Greening Short-Term Debt: a 55 Trillion Dollars Opportunity

Green finance is near to achieve almost 2 trillion dollars in volume to date, mainly driven by global bond, loans and other long-term markets. The estimated 55 trillion dollars value of global short-term debt markets offers an enormous pool of capital, on top of the global bond market, in which green finance can expand, towards its objective of 5 trillion dollars annually by 2025.

Climate Bonds Standards and Certification can drive short-term market. Several short-term debt instruments are already applicable for Certification under the Climate Bonds Standard: Commercial Paper (CP); Revolving Credit Facilities (RCF); Short-term bank loans; Export Letters of Credit; Certificate of Agribusiness Receivables (CAR); Floating Rate Notes; Green Repurchase Agreements (Repos); and Export Financing in Brazil, among others.

Investors generally benefit from the increased flexibility in managing the maturity profiles of their portfolios that short-term assets offer. Investors may use such instruments to these ends whilst also greening and diversifying their investment portfolio. Corporates which issue short-term debt as part of their general funding policy will be able to benefit from the demand for green finance whilst also meeting their environmental objectives.