Canadian green bond issuance reached C$5.5 billion in 2018 according to a report titled Green Finance State of the Market Canada from the Smart Prosperity Institute and the Climate Bonds Initiative. The report details emerging trends, and identifies specific opportunities for green bond market development.
“As Canada continues to ramp up its climate policy ambition, green bonds have the potential to harness much-needed private capital flows to finance the transition to a cleaner, low-carbon economy”, said Mike Moffatt, Senior Director, Policy and Innovation at Smart Prosperity Institute.
“Canada continues to take a leadership position in green bonds, with the Canada Pension Plan Investment Board issuing a $1.5bn green bond, the world’s first ever from a pension fund. We expect 2019 to be another year of firsts for Canada in this growing field.”
Key Highlights from the report include:
- 2018 annual Canadian green bond issuance reached C$5.5 billion, just shy of 2017’s all-time high of C$5.6 billion.
- Canada placed 10th globally in 2018 issuance and 9th globally in cumulative issuance with more than C$15.2 billion.
- Canada’s largest ever green bond was issued by Canada Pension Plan Investment Board (CPPIB) (C$1.5 billion). It is the first ever green bond from a pension fund globally.
- Sub-national governments continued to drive issuance, with the Province of Ontario as Canada’s largest issuer.
- Renewables and transportation dominated the use of proceeds, with cumulative allocations of 32% and 30% respectively.
- Ambitious climate commitments and policy have been put in place to transition to a low-carbon economy. A growing Canadian green bonds market can be instrumental in steering private sector and international capital flows to finance this transition.
- The creation of a Canadian sovereign green bond and implementing recommendations from the Expert Panel on Sustainable Finance would send strong market signals and contribute to advancing the country’s climate change agenda.
- Canadian banks, pension funds, and institutional investors must play a more active role in developing green financial instruments and the domestic green bond market to meet investor demand and enhance environmental outcomes.