Guest essay by Eric Worrall
Green bonds – corporate borrowing to help finance improved energy efficiency, renewables, and other fashionable environmental activities, appear to be a growing trend. But there are concerns about transparency, about ensuring the money raised is spent as promised.
On the surface, green bonds seem counter intuitive: why would a company willingly take on debt to finance environmental efforts? But Apple’s recent decision to issue its first green bond suggests that this type of investment could play a key role in reining in global warming.
Apple’s $1.5bn green bond, announced last month, will fund several initiatives, including the company’s conversion to 100% renewable energy, installation of more energy efficient heating and cooling systems and an increase in the company’s use of biodegradable materials. A green bond, like a typical bond, is simply a way to borrow money, but it’s issued specifically to fund environmental projects.
Apple’s green bond reflects a growing corporate concern about the economic impact of climate change. Businesses are responsible for the majority of manmade greenhouse gas emissions, which are driving up average temperatures worldwide and affecting many companies’ bottom lines. Some, including Apple, are realizing the need to invest in environmental resources, such as watersheds or forests, to protect the sources of their products.
…
Clinton Moloney, sustainability advisory leader at PricewaterhouseCoopers, said that as the effects of climate change become more devastating and widespread, green bond projects could grow more complex. For instance, proceeds can be used to build a seawall to help protect the San Francisco Bay from rising sea levels, or to restore marshlands that help to soak up runoffs during a big storm.
“We can do environmental projects that use concrete and steel, or we can think of nature based solutions as well,” Moloney said. “Evaluating those projects needs to be more sophisticated. That’s where we’re headed.”
Another issue facing green bonds is transparency. For investors who aren’t only interested in making money, figuring out the environmental impact of their investments while ensuring that the money is spent as promised can be difficult to accomplish. As a result, a number of organizations have come up with rules and metrics to help both corporate borrowers and investors track and understand how the money is spent.
Some of the proposed investments sound like things companies would have wanted to do anyway. For example, cooling data centres is an ongoing technical challenge. While there have been energy efficiency improvements, such as low voltage technology which produces less heat per computation, the overwhelming commercial incentive to stay on the leading edge of capability appears to be forcing the development of increasingly radical innovations.
Nevertheless I suspect delivery will become an increasing issue for green bonds. While I have no doubt of Apple management’s ideological commitment to green issues, I suspect some players will think of this new green fundraising trend as just another way to tap the markets. In addition, even when their intentions are good, many companies may have substantially underestimated their dependence on fossil fuels, which may also mean they have underestimated the cost of “going green”.
Activist investors will not be slow to demand action, if they believe they have not received the promised return on their investments. Even if a company pays the promised dividends on green bonds, investors may still be dissatisfied with environmental outcomes. If a company commits to outcomes, as part of their issuance of their green bonds, they might find themselves caught short, if the costs of meeting those commitments substantially exceeds the capital raised by the bonds.
Given the disastrous track record of many green investments over the last few years, it seems likely that at least some of these new green bond funded projects, however well intentioned, will not end well.
go to google
type in Green bond
press the space bar
the words tax exempt will appear, if need to know why Apple are interested that is your answer
Movin’ to Montana soon, Gona be a Climate Bond tycoon . . .
I think Frank would have liked that verse.
Because of intermittency and other major defects, most so-called “green energy” schemes are not green and produce little useful energy.
Interesting piece of marketing.
But of course computers aren’t green and never could be.
IIRC apple products are usually silver….
Why the hell are people engaging in conversation/indulging Seth? I got bored with his crap after a few posts. He is probably 20 and knows everything. A waste of time and energy.
Or as a recent Ivy engineering grad informed me …. wind and solar are here to stay and will increase in viability as the economy of scale kicks in. At some point, it’s best to smile and move on as it’s pointless to argue with someone who is blind to a rigged market.
There are many well educated and otherwise bright people who have been sucked in. We have squandered much wealth chasing fundamentally flawed choices.
It’s what they thought it would cost to buy off the green-mailers.
“Businesses are responsible for the majority of manmade greenhouse gas emissions, which are driving up average temperatures worldwide and affecting many companies’ bottom lines”
And all along they’ve been telling us it was transportation use of fossil fuels and our gas-powered cars have to be scrapped in favor of those uneconomic Tesla thingies……somebody got some ‘splainin’ to do.
As for Apple’s datacenters running on 100% renewable energy – just cut them off the grid and see how long they stay up by themselves before the diesel-driven EPUs kick in.
Somewhere in all this green bond BS I get a distinct whiff of government backing boondoggle to make them more “attractive” to investors. It’s already been proposed, if not implemented, in Canada and the UK. Not to mention government organizations like World Bank and its various Development Bank associates issuing their own green bonds which are backed by taxpayer funds. I’m getting more than a little tired of paying for free lunches.
You ain’t seen the end of the CAGW ruse IF they continue to be successful in mandating percent ownership of green scams into publically managed pots of money. It will give long legs to the ruse.
Cut off the subsidies in a rigged market or at least slow them to meaningless crawl and chances are the movement will find something else to drone on about.
The truth is that “green” is simply a devious way to dress up lies in order to steal and improve PR. Even the phrase “energy efficiency” is a way of lying, because it pretends that any expense in the pursuit of saving energy is worthwhile.
It is, of course, nothing more than one more in a long line of Wall Street gimmicks intended to separate fools from their money.
Apple is doing the right thing here, on many levels.
1) competitive solar PV provider http://www.firstsolar.com/About-Us/Projects/California-Flats.aspx
2) use of low cost debt for low cost power source, especially for Calif.
3) takes future power cost swings off the table, without sacrifices up front
4) adds a cost advantage over competitors, like the dunces at Google
5) forestalls some of the worker relocations to Austin and other non-Calif sites, for now
This is laughable. There is no way Apple can go “100% renewable” with respect to any part of their business, let alone the manufacturing portion, which is subcontracted to the Chinese.
At this rate their current management will drive them once again to be the loser Apple of the mid-90s.
Lisa says so.
Considering 67% of the electricity in the US comes from fossil fuels and another 19% from nuclear (EIA 2014), I would guess Apple is completely clueless as to how much of their energy comes from non-renewable sources. With 86% of their energy needing to be replaced by 19th century technology for 21st century purposes, perhaps Apple should go into the miracle business and forget computers.
Wow Eric, This topic brought out quite a number of “renewables are as American as apple pie” trolls from their dorm rooms apparently. Without fossil fuels and nuclear power there will not be enough energy available in the economy to support anything like the 10 billion people our planet is expected to have in anything remotely resembling a decent standard of living. It’s that simple. Finding cute little scams to profiteer from subsidies and tax dodging is no solution whatsoever to the very real need for real economic development and increased skills in the workforce worldwide. It really is that simple. The alternative is World War….it is that simple.
Next year, after Trump is elected, these will be considered ” Junk Bonds ” !
How long will it be , before we get speeding fines because our phone has been caught going over the speed limit, and it wont matter if your the driver or not, every member in the car with a mobile turned on will receive a fine. Just announced in Australia, You will be fined $200.00 if your caught walking across a intersection while texting. http://arstechnica.com/apple/2011/04/how-apple-tracks-your-location-without-your-consent-and-why-it-matters/
The world would be a better place if these companies did NOT exist . http://www.theguardian.com/news/datablog/2012/mar/02/arms-sales-top-100-producers .
Without Wars these companies would have to find something else to manufacture , Maybe something that enhances live and doesn’t destroy it would be a good start .
The term ‘renewable’ is misleading. Wind and solar power are best described as ‘unreliable’ and ‘intermittent’. Nuclear fission power is eminently renewable: just dig up a little more uranium (or thorium), of which we have plenty. So for that matter is ‘fossil’ fuel power: we just keep finding more natural gas everywhere we look (and oil, too), and we can make it from plants and air, too. And there’s a half millenium’s worth of coal just waiting to be dug up. It’s all renewable, and wonderfully reliable—just takes fuel!
/Mr Lynn
The fact that apple’s address is 1 Infinite Loop should say volumns . . .