Environmental Bonding

March 2020

Want to invest in preserving the environment? In 2020, Germany’s finance ministry plans to issue state “environmental bonds,” from which the money raised will go exclusively toward fighting climate change.

The move comes as the German government is trying to better integrate its financial and environmental policies, forming an advisory council to that end. It wants to ensure that its lending and investment decisions contribute to reducing Germany’s greenhouse gas emissions rather than exacerbating the problem. The finance ministry has suggested screening the national budget for “green expenses.”

Investors shouldn’t put their money into environmental bonds with the expectation of getting rich, though. Interest rates on German government bonds are currently negative, meaning that holders actually lose money on them.

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