In the coming months, we will see increasing numbers of debates and discussions about the question of 'what is green?'.
The argument has been rumbling on for decades, but the question has been thrown into sharper focus by the rapid rise of the green bond market.
Putting a green label on a financial product means it needs to have a strong argument for, and robust evidence of, its environmental credentials.
But doing so can be complicated. After all, 'green' means different things to different people. Greenhouse gas emissions, water and biodiversity, can all come in for consideration, while social issues are often thrown into the mix too.
Thai oil company Bangchak recently issued a 'green bond' for its clean energy activities. To some people, the idea of a fossil-fuel company issuing a green bond constitutes the ultimate in greenwashing, while others believe companies such as this should be encouraged to embrace the green agenda.
For me, the worst aspect of this particular bond was the appalling lack of transparency. Even basic details about what the proceeds were to be used for were not made public, and attempts to correspond with the company have been largely ignored.
One important development in the 'what is green' argument came when the Barclays MSCI green bond index excluded issues whose proceeds are used for corporate energy efficiency projects, including Unilever's £250 million issue. In this article, second-opinion provider DNV GL explains why it believes the bonds are green. And MSCI explains its decision to exclude some energy efficiency projects from the index.
I would like to commend both DNV and MSCI for engaging in this debate. Because the green bond market is young and is still finding its feet, it is vitally important that these arguments are made public to enable other parties to learn from them. Otherwise, we are in danger of having a market that is increasingly fragmented, confusing and more at risk of being undermined by accusations of greenwashing.
I would like to open up Environmental Finance as a forum for these discussions. We will discuss the issues in our green bond conferences in London in June, and at Bloomberg's offices in New York in October, but in the meantime, I would invite anyone to contact me with any thoughts on the subject, or articles they would like to write.
The green bond market and other environmentally-themed investment markets need transparency in order to grow sustainably. That goes for the debates around what is green as well as the details of the issues themselves.