[Climate Bonds] First Green Bonds Index launched by Solactive; opens up opportunity for ETFs and improved access for smaller investors

Climate Bonds has posted a new item, ‘First Green Bonds Index launched by Solactive; opens up opportunity for ETFs and improved access for smaller investors

German Index company Solactive last week launched a green bonds index, the first to hit the market. The Index uses the Climate Bonds Initiative’s tracking list of green bonds as a base.

To be included in the Index, bonds need to have an amount outstanding of at least US$100 million and a minimum remaining time to maturity of 6 months. Convertible bonds and inflation-linked bonds are excluded. All bonds are weighted according to their market value with a maximum of 5% per bond.

As it enters its next stage of growth, the green bonds sector needs an ecosystem of specialist services for investors.

For example, Exchange Traded Funds (ETFs) are an investment option that allows investors to more easily participate in the market, with significant liquidity attractions. That brings more investors in, building demand for green bonds. ETFs generally depend on trackable indeces; a green bonds index should support the development of such options for investors.

The Solactive Green Bond Index is the first of what will hopefully be many developments this year in a green bonds ecosystem.