Index of the year: Bloomberg MSCI Green Bond Index
An already winning product improved in 2021, with the addition to the Bloomberg MSCI Green Bond Index of criteria covering development of rail infrastructure.
It is the sixth year in a row that the index has claimed the Environmental Finance Bond Award for Index of the year, in a resounding vote of confidence from the green bond market for an index first launched in 2014.
For inclusion to the index, self-labelled green bonds are evaluated by MSCI ESG Research against an independent methodology to assess if they have a net environmental benefit, verifying each security's use of proceeds fall within one of seven categories: Alternative Energy, Energy Efficiency, Pollution Prevention & Control, Sustainable Water, Climate Adaptation, Green Building and Others. Additionally, issuers must outline a process for project evaluation, management of proceeds and ongoing reporting.
MSCI said the addition of criteria to include development of rail infrastructure for freight – subject to this not being dedicated to fossil fuel transportation – was made because the development of rail infrastructure for freight "will promote a modal shift in transportation from more energy intensive air-based and road-based freight transport".
MSCI said that, since 2020, the most common grounds for a bond being considered ineligible was bonds' use of proceeds. For example, in 2021 it excluded a green bond expected to fund biochemicals and bio composites. The index does not consider this category as "green".
It attributed the ongoing success of its product to a team of more than 300 specialised environmental, social and governance analysts who determine whether green bond issuances qualify for inclusion.