Green bonds will spur investment in climate technology

Most additive and extractive industrial pursuits, that are often the go-to solution for most government development agenda, are the same ones that also carry a huge negative environmental effect.

While these still dominate the leading portfolios in terms of revenue and return in the market, the move towards smarter ways of work and living, riding on the back of advanced technology are starting to change the shape of business.

Unfortunately the track that many of these new businesses are subscribed to, is social enterprise, which is limiting in many ways as the purveyors of this flavour of capital often dictate overall direction.

The challenge comes when looking to raise money at a for-profit organistaion that wants to do good while doing well with a model that will see returns in the mid to long term. Raising funds from traditional capital shops becomes difficult as first; they may have a much shorter time to exit expectation and second; the ticket sizes may be slightly out of reach, unless syndicated.

It is therefore welcome that as a country we are starting to lay the groundwork for a domestic green bond market. As succinctly captured in the first draft of the Kenya Green Bond Guidelines, “green bonds are regular bonds with one distinguishing feature that proceeds are earmarked exclusively for projects with environmental benefits, mostly related to climate change mitigation or adaptation but also to natural resources depletion, loss of bio-diversity, and air, water or soil pollution.”

As a country we signed on to some bold environmental impact deliverables at the 21st annual Conference of the Parties (COP 21) in Paris, France under our Intended Nationally Determined Contributions, loosely translated as our “in-house targets”. We have set out to lower greenhouse gas emissions by 30 per cent by 2030 with agriculture, urban development, energy production and transport as our biggest contributors.

A cursory look at the innovation ecosystem will reveal that many technology entrepreneurs are building businesses in these verticals, that not only carry the value that end users are seeking but also mitigating or reversing our negative effects on the climate.

We know what needs to be done and must fire on all cylinders to deliver on the frameworks, tangible rebates, exemptions and trading platforms that will encourage the discovery, application and deployment at sufficient scale of technology that reduces or at the very least nets off our carbon footprint while turning profit.