In recent years, Social and Environmental sustainability has been at the forefront of conversation for governments and multinationals, particularly in Australia where extreme weather conditions, such as the bushfires and floods experienced earlier this year, have brought about deeper conversation on what businesses could be doing better. This first sentence is very long. One outcome of this is that Financial Markets across the globe have taken steps towards a greener perhaps sustainable future with the creation of a market for Green Bonds.
Green Bonds are fixed income debt intstuments that finance projects. These projects aim to have a positive impact on society by promoting environmental sustainability, such as low carbon and green buildings, renewable energy projects, clean transportation & solar projects. On the surface this emerging green market appears to be the way of the future.
As a recent graduate and in your first role as a commercial banker at a large financial institution, you are working with your team on a deal with one of your largest clients - an Australian retailer who wants to issue a $400 million green bond. The retailer has stated the proceeds will be used to fund the installation of solar hardware at all service locations and the reduction of plastic wrapping at their stores. This retailer also owns a chain of liquor stores and gambling chains.
While you see the value in Green Bonds, something is not sitting well with you when you learn more about the details of this transaction.
What would you do?
- What ethical considerations would you give to this dilemma?
We encourage you to post your answers in the comments so we can create a healthy discussion, with the aim of learning from our peers, becoming aware of differing perspectives and challenging our own biases.
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