With this article, we welcome Sean Kidney, CEO and Co-Founder of the well regarded Climate Bonds Initiative.  Sean is a leading resource on the growing area of bonds and climate change solutions. The most recent Climate Bonds Initiative analysis of the State of the Market 2014, shows that there is already over $500B in the climate-themed bonds universe (more on this below), and calls for investment to increase in green infrastructure are also seeing increased momentum,  Sean and his team will be quite visible and active during next week's Climate Week in New York City, so consider this a preview of solutions to these challenges on offer.


Sean writes his first piece for us from his hotel room in Manila, Philippines earlier this week (as originally appeared at the Climate Bonds Initiative's well worth following blog). 

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Musings from Manila on bridging the gap between young and capital needy emerging markets and capital rich ageing countries

I’m in Manila, in the Philippines. It’s been gusty and raining – there’s a typhoon crossing the northern part of the island. A modest reminder of last year’s devastating storm that destroyed the southern coast of Luzon.

I’m here for a meeting of an "International Expert Group on Using Climate Finance to Leverage Sustainable Transport". Ironic really, as it took an hour to get 12kms through the crazy traffic from the airport. But of course this is a not a rich country; the route to the ubiquitous glass skyscraper zone I’m in passes through acres of teetering favelas, piled up close to the edge of the airport.

The growth rate here is finally up – now a blistering 6.4% a year. They’ve got a lot to invest in; but they need big slugs of capital if they’re going to be able to choose the high capital expenditure route of clean energy and low carbon transport rather than low capex coal/gas power - and yet more clogged highways.

That’s the deal to be made: rich country investors' capital into fast-growth, green projects in developing countries that delivers long-term financial plus environmental returns. Through high yield climate bonds, for example.

The trouble is, fast-growth projects in emerging markets looks risky – and it may be so, buffeted as they are by the winds of big economies' trade. That’s where development banks and rich country aid can step in – covering the bits and pieces of risk that freak out rich countries' pension and insurance fund investors and making sure the overall projects are investible. Simple really.

A kind of pact between capital rich economies with ageing populations, and capital-needy, fast-growing economies full of younger people with a long working life ahead of them.

In fact, if you look at a global distribution of age groups, it’s a perfect spread for a strong economy. It’s just that our artificial national boundaries compartmentalize some of us into ageing populations with not enough young people to support all the pensioners, and others into very young populations with not enough older people to invest where needed. So, the older demographics offer lower-cost (but still good earning!) capital to the younger demographics, allowing them to choose green. A global win win.

Finance, of course, knows no borders. It just needs someone to package the products that allow us to invest money in the right places. Filipino Climate Bonds, here we come.

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For About.com readers further interested, some wonderful graphics can be found here, taken from the excellent Bonds & Climate Change - The State of the Market in 2014