May 2012: CDC Climat has published a brief on the use of “green bonds” to finance climate change mitigation and the transition to a green economy, titled “Financing the transition to a green economy: their word is their (green) bond?” Described as a form of socially responsible investments, green bonds are financing instruments intended to encourage institutions to invest in initiatives with a climate component.

The paper describes the extent to which various institutions and organizations are using green bonds, and outlines some of the challenges to their increased use, such as regulatory risks and lack of capacity. The paper concludes by highlighting the potential of green bonds to address early-stage funding issues, stating that green bonds help finance projects that are made profitable by climate tools, such as emissions trading.

CDC Climat is France’s Caisse des Dépôts’ subsidiary launched in 2010 to tackle climate change as a long term investor. [Publication: Financing the Transition to a Green Economy: Their Word is their (Green) Bond?]