In most OECD pension funds, bonds remain by far the dominant asset class, accounting for 50% of total assets under management on average (OECD Pension markets in focus July 2011). Green bonds could therefore be a channel to direct significant pension fund capital towards green projects. However the market size for green bonds is still small and illiquid at USD billion as of August 2011 (see next section for discussion). Veys (2010) points out that an asset allocation move from equities to bonds within pension funds (as has happened in recent years) is a more significant change.
