As we get into the final lap of bond issuances for the year, it is helpful to take stock of where the green bond markets are and what we could look forward to in 2019 and beyond. As of end November, the issuance level stood at just over US$164 billion, well placed to exceed last year’s aggregate issuance.
The reference to green bonds now has become a lot broader: the market has started to distinguish between the various subsets of sustainable bond financing with a clear demarcation between green, Sustainable Development Goals (SDGs), sustainability and social bonds.
Infact, most recently, the ASEAN Capital Markets Forum launched the Sustainability and Social Bond frameworks as the base standard for the 10 ASEAN nations – a move essentially to harmonise taxonomies in the region. SDG bonds however, bring together both social and climate themes via focusing the use of proceeds onto 17 recognised SDGs of the United Nations (UN).
The goals recognise that ending poverty must go hand-in-hand with strategies that build economic growth and addresses a range of social needs including education, health, social protection, and job opportunities, while tackling climate change and environmental protection. To put this in numbers the United Nations Conference on Trade and Development (UNCTAD) estimates that achieving the SDGs by 2030 will require US$3.9 trillion to be invested in developing countries each year. It also notes that with annual investment of only US$1.4 trillion, the annual investment gap is US$2.5 trillion.