Measuring the effectiveness of ESG-labelled bonds can be a challenge, particularly with 'outcome bonds', which have specific environmental or social goals but lack standardised assessment criteria.
To mitigate risks such as greenwashing, investors need a systematic approach to assessing these bonds. A case study of a rainforest reforestation project illustrates such an approach and highlights the importance of thoroughly evaluating both economic returns and environmental impacts to ensure credible, effective investments.
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