Green Bonds Issuance to Hit US$100 Billion
Issuance of Green Bonds is on the verge of topping the US$100 billion mark for the first time, with a record year in prospect.
So far in 2017 US$96 billion worth of the financial instruments have been issued, according to Bloomberg New Energy Finance (BNEF), with another US$39 billion worth expected by the end of the year.
This would mean an annual total of US$135 billion – a 36% rise on the US$95 billion figure of 2016. The rise of Green Bonds has led Bloomberg to upscale its estimates of the market from its initial forecast of US$123 billion to US$130 billion after six-month results and now again to the highest figure.
While the sector is still just a fraction of the trillion-dollar debt market, it is set for a massive expansion. So far investors controlling some US$60 trillion have pledged to follow the Principles of Responsible Investment, where they factor in environmental, social and governance factors (ESGs) when they make investment decisions.
This has already pushed up demand for Green Bonds, with some institutional investors setting up dedicated funds devoted to clean energy and technology. Many finance professionals predict that this trend towards socially responsible investments will continue to accelerate rapidly.
To collate its figures, Bloomberg tags bond on its Terminal according to international green principles. Other analysts may use slightly different criteria, giving differing estimates, but all major indexes are predicting the US$100 billion barrier being smashed. Moody’s has a 2017 figure of US$120 billion chalked in (downgraded from an initial estimate made in January of US$203 billion), while the Climate Bonds Initiative has predicted a year-end total of US$130 billion.