Issuance of Global Green Bonds Reaches All-Time High of $351 Billion during First Half of 2023
Investors contributed to record-breaking amounts of capital over the first half of 2020 that propelled global green bond issuance to a new peak of $350bn.
This week, Linklaters, a law firm, conducted an analysis and determined that the worldwide market for green bonds will likely have a record-breaking year.
An examination of Bloomberg's industry numbers revealed that from the start of the year to the end of June, 1,758 sustainable bond products were issued, raising a total of $568bn.
Linklaters reported that during the year's first half, the sustainable bond market experienced a record amount of capital raised from investors. This was attributed to issuing 935 green bonds, which raised $351bn.
In the first half of the year, banks raised $123bn in green bond issuance, which Linklaters identified as much higher than in years prior. This likely stemmed from the banking sector's endeavours to support the funding of green initiatives as part of their net-zero strategies.
Research indicated a sizable expansion in the Asia Pacific area. Still, Europe remained the leading green bond market in 2020, with 448 green bonds being issued yearly and raising $190bn.
Linklaters pointed out that market expansion is taking place amid a continuously changing regulatory environment in Europe, and the EU Green Bond Standard is anticipated to be established by the autumn.
The law firm has encouraged green bond issuers to seek legal counsel to stay compliant with the ever-evolving regulatory environment of green finance markets. These companies need to keep up-to-date with the current standards.
Despite the uncertain macroeconomic conditions, the first half of the year has been robust and steady for sustainable bonds, with green bonds showing even more strength, according to Linklaters' capital markets managing associate, Amelia Rice.
It will be intriguing to observe if the speed of issuance continues to increase throughout 2021 as different entities such as governments, banks, and companies strive to finance a larger quantity of eco-friendly projects.
Ben Dulieu, a partner at Linklaters who specializes in capital markets, cautioned that as the urgency of the climate change transition increases, so too will the examination of sustainable finance offerings.
According to him, regulators worldwide have Greenwashing at the forefront of their attention, and the recently reached political agreement on the European Union's Green Bond Standard will attempt to bring more trust and clarity to the market.
Underwriters and issuers will need to be provided with professional guidance as they transition through the upcoming regulatory modifications and to assist them in their efforts to carefully respond to the increased attention on the strength of sustainable bond products.