A green bond, like any other bond, is a fixed-income financial instrument for raising capital through the debt capital market dedicated to climate-mitigation, adaptation, and other environment-friendly projects. Green bonds are an increasingly attractive mechanism for both private and public sector organizations to raise capital for projects, assets or other activities that benefit the economy, environment and society.
The green bond market has grown from less than $1billion in 2007 to over $41 billion in 2015 (CBI 2015a) with over 80 percent of bonds issued going to climate-related infrastructure and energy efficiency projects.
Kenya is at an advanced of tapping into the Green Bonds Market through the issuance of a Sovereign Green Bond. In March 2017, the Kenya Bankers Association (KBA), Nairobi Securities Exchange (NSE), Climate Bonds Initiative (CBI) and Financial Sector Deepening Africa (FSD Africa) in conjunction with the Dutch Development Bank FMO and the International Finance Corporation (IFC) launched Kenya’s Green Bond Programme. The Programme is aimed at positioning key financial institutions to tap the growing investor demand for green investments and build the requisite structures and frameworks to tap into the Green Bond market.