The total climate-aligned bonds universe stands at USD 597.7 billion (EUR 543bn) -- a 20% increase from last year -- and is comprised of unlabelled climate-aligned bonds (USD 531.8bn) and labelled green bonds (USD 65.9bn), according to the report.
Total of 32% of this year’s increase of USD 95 billion was due to the rapid growth of the green bond market and 40% was due to climate-aligned rail issuance. Low carbon transport accounts for USD 418.8 billion (70%) of the total climate-aligned bonds universe followed by clean energy, which accounts for USD 118.4 billion (20%). The remaining 10% of bonds fall into the Buildings and Industry, Agriculture and Forestry, Waste and Pollution or Water themes or are Multi-Sector bonds.
Recent developments in the green bond market in terms of size and diversification are discussed; in 2014, USD 36.6 billion of green bonds were issued, triple the 2013 issuance of USD 11 billion. The Climate Bonds Initiative (CBI) expects this growth to continue and green bond issuance in 2015 to reach USD 70 billion, with a stretch target of USD 100 billion. Diversification of currencies and ratings of green bonds is an encouraging sign of a deep and liquid green bond market developing.
Another encouraging development is that green bonds have kicked off in emerging markets. India and China have led the way and, judging by the size of the unlabelled climate-aligned bond universe, there is potential for plenty more issuance from these markets, particularly China.
Sean Kidney, CEO, Climate Bonds Initiative, said: “Investors representing USD 43 trillion of assets under management signed statement at last September’s UN Climate Summit about the importance of addressing climate change and their willingness to invest accordingly, subject to meeting their risk and yield requirements. This report shows them that there’s a large and liquid USD 600 billion universe of bonds they can invest it – and it’s 90% investment grade.”
This report is the fourth edition of the annual "Bonds and Climate Change: state of the market" report. CBI says it is the only publication that attempts to estimate the global flows of bond finance toward climate solutions. These flows are estimated by sizing the unlabelled climate-aligned bond market and the labelled green bond market. Unlabelled climate-aligned bonds are bonds whose proceeds are used to finance climate solutions but do not carry the green label yet.
Country specific findings:
AUSTRALIA
National Australia Bank (NAB) issued a AUD 300 million green bond as the first Certified Climate Bond from a bank;
Australia’s ANZ Bank was the first multi-sector issuer to be certified under both the low carbon buildings and solar Climate Bonds Standards;
CHINA
CNY-denominated bonds account for USD 197.7 billion or 33% of the climate-aligned bond universe;
China Rail is the largest issuer of any climate-aligned entity, with USD 171.5 billion climate aligned bonds;
China Industrial Bank issued a bond in the green bond style in late 2014. We expect the first regulator approved green bonds in the second half of 2015;
FRANCE
This year’s EUR 480 million issuance from French recycling company Paprec moves corporate green bond market forward;
France’s SNCF has issued USD 11 billion of climate-aligned bonds;
GERMANY
German KfW bank, with USD 4 billion in green bond issuance, is the 3rd biggest issuer of green bonds within a year of its first green bond issuance;
German real estate and mortgage bank BerlinHyp issues first labelled green covered bond at EUR 500 million in May 2015;
NRW bank issues assurance statements on green bond proceeds;
UK
Some 9%, USD 58.5 billion, of climate-aligned bonds universe is from UK issuers;
The UK’s Network Rail has issued USD 44.1 billion of climate-aligned bonds;
Transport for London (TfL) labels its GBP 400 million bond green in 2015, the rest of TfL’s outstanding bonds are represented in the unlabelled climate-aligned universe;
USA
Some 12%, USD 51 billion, of climate-aligned bonds universe is from US issuers;
US municipal green bond market heated up in mid-2014 with green bonds issued for university green property projects and sustainable water projects;
(USD 1 = EUR 0.908)
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