Increasing simplicity and clarity in the market for environmentally-focused investments may help investors construct portfolios that generate greater returns and fewer carbon emissions, McGuireWoods London debt finance partner Marc Naidoo told Net Zero Investor in a Jan. 13, 2023, story on green bonds.
Green bonds provide financing for projects that stand to benefit the environment, and a boom in green investing during the pandemic brought a proliferation of options that threatened to confuse investors. The market has since slowed, but Naidoo told Net Zero Investor that the shakeout may end up increasing the quality and accountability of those green bonds that are issued.
“Whilst some would say that an increase in regulation creates a more standardised market with stricter guidelines, the other side of the coin is that the more regulations there are the more loopholes come into existence that can be exploited. Confusion reigns supreme where there are multiple standards to adhere to, and whilst regulators are trying to do the right thing, sometimes this can be counter intuitive,” Naidoo said.
Naidoo focuses his debt finance practice on emerging markets, with a particular emphasis on Africa and sustainable finance, and is a member of the five-person executive committee leading McGuireWoods’ ESG task force.