In “Going green on bonds is best way to change behaviours” (Special Report,, September 28), Xavier Baraton touches on a critical aspect of the green bond market.

For investors of sovereign bonds, alternative methods of sustainable investing threaten to create a development trap. Environmental, social and governance investing can encourage a bifurcation in the flow of capital, favouring “leaders” over “laggards”. There is an inherent injustice in the consumption and parallel condemnation of less economically developed countries but impact finance helps to overcome these challenges.

Green bonds’ “use of proceeds” pledge on contributing towards environmental objectives allows investors to “reward” issuers based on their future intentions rather than on their historical record on sustainability.

This approach is more equitable for emerging markets and creates important incentives, that may not be obvious, but nonetheless over time contribute to changing behaviours.

Karim Henide
London SW13, UK

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