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Slow growth in Canadian green bonds market

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Despite federal and provincial government commitments growth in Canada’s green bonds market has been slow, according to a report from the Smart Prosperity Institute (formerly Sustainable Prosperity) and The Climate Bonds Initiative.

The jointly released fifth annual Bonds and Climate Change Report 2016: State of the Market in Canada focuses on international efforts to build infrastructure for the low-carbon economy and to green investment portfolios are expected to translate into growth of the green bond market globally.
 
“Green bonds have the potential to be a key tool to help finance Canada’s transition to a low-carbon economy and to meet global, national and local sustainability objectives,” says Michelle Brownlee, the report’s co-author and director of policy at the Smart Prosperity Institute.
 
The State of the Market in Canada is a special supplement to the Bonds and Climate Change: The State of the Market global report and is prepared on an annual, collaborative basis between Climate Bonds Initiative and the Smart Prosperity Institute. 
 
Commissioned by HSBC, the report marks specific highlights from the current year, emerging trends, and identifies specific opportunities for market development of green bonds in Canada.
 
According to the report, Canada’s climate-aligned bond market has grown to CAD32.9 billion – making Canada’s markets the fifth largest in the world, while both the full climate-aligned universe and the CAD2.9 billion labelled green segment of the Canadian market have grown over the past year, though less quickly than had been expected.
 
The report points out that 2016 remains an important opportunity for the federal and provincial governments to take action and show the leadership necessary to accelerate market growth.
 
“The market needs strong leadership now. 2016 will be a tell-tale year for Canada. With leadership, 2016 can be the year Canada’s green bond market really goes mainstream,” Brownlee says.
 
“Canada has a unique opportunity to advance on green finance. Large pension fund investors and a well-developed banking and insurance sector can act as building blocks for a domestic and green bonds market to help meet Canada’s climate objectives and emissions goals,” says Sean Kidney (pictured), CEO Climate Bonds Initiative.
 
"In order for Canada's clean growth strategy to achieve scale and speed, we need a clean growth finance strategy. We estimate the government can help catalyse CAD100 billion of private sector clean growth investments over the next four years by doing two things: issuing green bond guidelines and providing credit enhancement and or tax advantages for green bonds," says Toby Heaps from Corporate Knights, report launch partner. 

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