Green Bond as Instrument of Impact Investing for Financing Sustainable Transports

The chapter wants to describe Green Bond as an important sustainable financial instrument, that can be considered an instrument of Impact Investing, one of the investment strategies adopted by the Sustainable and Responsible Investors. After a first definitory approach, the author underlines characters and topics of Green Bond, considering also the existing critical issues. The recent European Institutions' Initiatives for the growth od Sustainable Finance are analyzed, with a focus on the realisation of the EU Green Bond Standard, according to the EU Taxonomy on Sustainable Activities. Then, the author considers how Green Bond can be used for financing Sustainable Transports. For reaching this goal, it can be useful to consider the Green Bond Market in its recent evolution. Then, some recent issuances of Green Bond having as eligible projects the Sustainability in transports are described, showing the examples of some international corporate issuances - Mercedes-Benz (2021) and Scania (2020) - and the example of the first Italian Sovereign Green Bond, the BTP Green (March 2021). In fact, some categories, such as Transport or Adaptation, appear particularly suitable for sovereign funding. On the other side, respondents of a survey highlighted their preference for more Sovereign Green Bond, that can be used by governments to direct resources towards the under-funded sector categories. In fact, it is possible to point out that there are differences between how public and private issuers use the funds raised withGreen Bond. The law-carbon transportation segment is a good example of this. Governments and government-related entities are investing heavily in infrastructure to electrify and modernize public transportation systems. Considering NN Investment Partners’ funds, it is possible to notice that, as a result, low-carbon transportation accounted for 34% of their Sovereign Green Bond fund portfolio at the end of 2021, while the allocation to this segment in their Corporate Green Bond fund was just over 7%, reflecting the fact that private-sector car manufacturers are still in the early stages of developing and mass producing low-carbon-emission vehicles. Yet, the examples of corporate green bond issuances seen in the present work (Mercedes-Benz and Scania) can show clearly the growing interest of car manufacturers in this way of funding resources.