Amazon to bolster climate plans with green bonds
The name’s bond, green bond. The future of finance is about more than just acquiring ‘green’ or money, but convincing more of us to invest our money in green causes.
Green bonds are the perfect vehicle for governments and corporations alike to do this, and now tech juggernaut Amazon is entering the fray, planning to back up its climate initiatives by funding them through a $1 billion green bond.
Many have queried what one of the wealthiest and most profitable organisations on the planet intends to do with its sizable wealth in order to benefit the planet, and this green bond is a tantalising glimpse at the future as Amazon sees it.
Bold steps by big companies will make a huge difference in the development of new technologies and industries to support a low carbon economy.– Christiana Figueres, Former Executive Secretary UN Framework Convention on Climate Change
The bonds that bind us
Amazon has been doing more than just collecting cheques for helping service our spending habits, entertaining us with shows, films and delivering goods to our doors over lockdown. The tech giant is aiming to achieve net zero carbon emissions by 2040, using a fleet of EVs to deliver goods, having placed an order for 100,000 from Rivian already.
The Climate Pledge Fund sees Amazon committing $2 billion towards helping support the development of technology and services to aid the transition of economies towards net-zero carbon emissions. But such bold plans require sources of financing to begin with, or else they become just unfulfilled pledges which sound good but don’t deliver as you would expect from a business specialising in delivery itself.
Explaining its plan to issue Green, Social and Sustainability Bonds, Amazon intends to add to a growing pool of sustainable bonds already on the market, putting the funds raised to good use. While the precise plans are yet to be finalised, they could go towards them developing the infrastructure to help Amazon use its EV delivery fleet sustainably over the long term. Not only that, but the funds could go towards developing renewable energy investment needed to create new installations which feed green electricity into the grid.
Thinking about the future
The sustainable bond market is in an early growth phase, with estimates that its total value could equal $1 trillion for 2021 as a whole. Such a sizable and thriving sector is equivalent to just over one per cent of global GDP, reflecting the growing clout of sustainability in global finance.
One of the biggest boosters to this boom in green bonds entering the market is assistance from governments including the UK Government, which plans to issue no fewer than £15 billion in green gilts over the course of 2021. Finance and politics both play a role in making progress happen, but the best solution to tackling the challenge of transitioning our economies away from the practices of the past requires co-operation between the two.
The etymology of bonds goes back to the concept of a special instrument binding an individual to pay a sum of money to another. Governments and investors alike are bound together, whether they like it or not, to use the power of the bond markets to finance the projects of the future. Protecting the planet comes at a cost, and green bonds could be the way to pay towards it.