Morgan Stanley has announced that it closed on the issuance of a $500 million green bond, its first green bond, as part of the company’s strategy to advance market-based solutions to social and environmental challenges.
Funds equal to the net proceeds of Morgan Stanley’s green bond will be allocated to various renewable energy and energy efficiency projects. Much of these funds will correspond with investments in existing and future third-party renewable energy projects, primarily wind farms, including Route 66 Wind, a 150 MW wind farm under construction in Texas, and Rattlesnake Wind Energy Center, a 207 MW wind power project also under construction in Texas.
Since 2006, Morgan Stanley has facilitated over $61 billion of capital for cleantech and renewable energy businesses.
Ahead of this offering, the company created a green bond framework aligned with the Green Bond Principles, which describe the process governing how projects are selected to receive funding. Proceeds from the sale of the notes will be deposited into a segregated Morgan Stanley account for tracking disbursements, Morgan Stanley says.
The company has led the banking industry in green bonds, including the first corporate green bond, the first automobile asset-backed securities green bond and the first U.S. university green bond.
Since 2013, Morgan Stanley has led 27 green bond transactions representing over $15 billion in aggregate principal amount. It also is a founding signatory of the Green Bond Principles, voluntary guidelines for the development and issuance of green bonds, which encourage "transparency, disclosure and integrity" in the development of the green bond market.
Morgan Stanley says the green bond is part of its broader commitment to sustainable finance. In 2013, the company established the Institute for Sustainable Investing to accelerate the mainstream adoption of sustainable investing by developing industry-leading insights and scalable finance solutions to address global challenges. Earlier this year, a new report from the Institute found that investing in sustainability has usually met and often exceeded the performance of comparable traditional investments, both on an absolute and risk-adjusted basis, across asset classes and over time.
There has been an ongoing trend of big banks bringing sustainable investing into the mainstream. Citigroup has launched a $100-billion commitment to finance climate change mitigation activities, Deutsche Bank committed to investing €1 billion in green bonds, the** Bank of England** (BoE) published a research agenda acknowledging the impact of climate change on financial markets and last September** Barclays** announced it would invest a minimum of £1 billion in green bonds.