Water comes out bottom in new climate bonds survey

A new report published today by the Climate Bonds Initiative and HSBC found that out of $174 billion of outstanding bonds identified as “fully aligned” with climate-related activities, water was the only category to have zero representation.

Bonds from the transport and energy sectors together accounted for 85% of climate-related issuance between 2005 and February 2012, according to the document. Meanwhile, bonds deemed to be “conditionally aligned” to the water sector – which include those issued by water utilities and water and sewer obligations issued by US municipalities – dwarfed the overall total, at $197 billion.

“Issuers could link bonds more clearly with water conservation and flood prevention measures,” the report suggests as a way of raising the profile of the sector for climate-conscious investors.

While so-called “water bonds” have been issued by such borrowers as the Asian Development Bank, the proceeds of such deals are not specifically ring-fenced for water projects.