2024 has been the strongest ever year for green bond sales, with deals topping USD356 billion in the first six months, according to research from Bloomberg.
While the first three months were the busier of the half, with issues from both corporates and governments pushing sales to USD191 billion, second quarter sales of green bonds still hit USD165 billion.
According to Jonathan Gardiner, Sustainable Indices Product Manager at Bloomberg, sustainable bond issuance as a whole set new records in the first quarter of 2024, boosted by government bond issues, as well as transition bonds in Japan.
However, he adds: “Issuance of impact bonds – green, social, sustainability and sustainability-linked – was stronger in the first quarter than the second, with Q1 totalling USD328 billion, up 7.5 per cent on the same period last year.”
Green bonds look set to continue their stellar year after a new Labour government was elected in the UK this month.
After concerns from green gilt investors that the Conservative government was pulling back on climate change commitments, the incoming Labour party pledged clean power by 2030.
According to the Institute for Energy Economics and Financial Analysis (IEFFA) the UK – which is already the world’s third-largest sovereign issuer, after France and Germany – “is committed to reaching net zero by 2050. With some form of interim climate policy pledges [from the new government] this could see continuity of the country’s green gilt programme”.
New pledges include the zero-carbon electricity system commitment has been brought forward by five years, and the target of quadrupling offshore wind by 2030 go further than the previous government’s goal of 50 gigawatts by the same year.
The aim of tripling solar power by 2030 appears in line with the previously set goal of 70 gigawatts by 2035.
Kevin Leung, Sustainable Finance Analyst, Debt Markets, Europe, at IEEFA says: “While the required investments may vary, sovereign green debt financing is becoming an increasingly important fundraising channel; it also plays a rising role as a catalyst for private investments. Additional benefits such as overall sustainable bond liquidity and market creation, as illustrated in a working paper by the International Monetary Fund, should encourage continued green gilt issuance.”
While the UK is a big player in green bonds, it is not the largest and it did not contribute the biggest proportions of issuances this year.
The largest green bond sale in the first six months of 2024 was from the Italian government, in May, which totalled EUR9 billion. The Japanese government debuted its green transition bond, with three separate transactions in the first half totalling over USD12 billion, which Gardiner notes is “part of their plan to significantly ramp up issuance over the next 10 years”.
In addition to the UK, other government issuers of green bonds included France, Germany, Australia, Canada with more than EUR140 billion in sales from January to June, accounting for the largest sector of these instruments issued.
