Market Best Practice in Green Investment
Cumulative issuance under the Climate Bonds Standard passed USD150bn in October, establishing a new milestone for the international Climate Bond Standard. Certified green bonds and loans have now been issued by over 160 organisations from 36 nations, influencing green finance market directions towards best practice in both developed and emerging economies. The initial milestone of $100bn in Certifications was reached in December 2019.
Increasing market share in 2020
At the end October 2020, the global green bond & loans market has reached $194.6bn, with $46.4bn (24%) of that issuance Certified under the Climate Bonds Standard - a 9% increase of the equivalent period in 2019. Prominent Certifications in 2020 include sovereign green bonds from Chile and the Netherlands, major Chinese banks, auto manufacturer Volkswagen and Japanese fast train network operator JRTT. French rail operator Societe du Grand Paris (SGP) is the single largest Certifier for the year to date with 10,679,000,000.
Largest Certified Bond Issuers – The Top Ten
Pos. | Issuer | Amount* |
1. | Societe du Grand Paris | 10,679,000,000 |
2. | Republic of Chile | 3,810,000,000 |
3. | New York Metropolitan Transport Authority |
3,549,750,000 |
4. | Volkswagen AG | 2,340,000,000 |
5. | Sparebank 1 Boligkreditt AS | 2,021,000,000 |
6. | China Development Bank | 1,430,000,000 |
7. | SNCF SA | 1,412,000,000 |
8. | Los Angeles County Metropolitan Transportation Authority (LACMTA) | 1,371,040,000
|
9. | China Construction Bank | 1,200,000,000 |
10. | San Francisco Public Utilities Commission | 1,114,900,000 |
*USD Equivalent
Repeat Issuers Adopt Programmatic Certification
28 organisations have adopted the streamlined Programmatic Certification process for multiple green issuers with some of the world’s largest transport operators, banks and utilities prominent.
The List:
Certified green bond and loan issuance has originated from Australia, Austria, Barbados, Belgium, Brazil, Chile, China, Colombia, France, Germany, Greece, Hong Kong, India, Italy, Japan, Kenya, Luxembourg, Mauritius, Mexico, Morocco, Netherlands, New Zealand, Nigeria, Norway, Panama, Philippines, Poland, Russia Singapore, South Africa, Spain, Thailand, United Arab Emirates, United Kingdom, United States and Vietnam.
Sean Kidney CEO Climate Bonds Initiative
“The Climate Bond Standard sets international best practice in green finance markets. Its success is in part due to rigorous approach taken by the Technical and Industry Working Groups to grounding in climate science and alignment with the goals of the Paris Accord. This latest milestone is also a tribute to the market leadership of green issuers & lenders, large and small, who have adopted a robust approach to transparency, disclosure and investor assurance via Certification.
“Climate Bonds will be expanding the reach of the Standard and its underlying sector Criteria in 2021, incorporating additional resilience and transition factors and development of its utility as a universal adapter in different markets and regions.”
Between 2014 to 2019 the average annual growth rate of Climate Bond Standard issuance was 287.9% - a steady rise
Sector Criteria- Use of Proceeds
Low carbon transport dominates followed by Solar, Low Carbon Buildings & Wind.
Geographical Distribution – France in front
As of October, the largest source of Certifications was France (19%), followed by the United States (15%), Netherlands (14%), China (9%), and Australia (8%). New Zealand, Norway, Chile, India, and Japan make up the remainder of the top 10 with a collective (23%).
Pos. | Country | Amount Issued |
1 | France | 28,237,900,000 |
2 | United States | 21,920,940,000 |
3 | Netherlands | 20,280,900,000 |
4 | China | 13,953,800,000 |
5 | Australia | 11,219,000,000 |
6 | Germany | 9,840,700,000 |
7 | Norway | 6,916,900,000 |
8 | Chile | 6,209,000,000 |
9 | India | 5,343,100,000 |
10 | Japan | 4,900,630,000 |
The Last Word
The reach of the Climate Bonds Standard is expanding. The first Certification in the Waste sector has emerged from Japan, we’ve launched our Shipping Criteria and there’s more to come in Transport and Water. All of our work has the objective of increasing the use of science-based assessments in green investment.
Some of our focus in 2021 will shift to transition finance, the next area of challenge is in decarbonising the heavy emitting sectors and supporting new technology and enablers.
The $150 bn is an interim marker in our efforts since 2014 to establish best practice in green investment markets. The coming challenge lies in accomplishing broadly similar standards in transition-based investment.
With thanks to all the issuers, underwriters, verifiers, and advisors who have pioneered international best practice since 2014.
‘Til Next Time!
Climate Bonds
