Save the world while growing your money!
You can do both with this product!
Today I’m going to talk about a different kind of product that you can invest in, which can help save the world from global warming (and also give you returns in the process)
These products are known as Green bonds.
First, what is a green bond?
Well, a “green bond” is just like any other bond - where the issuing entity (the government, a company etc) raises money from the public. The key difference being that the money that is being raised from the public is used for specific environmental projects - think renewable energy, pollution prevention, waste management etc.
Green bonds have been in existence in India since 2019.
So, why am I talking about it now?
Because Sovereign green bonds are now being issued - these are green bonds issued by the government. The money that we as investors put in, will be invested in projects that help the environment, like clean transportation, renewable energy, pollution prevention etc. (There are 9 such categories in which the money can be invested)
The government is planning to issue bonds worth INR 16,000 crores this year alone.
How have green bonds done globally?
Ironically, the countries which need climate change projects the most are doing poorly in green bonds.
For example, Africa has only 0.18% of its bond market in green bonds. In Europe, on the other hand, green bonds account for 1.9% of the overall bond market.
It’s simple - countries like Africa don’t even have the basic roti, kapda, makaan needs met. Environmental sustainability comes much, much later!
Anyway, coming back to India..
Are green bonds safe?
Well, while corporate green bonds are already present, sovereign green bonds are now being issued by the government. And because the government itself is the issuer of the bonds, they’re safe (unless the government defaults; but if that happens, we’ve got bigger problems, lol)
So should you invest in them?
Well, no and yes.
First off, since these are sovereign bonds (and therefore safe), the returns on them are anyway low.
Second, historically, green bonds around the world have given slightly lower returns compared to their non-green counterparts. As per research, the returns for green bonds have been about 0.08% lower than routine, non-green bonds.
So the bonds may probably not give you the best returns.
But we do have some responsibility towards the environment (or towards the next generation), right?
So it’s worth considering, honestly 🙂
An announcement (and help)..
As most of you may know, we shut down our company (Jackfruit) 2 weeks ago 😔
But hey! Like Flatheads, we’re also “down, but not out!”
The weekly newsletters are going to continue. I love writing to you guys, and will keep doing so!
Also, I’m back to the drawing board and trying to build something that we can offer to you guys. But for that, we need something from you. It’ll mean the world to me if you could share your basic details here for us to build better. It’s completely anonymous and won’t take more than 20 seconds!
If you learnt something new from this newsletter, why don’t you share it with friends on WhatsApp? I’m really trying to reach 10,000 subscribers by the end of this month - we are at 8,623 now!
See you next week!
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