State Street Global Advisors is launching a fund that will invest in ‘green’ bonds, which are issued by institutions such as the World Bank to raise money for environmentally beneficial projects.
State Street says the market of green bonds issued by supranational or multilateral development banks has grown from $1 billion to $5 billion in the last two years.
The fund will primarily invest in bonds issued by these players, which are of high credit quality and are backed by stable institutions with large balance sheets.
The firm said projects financing by green bonds generally aim to mitigate climate change or adapt to its effects.
“Investment managers are being asked more frequently by their clients to consider sustainability and environmental factors in their approach to the market,” said Chris McKnett, head of environment, social and governance (ESG) investing at SSGA, who said the decision to launch the fund was driven by market demand.
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