Environmentalists demonstrate at the 2015 UN Climate Change Conference near Paris. Thomson Reuters

An increasing percentage of people today are not solely concerned about outsized returns when they invest their money — they also care about the social impact of their investments.

That increased interest has partly spurred the growth of socially responsible investment products and "impact investing" on Wall Street.

The growth of so-called green bonds is a part of this trend.

"Investor appetite for environmental solutions has increased sharply in recent years, with $21.4 trillion in global assets incorporating socially responsible investing, and up to 93% of US millennials showing a high preference for impact investing," Bank of America Merrill Lynch said in a recent report.

Issuers of such bonds, such as governments and companies, promise to put proceeds toward environmentally friendly projects. Those investors can use the money from those bonds to finance renewable-energy projects, clean auto technology, and several other green initiatives.

Earlier this year, the green bond market passed a milestone, with $200 billion in total issuance since the market's inception. There could be an additional $150 billion worth of issuance in 2017, according to a note sent Tuesday by a group of Bank of America Merrill Lynch equity strategists led by Beijia Ma.

Ma wrote that the recent swell in the market was driven by a sharp increase in the number of bonds issued by national governments.

A boom in green bonds

According to the bank, the boom in 2016 is directly linked to the 2015 Paris Agreement on climate change and the nations' targets for curbing greenhouse gas emissions. Many countries viewed — and continue to view — green bonds as a means to hit those targets and lower their carbon footprints to comply with new standards.

The bank said:

"2016 was a transformational year in global policy for green bond development, with China's remarkable rise a clear illustration of the impact of supportive legislation. Countries crystalize their climate commitments in 2017, with Poland (first mover) and France ($7 billion note, largest ever) issuing their inaugural sovereign green bonds in the past quarter."

The bank believes five to 10 more nations will jump on the green bond bandwagon later this year, further contributing to the growth of the market. The bank predicts that China will lead the way in issuance next year. According to the note, China, a nation responsible for over 30% of the world's CO2 emissions, could see its green bond market grow by up to 50%.

"We project $90 [billion] to $130 billion of issuances in 2017 ... which assumes 30%-50% growth from China, and 15% growth from the rest of the world," the note said.

That estimate is also contingent upon high growth in other emerging markets, such as those in Latin America and Africa.

Currently, the US has the largest number of outstanding green bonds.

What's next for green bonds?

Nigeria is the next country in line to issue green bonds because it has already completed "intensive work" and is aiming for a March or April launch, according to the note.

Bank of America also thinks the green bond market could further diversify. According to the bank, the mortgage industry could soon see a pop in "green mortgage-backed securities."

"Fannie Mae believes these types of green renovations could lower credit risk, increase property value, create higher quality and more durable housing while lowering energy and water use," the bank said.