The list of so-called climate-friendly investment products is getting longer by the day.In just the past week, officials at Goldman Sachs Group Inc. said they’re looking into the prospect of developing green equity for clients, and a group of crypto-miners said they’re considering the sale of “green Bitcoin.”It’s clear that demand for these types of investments—at least at the moment—is enormous. One only has to look at the market for green bonds, where issuance this year is almost triple what it was a year ago, and ESG-focused exchange-traded funds, which have attracted net inflows for 50 straight weeks.It’s also clear that there’s increasing concern about the lack of consistent regulatory oversight in this corner of capital markets. Earlier this month, the U.S. Securities and Exchange Commission indicated that it plans to move ahead quickly on requiring new corporate disclosures on climate change and other environmental, social and governance factors.And then last week, President Joe Biden ordered the creation of a strategy to quantify the risk climate change poses to both public and private financial assets. In the U.K., Chancellor of the Exchequer Rishi Sunak is pushing the Group of Seven economies to impose mandatory reporting of environmental risks on their big companies.
That brings us back to green equity and a so-called green Bitcoin.
The idea behind green equity is to raise capital for projects intended to help the environment. Swedish firm K2A got the first green label almost exactly a year ago from bankers at Stockholm-based Swedbank AB. Shares of K2A, a company which makes apartments out of wood, have risen about 100% in the past 12 months, outperforming the 45% advance of the OMX Stockholm 30 Index.Goldman Sachs may add its weight to the market for green equity. John Goldstein, the firm’s head of sustainable finance, said in a recent interview that the bank is experimenting with the idea. “When and where and how would we get to actual green equity, I think we’ll see,” he said.In the world of Bitcoin, some are working to sell coins whose transactions are verified on the blockchain by computers supposedly powered only by renewable energy.
“There’s a market that doesn’t know it yet,” said Sheldon Bennett, chief executive officer of crypto miner DMG Blockchain Solutions Inc. His firm has had discussions with “multiple banks and financial institutions” that want to buy Bitcoins that can fulfill increasing demand for ESG compliance, he said. “More and more, they are saying if there’s an option, I am willing to pay a premium to get it,” he said.
Sustainable finance in brief
BP starts offshore wind recruitment push as the energy giant’s green ambitions grow. The surge in ethical finance is making ESG a hot item on resumes. Ethereum closes in on a long sought fix to cut energy use by 99%. The G7 agreed to phase out fossil fuel subsidies. If U.K. financial firms were their own country, they would have a bigger carbon footprint than Canada.
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