October 28, 2021

Green bond “greenium” fuels sustainable investment in the Great Lakes St. Lawrence region

A green bond premium, or “greenium,” is fueling a wave of investments in environmental sustainability in the Great Lakes St. Lawrence region. A new analysis of green municipal bonds in the Great Lakes region as well as a new study on the growth of municipal bonds in the Great Lakes region finds that public bond issuers in the region can lower their borrowing cost by using green bonds. The “greenium” enables governments, utilities and other public agencies to save up to 23 basis points compared to conventional bonds, based on yield spreads in the primary bond market. Investors are increasingly willing to take a discount for green bonds tied to demonstrable environmental outcomes – saving taxpayer money while financing needed improvements.

The Great Lakes St. Lawrence Governors and Premiers (GSGP) commissioned the study by Dr. Peter Adriaens, Professor of Environmental Engineering, Finance and Entrepreneurship at the University of Michigan. The study is the first in the Great Lakes Impact Investment Platform Research Series which focuses on key issues related to conservation finance.

Analysis of Green Municipal Bonds in the Great Lakes Region

Growth of Municipal Bonds in the Great Lakes Region