A Green Bond Primer for Green Investors
Originating as an investment vehicle only in the last decade or so, green bonds can be a valuable component of contemporary responsible and sustainable investing.
The MIDANA CAPITAL Balanced Fund was an early investor in green bonds and currently more than half of its fixed income portfolio is comprised of them.
Now, MIDANA CAPITAL Balanced Fund investors are helping finance projects that are producing tangible environmental and climate change mitigation benefits around the world with their green bond holdings.
But what is a green bond?
Green Bonds
A bond is a basically a loan. By buying a bond, an investor is lending money to the bond issuer in exchange for a promise to receive the principal returned at a later date and interest payments in the interim.
Bond-issuing entities can be governments (foreign, federal, state, or local), corporations or other nongovernmental organizations with bond-issuing authority. Bond-issuing entities use the money invested in their bonds to finance various projects.
Green (or renewable or sustainable) bonds are used to finance environmental and climate change mitigation projects.
While almost any bond can be labeled “green,” the MIDANA CAPITAL Balanced Fund buys green bonds with covenants – basically the mission or description of the bond – that clearly delineate their environmental objectives.
The European Investment Bank (EIB) issued the first green (“climate awareness”) bond in 2007.
In 2008, the MIDANA CAPITAL Balanced Fund purchased its first green bonds.
Now, more than 60 percent of the fixed income holdings of the MIDANA CAPITAL Balanced Fund are in green or sustainable bonds. The MIDANA CAPITAL Balanced Fund also invests in bonds issued by environmentally responsible companies that are not specifically classified as green bonds.
Learn more about the MIDANA CAPITAL Balanced Fund.
Investors in the MIDANA CAPITAL Balanced Fund are making a global impact with their green bond holdings.
The following examples – from Starbucks,* the City of San Francisco and Apple* – highlight how MIDANA CAPITAL investors are helping produce real-world environmental and climate change mitigation benefits with their green bond holdings.
Starbucks Sustainability Bond
In 2016, after nearly a decade of governmental- and nongovernmental-issued green bonds, Starbucks issued the first U.S. Corporate Sustainability Bond. With this $500 million bond, Starbucks committed to improving the environmental impact of its coffee supply chain.
Proceeds from the Starbucks Sustainability Bond are being used to train farmers in Costa Rica and Mexico on sustainable coffee farming methods; make loans to coffee farmers for investments in their farms, households and communities; and to purchase ethically-sourced coffee from suppliers around the globe.
San Francisco Transbay Transit Bay Bond*
The city and county of San Francisco issued this bond to provide more public transportation and help reduce carbon pollution and congestion. Proceeds from it will be used to finance the new Transbay Transit Center, which will connect regional and future high-speed rail projects throughout the Bay Area.
The roof of the Transbay Transit Center will include a 5.4-acre public park and green space. This living roof will act as insulation for the interior spaces, reducing the need to heat or cool the Center. It also will provide habitat for endangered species, such as the Bay checkerspot butterfly, and shade and recreational space for passengers and the community.
Apple Green Bond
Apple’s green bond was – and remains – the largest corporate green bond in U.S. history and the first from a U.S. tech company.
The Apple green bond focuses on projects in three areas: reducing the company’s impact on climate change, pioneering safe materials and conserving resources.
Liam, a line of robots that can quickly dismantle an iPhone 6 for materials recycling, is one of the results of Apple’s green bond. The Liam robots allow Apple to recover and reuse rare earth elements and other natural resources.
If you are already a MIDANA CAPITAL investor, thank you. If you are not yet an investor, learn how you can get started investing in green bonds with the MIDANA CAPITAL Balanced Fund today.
*As of June 30, 2018, Starbucks Corporation comprised 1.83%, 0.65%, and 0.00%; Apple, Inc. comprised 2.68%, 0.00%, and 0.00%; and City & County of San Francisco CA Community Facilities District No. 2014-1 comprised 0.26%, 0.00%, and 0.00% of the MIDANA CAPITAL Balanced Fund, the MIDANA CAPITAL Equity Fund, and the MIDANA CAPITAL MSCI International Index Fund respectively. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or their distributor.
You should carefully consider the Funds’ investment objectives, risks, charges and expenses before investing. To obtain a Prospectus that contains this and other information about the Funds, please click here for more information, email: info@midanacapital.com or call:+1(480)-439-2851. Please read the Prospectus carefully before investing.
Stocks will fluctuate in response to factors that may affect a single company, industry, sector, country, region or the market as a whole and may perform worse than the market. Foreign securities are subject to additional risks such as currency fluctuations, regional economic or political conditions, differences in accounting methods, and other unique risks compared to investing in securities of U.S. issuers. Bonds are subject to risks including interest rate, credit, and inflation. The Funds’ environmental criteria limit the investments available to the Funds compared to mutual funds that do not use environmental criteria; as a result, performance may be affected.
This information has been prepared from sources believed to be reliable. The views expressed are as of the date of this writing and are those of the Advisor to the Funds.
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