Green bonds market passes $1 trillion milestone amid global turmoil

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The green bonds market has passed its greatest milestone by reaching more than $1 trillion in issued bonds since the mechanism emerged in 2007, according to a new study released by BloombergNEF.

According to the study, more than $200 billion in green bonds has been issued in 2020.

This represents a 12% increase compared with the first nine months of 2019. Together, corporate, government, municipal and mortgage green bond issuance in 2020 trailed 2019’s volumes through August. This all changed in September, when green bonds saw more than $50 billion brought to market in that month alone.

In the first nine months of 2020, green bonds accounted for 47% of the sustainable debt issued worldwide.

One of the biggest boosters this September came from Germany. The federal government issued a €6.5 billion ($7.7 billion) sovereign bond at the start of the month, making it this year’s biggest single new green bond. Similarly, the Swedish government and Électricité de France (EDF) helped jumpstart the month, with more than $5 billion combined.

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In reaching their cumulative $1 trillion issuance milestone, the market has also pushed the wider sustainable debt market – which includes social bonds, sustainability-linked loans,  green loans and others – over the $2 trillion mark.

Green bonds have become the longest standing and most heavily used instrument in the sustainable debt market with global issuance increasing every year to date, reaching a record of more than $270 billion last year.

Mallory Rutigliano, sustainable finance analyst at BNEF, said:  “For much of this year, green bond issuance has lagged behind 2019. But the bumper month in September, with more than $50 billion issued, offers hope of a possible boom in the last quarter of the year.”

Maia Godemer, BNEF sustainable finance associate, adds: “The integration of environmental, social and governance criteria has never been more important for investors than in 2020. We’ve seen this reflected in the debt market, and it is not only likely that these varieties of financing will grow in volumes in coming years, but we will see further innovation. One driver is likely to be increasing pressure to standardise rules around green bonds, particularly in Europe.”