market is growing rapidly, expanding by 127% annually since 2012 and S&P Global Ratings expects 2017 to be the fifth consecutive year of growth, with 130 billion of self-labeled green bonds issuance forecast for the full year. The universe for potential green bonds is even higher if one includes projects that have a positive environmental impact but are not labeled as "green".