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Seeing green shoots in green investing

Data: Fannie Mae, Bloomberg, NEF, Institute of International Finance; Chart: Axios Visuals

Investment in green assets — securities developed for climate and environmental projects — remains small, but growth is starting to pick up significantly, data from the Institute of International Finance shows.

The big picture: While their asset volumes are still marginal compared to traditional U.S. mortgage-backed securities (which have averaged over $1.5 trillion annually in recent years) IIF notes that green MBS volumes have grown from a trickle of some $6 million per year 2012–2015 to much more substantial issuance. In 2017 and 2018, green MBS issuance averaged $28.8 billion a year.

  • The total has now exceeded $55 billion, with the overwhelming majority issued by the government mortgage giant Fannie Mae.

What it means: Asset-backed securities (ABS) are groups of mortgages, credit card loans or other typically illiquid assets pooled together and sold as one security. Green ABS are all related to low-carbon assets like solar-powered systems or real estate loans in which the proceeds are used to finance green projects.