The case for labeling green : a literature review of municipal climate bonds

The Climate Bond Initiative’s ‘Green Bond’ certification process is a new and challenging situation for the State of California’s municipal bond issuers. When issuing a new bond that incorporates environmental climate bond acts, municipal bond issuers must consider the cost versus value to labeling a bond as green. Using a thematic literature review methodology, this paper analyzes the intersection between municipal bonds and green bonds and provides an analysis through a case study of two municipal bond issuances – one green and one conventional. This case-study serves as an example for policymakers to evaluate the labeling of a municipal bond as ‘green’ or not. We provide to policy decisionmakers an analytical synthesis of a three-pronged decision fork of whether the issuing of a ‘conventional’ municipal bond, a municipal ‘green’ bond, or of a ‘certified green municipal bond’ impacts the environmental objectives, financial readiness and investor appetite of each of those courses of action. This three-pronged decision-tree provides further environmental context and fills in the gap in the literature with an off-the-shelf example for policymakers. Lastly, in our analysis of the literature, we find that the ‘green-bond-in-name-only’ approach to labeling a municipal bond and its bond acts is the most cost-effective, and impact investment-appropriate method choice for California policymakers. We provide evidence to support that this decision gives the highest return on both investment and return on impact for the State of CaliforniaPublic AffairsBusiness Administratio