{"id":39090,"date":"2023-10-27T15:11:00","date_gmt":"2023-10-27T19:11:00","guid":{"rendered":"https:\/\/test.greenmoney.com\/2025\/?p=39090"},"modified":"2023-10-31T12:00:22","modified_gmt":"2023-10-31T16:00:22","slug":"connecting-impact-bonds-and-the-green-building-movement","status":"publish","type":"post","link":"https:\/\/test.greenmoney.com\/2025\/connecting-impact-bonds-and-the-green-building-movement\/","title":{"rendered":"Connecting Impact Bonds and the Green Building Movement"},"content":{"rendered":"
>> Back to November 2023 Issue<\/a><\/div>\n

\"Benjamin<\/a>When thinking about ways to help the planet and its people, investments in fixed income rarely come to mind \u2014 but they should! No longer are bonds just the sleepy, safe, under-attended corner of one\u2019s portfolio. Today impact-targeted fixed income (or \u201cimpact bonds\u201d) offer a rapidly expanding opportunity to directly support the type of change you are seeking in the world. At Praxis Mutual Funds<\/span>\u00ae<\/span>, we\u2019ve grown our use of these bonds from 12 percent to 36 percent over the past 10 years, while still maintaining a broadly diversified fixed income portfolio. This mirrors the explosive growth and innovation we\u2019ve seen in the green, social, and sustainable bond space as a whole during this period \u2014 including product that supports the green building movement.<\/span>\u00a0<\/span><\/p>\n

The Evolution of Impact in Fixed Income Investing<\/span><\/h2>\n

I began thinking about the possibilities for positive impact bonds back in 2006 when the International Finance Facility for Immunisation (IFFIm) issued a bond that served to dramatically increase the rate of immunization against critical diseases in the developing world. The direct connection between the bond investment and the impact on lives was incredibly clear. Through the Praxis Impact Bond Fund, we have been involved in many different \u201cfirsts\u201d in the U.S. dollar impact bond market. We were involved in the first U.S. dollar green bond in 2009, the first green asset backed security, the first social bond and many more.<\/span><\/p>\n

Each of these bonds have differing levels of impact, and each has helped us understand what might be possible through targeted, impact bonds in varying ways. At Praxis, we don\u2019t want \u201cperfect to be the enemy of the good\u201d and recognize that progress comes in many forms. Rather, we believe that through product innovation, proper due diligence, increasingly high standards and robust reporting, the money and, most importantly, the impact will keep flowing.<\/span><\/p>\n

The need for impact investments crosses many different sectors and industries, but green buildings are among the most important for several reasons. Green buildings can be developed in commercial, industrial, and residential areas and they are integral to lowering our collective energy use. According to the International Energy Agency (IEA), the \u201coperation of buildings account for 30 percent of global final energy consumption and 26 percent of global energy related emissions.\u201d<\/span>1<\/sup>\u00a0Buildings are central to our lives because they encompass our homes, our workplaces, and the places where we eat and shop. Reducing the use of fossil fuels to heat and cool these buildings makes a critical contribution to our climate-challenged planet.<\/span><\/p>\n

Understanding Bonds for Green Building<\/span><\/h2>\n

There are four main categories where the impact \u2014 and specifically \u201cgreen\u201d \u2014 bond market intersects with green buildings. Green bonds are securities issued with a clear environmental impact focus. In some cases, the money has already been spent for the intended green purpose or the issuer has detailed specific areas where the money will be used. Three of those four green bond categories are related to residential green buildings including: multi-family housing, single-family housing, and green home improvement loans. The final green bond category is non-Agency CMBS (Commercial Mortgage-Backed Security) that have green attributes.<\/span><\/p>\n

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