The issuance of green bonds, which began in 2007, has now surpassed the US$1 trillion mark, according to a survey by research firm BNEF (BloombergNEF). In the first nine months of this year alone, more than US$200 billion were issued. Among the main projects that raised these funds – used to finance environmental projects and activities – are wind farms and wastewater management.
According to BNEF, this volume of funds represents an increase of 12% compared to the same period in 2019. Together, corporate, government, municipal and mortgage green bond issuances in 2020 lagged behind 2019 volumes through August. However, this changed in September, when green bonds brought more than $50 billion to market.
“For much of this year, green bond issuance has lagged behind 2019. But the bumper month of September, with more than $50 billion issued, offers hope for a possible boom in the final quarter of the year,” he said. Mallory Rutigliano, financial analyst at BNEF.
One of the biggest drivers in September came from Germany. The federal government issued a €6,5 billion ($7,7 billion) sovereign bond earlier in the month, making it the largest single new green bond this year. Similarly, the Swedish government and EDF (Électricité de France) helped drive the month, with more than $5 billion combined.
BNEF also highlighted that green bonds have also boosted the broader sustainable debt market – which includes social bonds, sustainability-linked loans, green loans and others. According to the report, in the first nine months of 2020, green bonds accounted for 47% of sustainable debt issued worldwide.
“The integration of environmental, social and governance criteria has never been more important to investors than in 2020. We have already seen this reflected in the debt market, and it is not only likely that these varieties of financing will grow in volume in the coming years, but we will see more innovation. A driver is likely to be increased pressure to standardize rules around green bonds, especially in Europe,” pointed out Maia Godemer, sustainable finance associate at BNEF.
