As Green Bonds Boom, So Do ‘Greenwashing’ Worries

Trillions of dollars of investment are needed to combat global warming. Enter green bonds, a way for issuers to raise money specifically for environmentally friendly projects -- such as renewable energy or clean transport -- and to be able to boast about it publicly. Fund managers also like the notes as a way of meeting growing investor demand for sustainable options. The market, which opened slowly more than a decade ago, has boomed in recent years, helping spur development of other socially conscious debt products. Because investors face the challenge of judging whether a note is truly green, regulators are working on standards to help guard against greenwashing -- misleading claims about just how good a friend to the environment an issuer is.

Green bond proceeds can go toward new or existing projects that are meant to have positive environmental or climate effects. Inside that, the range is vast. The field covers energy, transport, waste management, building construction, water and land use. Some definitions also include communications and information technology.