The movement would mark a rise of close to 30 per cent from 2020, when green, social and sustainability bonds totalled $225 billion.
A new report from Moody's has forecast the growth despite green instruments slightly cooling last year, expecting renewed momentum with supportive government policies in major jurisdictions, combined with strong investor demand and standardised regulations.
But there had been a pandemic-related rise in social and sustainability bond placements in 2020, with placement more than tripling to $123 billion, outweighing a 2 per cent decline in green bond volumes.
The products issued by financial institutions and development banks had accounted for around half of the total global issuance, of $490.6 billion.
Issuances in the APAC region grew to $15.2 billion in 2020, from $10.4 billion in 2019, accounting for 12 per cent of the total. Chinese, Japanese and South Korean institutions were primarily responsible, with their issuances up by 62 per cent, 140 per cent and 146 per cent respectively, compared with 2019.
“We expect financial institutions’ issuance of use-of-proceeds sustainable bonds to approach a fresh record this year, aided by a growing regulatory focus on ESG factors that encourages more financial institutions to issue sustainable bonds,” Carola Schuler, managing director at Moody's Investors Service said.
Green bonds are expected to grow by 38 per cent in 2021, spurred by sustainability commitments from the EU, US, UK and China.
Moody’s has projected green bonds will account for around half of the total, with social and sustainability-linked products expected to account for around a quarter each.
Another emerging outlet for green debt issuance is the Islamic finance market, Moody's noted.
After increasing fivefold in 2020, social bond issuance is tipped to grow by 6 per cent in the year ahead, while sustainability bonds are expected to surge by around 58 per cent after more than doubling in 2020.
Sarah Simpkins
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
