Global green bond issuance hit new record high last year

LONDON (Reuters) – Global green bond issuance reached a record high of $269.5 billion by the end of last year and could reach $400-$450 billion this year, a report by the Climate Bonds Initiative (CBI) showed on Monday.

Green bonds are a growing category of fixed-income securities that raise capital for projects with environmental benefits, such as renewable energy or low-carbon transport.

Although issuance reached a new record in 2020, the figure was just above 2019’s total of $266.5 billion as issuance slowed in the second quarter due to the effects of the coronavirus crisis before rebounding in the third quarter.

“The impact of COVID-19 in 2020 proved a huge economic and social negative. In that context, the resilience of green finance markets led to a record year of issuance,” the report said.

“2021 may enable a sustained resurgence,” the CBI added.

The CBI is a London-based non-profit which promotes investment in the low-carbon economy.

Supporting factors for green bond issuance this year include U.S. President Joe Biden’s intention to return the country to the international Paris Agreement to fight climate change and investors and policymakers’ growing focus on decarbonising industrial sectors.

The green bond market started up in 2007.

Although they make up a small fraction of the overall debt market, green bonds are attracting attention because the need to meet emissions-reduction targets will need trillions of dollars of capital from public and private sectors.

Last year, the United States issued the most green bonds, with a total value of $51.1 billion, followed by Germany at $40.2 billion and France at $32.1 billion, the report said.

The proceeds of green bonds were mainly aimed at energy sector investments, followed by low-carbon buildings and low-carbon transport, it added.

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