Sustainable Finance
Sustainable Finance by Nicholas Pfaff, Valérie Guillaumin, Simone Utermarck and Ozgur Altun
Summary Issuance in the sustainable bond market in the first quarter this year is showing a sharp increase over the same period in 2020 with the continuation of strong sustainability and social bond issuance alongside green bonds. Broader emerging 2021 themes are among others the global recognition of the sustainable bond standards supported by ICMA and the renewed interest in sustainability in the US market. We also note the multiplication of taxonomy initiatives globally and the strong interest in biodiversity focused investments. On the regulatory front, we continue to engage closely with the EU Platform while also being very active in regulatory consultations in Asia. Finally, the GBP Executive Committee is making progress with an ambitious agenda for 2021 already evidenced by important additional Sustainability-Linked Bond (SLB) related guidance released in February this year.
Sharp increase of sustainable bond market issuance in 2021 to date As of 24 March 2021, sustainable bond volumes amounted to USD172.13 billion in 2021 representing nearly a 150% increase over the same period in 2020 (USD69.82 billion). Social bonds have continued their breakthrough growth with EU issuance of EUR23 billion in particular since the start of the year (and EUR62.5 since October 2020) to fund its SURE programme.
On the green bond market front, sovereign issues continue to grow, especially in Europe. Following the inaugural issuances from Germany and Sweden in 2020, Italy joined the market with the biggest single sovereign issuance in Europe, a EUR8.5 billion 24-year green bond (marked by over EUR80 billion in buy-side interest). France consolidated its position as the leading sovereign borrower in the green bond market with a new EUR7 billion 23-year transaction bringing its total green bond issuance to EUR39.5 billion. The UK and Spain are also expected to issue green bonds this year.
Sustainable bond market issuance: 2014 to 2021 year to date
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