Climate Bonds has issued its report Green Bonds: The state of the market 2018 showing that green bonds worth US$167bn were issued globally during 2018, and US$521bn issued cumulatively since 2007.
Highlights from the Green Bonds report include:
- 2018 labelled green bond issuance: US$167.6bn (2017: US$162.1bn) 2018
- Cumulative green bond issuance since 2007: US$521bn
- USA leading with US$118.6bn (20%), followed by China US$77.5bn (18%) and France US$56.7bn (8%)
- Top 3 issuers Fannie Mae USA (US$ 20.1bn), Industrial Bank China, (US$9.6bn), Republic of France (US$6bn)
Emerging markets in 2018: A big leap forward in Asia-Pacific
China’s entry in 2016 and push in 2017 boosted overall EM issuance. China has the second largest green bond market globally and accounts for over 70% of the total Emerging Market issuance to-date, and about the same in 2018.
Issuance from other Emerging Market countries remains fairly small compared to global volume. However, the number of new issuers entering the market has increased over the past five years. It reached 85 debut issuers in 2018 or 42% of the global total, which is a significant achievement given the relatively small size of most EM bond markets.
Hot spots for 2019-2020 Asian EM issuance include Indonesia, Malaysia, Philippines, Thailand & Vietnam.
Beyond Green Bonds
The wider labelled bond market has expanded beyond green bonds, now it includes, sustainability, social bonds, SDG bonds, have been around for a few years now, but their prominence was noted in 2018, with SDG bonds also emerging as issuers and investors starting to adopt policies and strategies linked to the UN’s 17 Sustainable Development Goals.
2018 labelled bond market size:
- US$21.0bn sustainability / SDG / ESG bonds and loans financing green and social projects
- US$14.2bn social bonds financing social projects
- US$23.7bn green bonds, which do not meet the CBI green bond database screening criteria
Climate Bonds outlook
The predictions of annual issuance for 2019 range from USD140bn to USD300bn. That continues to be the big benchmark that banks, insurers and corporates must deliver. By end 2020 the public scrutiny on those who are not investing in green and contributing to the transition to a low-carbon economy will likely be sharper.
In the interim, investors are pushing harder on the world’s largest emitters. The Climate Action 100+ initiative, one of the projects that form the ‘Investor Agenda’, has established a straight line of corporate governance engagement between a USD32tn coalition of institutional investors and the 160 largest global emitters.
Continued harmonisation of taxonomies and use of green bond guidelines is expected for 2019-2010 as well as growth of other labelled issuance (sustainability/SDG bonds and social bonds).