A record $50bn in green bonds came coursing into the market last month, taking the financial instrument used to fund clean-energy projects past the $1trn mark, according to latest research from BloombergNEF (BNEF).
Some $200bn in green corporate, government, municipal and mortgage bonds have been signed so far this year, a 12% increase compared with the first nine months of 2019, underscoring the “beacon of sustainability” they are providing global debt markets “amid the global turmoil” of 2020, said the analyst group.
“For much of this year, green bond issuance has lagged behind 2019. But the bumper month in September, with more than $50bn issued, offers hope of a possible boom in the last quarter of the year,” said BNEF sustainable finance analyst Mallory Rutigliano.
Rutigliano pointed to Germany as to the “biggest booster” in September, as Berlin issued a € 6.5bn ($7.7bn) sovereign bond – the year’s single largest in value, spotlighting as well combined issuances totaling $5bn by the Swedish government and French utility EDF that “helped jumpstart the month”.
“In reaching their cumulative $1trn issuance milestone, green bonds have also pushed the wider sustainable debt market – which includes social bonds, sustainability-linked loans, green loans and others – over the $2trn mark,” she said.
Maia Godemer, a BNEF sustainable finance associate, stated: “The integration of environmental, social and governance criteria has never been more important for investors than in 2020.
“We’ve seen this reflected in the debt market, and it is not only likely that these varieties of financing will grow in volumes in coming years, but we will see further innovation. One driver is likely to be increasing pressure to standardise rules around green bonds, particularly in Europe.”
Green bonds have demonstrated a historical track-record for growth, with global issuance steadily climbing to reach a record of more than $270bn last year.
In the first nine months of 2020, green bonds accounted almost half (47%) of the sustainable debt issued worldwide, defying the coronavirus eruption and linked market tremors that was expected to skew this trend.