Leg up for green bonds amid record sustainable debt in 2020

Sustainable debt worth $732 billion issued globally; $305 billion of that in green bonds

By DTE Staff
Published: Tuesday 12 January 2021
Issuance of green bonds saw a late surge in 2020

The novel coronavirus disease (COVID-19) pandemic may have affected several efforts to combat climate change in 2020, but it did not slow down the nascent sustainable debt sector. A record $732.1 billion (Rs 53.6 lakh crore) worth sustainable bonds and loans were issued last year, 29 per cent more than in 2019, according to a recent report.

Green bonds, the oldest of the sustainable debt instruments, rose 13 per cent to set an issuance record of $305.3 billion.

Social and sustainability bonds grew consistently while green bonds surged later in the year, according to the report released January 11, 2020 by energy research organisation BloombergNEF.

Issuance of social bonds, which raise money for social objectives such as employment, public health and education, jumped seven folds to $147.7 billion. Sustainability bonds grew 81 per cent to $68.7 billion.

On the other hand, issuance of both sustainability-linked loans and green loans reduced 15 per cent to $119.5 billion and $80.3 billion respectively. 

Global sustainable debt annual issuance, 2013-2020

Source: BloombergNEF, Bloomberg L.P.

Mallory Rutigliano, a sustainable finance analyst at BloombergNEF, said:

“COVID-19-related disruption affected issuance of some sustainable debt instruments in 2020, but spurred others. Overall growth of almost 30% in the market showed that sustainability continues to rise up on the agenda for investors, businesses and governments. This relatively new market is now being seen as a tool global economies can use to build back greener and socially fairer.”

The swell in social bond issuance was driven by products addressing the coronavirus pandemic and the recession. The vast majority of issuance of these bonds came from government agencies and supranational bodies that borrowed money for healthcare and relief objectives.

The year 2020 saw the largest single social bonds issued ever, from entities such as the European Union, Unedic, and African Development Bank.

Offerings through green bonds, raised to support environmental activities, surged in September with a whopping $62 billion. The growth continued in the fourth quarter and took the total issuance since 2007 to more than $1 trillion.

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