Susterra, SRI, ESG and Municipal Bonds.

Municipal bonds have long been a staple for conservative investors looking for tax-exempt income. Now, the rise of ESG (environmental, social and governance) investing is bringing a new socially responsible dimension to the municipal bond market.

For investors who want their portfolio to reflect their values while still earning stable returns, ESG municipal bonds, also known as green bonds, provide an appealing solution. Which Susterra provides using cutting-edge technology.

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What Exactly Are ESG Municipal Bonds?

ESG municipal bonds are any bonds issued by local governments where the proceeds are earmarked for environmental or social projects. This includes things like:

• Building renewable energy systems like solar and wind farms
  
  
• Expanding public transportation networks
  
  
• Upgrading water treatment facilities
  
  
• Constructing affordable housing units
  
  
• Redeveloping brownfield sites
  
  

By issuing ESG-themed municipal bonds, local governments can attract values-aligned investors to help fund infrastructure and community development initiatives. Investors can target their fixed income allocation to projects and causes they care about.

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Surging Popularity of ESG Municipal Bonds

According to Moody's, issuance of ESG municipal bonds has skyrocketed from $1.6 billion in 2016 to over $10 billion projected for 2022. Major issuers include state governments like California and New York along with major cities like Houston and Miami.

Much of the surge can be attributed to increasing ESG-focused investment mandates from large institutional investors like pension funds. But retail investors are also drawn to the dual benefits of ESG munis - financing positive change while still earning an attractive tax-exempt yield.

Green municipal bonds to fund climate-related projects are the most common type of ESG bond issue. But social bonds financing affordable housing, schools, and healthcare access are also growing in prevalence.
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The Future Looks Bright for ESG Municipal Bonds

Between increasing ESG investor demand and local infrastructure needs, the municipal bond market appears ripe for further expansion of ESG bonds. This socially responsible fixed-income solution aligns financial returns with funding progress on environmental and social challenges.

For investors, ESG municipal bonds offer stable tax-exempt income just like traditional munis. But they also provide the added benefit of knowing your investment is driving meaningful impact like cleaner energy and accessible housing.

As the ESG investing movement continues gaining steam, expect to see green, social and sustainability municipal bond issuance rise to new heights. The $4 trillion muni bond market presents an opportunity for significant ESG progress, and Susterra is a pioneer in this field.

Are ESG municipal bonds something you would consider adding to your fixed-income portfolio?

Here at Susterra we welcome your thoughts and questions!

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