Such products, though not new in the finance world, saw demand rise at a faster pace after the Paris climate change agreement was reached in December 2015. The accord, which came into effect in November 2016, will see nearly 200 countries work to reduce greenhouse gas emissions with the aim of containing climate change.
Moody`s Investors Service said in January this year that green bond issuance rose 120 percent in 2016 to a record $93.4 billion, and it has the potential to hit $206 billion in 2017.
Reflecting the wider global appetite for green investment products, commonly known as sustainable or impact investments, a report published last month by the Global Sustainable Investment Alliance (GSIA) showed that socially responsible assets under management grew to $22.9 trillion at the start of 2016, 25 percent more than 2014. Such assets account for 26.3 percent of total managed assets.
Industry players interviewed by CNBC said global investors are increasingly considering environment, social and governance (known in the industry as ESG) factors. That shift comes alongside growing awareness of climate issues — from the melting Arctic ice caps to Southeast Asia`s trans-boundary haze pollution.
"Impact investing makes sense to investors because it allows them to diversify their portfolios with a new asset class… As years pass and more actors are participating in impact investing, this inspiration is paired with results that show that positive impact can be generated alongside financial returns," said Durren Shahnaz, founder of Impact Investment Exchange, a platform that helps social enterprises raise funds.
As environmental and social development issues continue to dominate headlines, tighter regulations have come into force, requiring companies to be more transparent about their commercial activities and to improve governance standards, the interviewees said.
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