Green Bond Issuance Overtakes 2018

Shanny Basar

The volume of green bonds issued so far this year has overtaken the whole of 2018 and reached a new record according to the Climate Bonds Initiative.

The non-profit investor organisation said in a report that previous milestones this year include reaching $100bn (€92bn) in June and $150bn in August.

In another boost to the green bond market, the Bank for International Settlements this month launched an open-ended fund for central bank investments in green bonds.

The regulator said in a statement: “Responding to a growing demand for climate-friendly investments among official institutions, the BIS’s green bond fund initiative helps central banks to incorporate environmental sustainability objectives in the management of their reserves.”

The European Bank for Reconstruction and Development also issued the first climate resilience bond following the development bank’s adoption of the Climate Resilience Principles from the Climate Bonds Initiative.

Three banks, BNP Paribas, Goldman Sachs and Skandinaviska EnskildaBanken, acted as joint bookrunners on the issue which had demand from approximately 40 investors in 15 countries.

Craig Davies, head of climate resilience investments at the EBRD, said in a statement: “This is a major step forward in the development of capital market instruments that can crowd in private finance at scale for climate resilience.”

Finance sector makes pledges

The United Nations Climate Action Summit in New York last week highlighted the potential role for the financial sector in helping to build climate resilience. Action on climate change is still far short of the requirements to meet the 1.5°C target of the Paris Agreement.

The UN launched the Principles for Responsible Banking and 130 banks, one third of the global  sector, signed up. They agreed to strategically align their business with the goals of the Paris Agreement on Climate Change and the Sustainable Development Goals.

Inger Andersen, executive director of the United Nations Environment Programme (UNEP), said in a statement: “When the financial system shifts its capital away from resource-hungry, brown investments to those that back nature as solution, everybody wins in the long-term.”

In addition the the UN-convened Net-Zero Asset Owner Alliance committed to drive economies to carbon neutrality by 2050.

The Alliance, which represents more than $2 trillion in assets under management, was set up by Allianz, Caisse des Dépôts, La Caisse de dépôt et placement du Québec (CDPQ), Folksam Group, PensionDanmark and Swiss Re at the beginning of this year. Since then, Alecta, AMF, CalPERS, Nordea Life and Pension, Storebrand, and Zurich have joined as founding members.

Members will advocate for, and engage on, corporate and industry action, as well as public policies, for a low-carbon transition of economic sectors and set targets for 2025, 2030 and 2040.

Oliver Bäte, chief executive of Allianz, said in a statement: “Mitigating climate change is the challenge of our lifetime. We, as asset owners, will live up to our responsibility and, in dialogue with the companies in which we invest, steer towards low-carbon business practices.”

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