Global green bond issuance reached a record high of $351bn in the first half of 2023, according to analysis by global law firm, Linklaters, based on Bloomberg data.
Overall, a total 1758 sustainable bond products were issued in the first six months of this year, raising $568bn. Green bonds continued to dominate the sustainable bond market, with 935 green bonds issued.
Europe continues to be the largest green bond market with 448 green bonds issued so far this year, raising a total of $190bn. This is despite the evolving regulatory landscape in the EU, with its Green Bond Standard expected to be adopted in the autumn.
In addition, green bond issuance by banks accounted for the majority of capital raised in the first half of the year, at $123bn, and was much higher than previous years, as the global banking sector continues to finance an increasing number of green projects.
In June, for example, the Industrial and Commercial Bank of China issued a Rmb10bn ($1.39bn) green bond, Bank of America issued a €1bn green bond, and both Danske Bank and SEB issued a €1bn green bond each, according to the Climate Bonds Initiative.
However, while green finance momentum continues to build amid the evolving regulatory landscape, sustainability-linked bond (SLB) issuances have slowed as scrutiny of the product increases. The second quarter of this year saw the lowest value of SLB issuances since the fourth quarter of 2020.
SLBs go beyond the traditional use of a proceeds model and link environmental, social and governance performance to financial performance through key performance indicators (KPIs) and associated targets.
According to Linklaters, “The downtrend comes amid keen investor focus on the selection of KPIs and ambitiousness of targets, as well as the robustness of the terms of the product. A key focus remains on ensuring SLBs are structured carefully to avoid greenwashing concerns.”
Interestingly, the International Capital Market Association (Icma), together with the Luxembourg Stock Exchange (LuxSE), has recently launched a database dedicated to sustainable bond data. The database includes bonds from more than 2100 issuers and 8700 listed green, social and sustainability bonds and SLBs aligned with Icma’s Green Bond Principles, and is openly available to all on Icma’s website.
Joy Macknight is editor of The Banker. Follow her on Twitter @joymacknight
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