Intel this week announced $1.25 billion green bond offering to fund projects that support the chipmaker's sustainability goals, joining fellow tech giants like Verizon, Telefónica, and Equinix in the climate bond arena.

Green bonds are fixed income instruments backed by the issuing company’s balance sheet that carry the same credit rating as the issuer’s other debts. These bonds are then used to finance projects with explicit environmental initiative such as greenhouse gas (GHG) emission reductions or renewable energy projects.

Nearly $270 billion in green bonds were issued in 2020, and the market reached $523 billion in 2021, according to the Climate Bond Initiative. The market's expected to exceed $1 trillion in total annual issuance by 2023, according to Gartner Research VP Moutusi Sau.

Green bonds also allow enterprises to hedge against climate change risks while achieving at least similar, if not better, returns on their investment, Sau explained. In this way, the growth in the green bond market also indirectly works to disincentivize high carbon-emitting projects.

Intel's green bond is focused on funding projects in six specific areas: green buildings; energy efficiency; circular economy and waste management; GHG emissions reductions; water stewardship; and renewable energy. The $1.25 billion bond is part of a $6 billion overall debt public offering, and Intel says proceeds from the rest of the offering will be put toward refinancing outstanding debt, working capital, and capital expenditures.

"Intel’s first-ever green bond aligns our financing priorities with our commitment to sustainable business practices," Intel CFO David Zinsner said. "It will help us advance the goals we have undertaken in our RISE 2030 framework, including our commitment to net-zero greenhouse gas emissions across global operations by 2040, and enable us to accelerate investment in areas where we can have significant and immediate impact on global environmental issues."

Intel claims to be 99% of the way toward its goal of net-positive water use by 2030, thanks to a combination of water conservation, internal management, and restoration projects. In the United States, Costa Rica, and India, the chipmaker said its operations are officially net positive in terms of Intel’s water use, meaning it restores and returns more freshwater to the natural environment than what it consumes.

As is the case with most environmental reporting, there’s a lack of standardized governance policies for green bonds, and that leads to discrepancies in impact reporting and voluntary certification. This absence of a regulatory landscape paves the way for greenwashing, which occurs when companies make unsubstantiated or misleading claims about the allocation of a green bond or mislabel projects as environmentally-focused.

“With this lack of standards or mechanisms to measure impact of green bonds, it becomes hard to verify if the said bonds are actually green or not, and hence greenwashing occurs,” Sau said.

Intel's inaugural green bond offering, however, has been analyzed and officially supported by the responsible investment arm of Institutional Shareholder Services (ISS), which says Intel "shows a high sustainability performance against the industry peer group on key ESG issues faced by the semiconductor industry."

The chipmaker also plans to publish a green bond impact report each year beginning in 2023 that will update stakeholders and the public on exactly how the money from its green bond was spent.

As for future green bond investments, an Intel spokesperson told SDxCentral that future financing is dependent on business requirements, market conditions, and other factors. "We aren’t going to speculate about the possibility of future offerings," she said.