JAKARTA (TheInsiderStories) – The green bond market hit a new all-time quarterly high in the second quarter (2Q) of 2019 as issuers brought $66.6 billion to the market globally. The propelling first half issuance to a record $117 billion, according to a new report by Moody’s Investors Service released on Thursday (08/08).
“First-half issuance was 47 percent higher than the same period of 2018, compared against the 11 percent year-over-year for the same six month periods of 2017 and 2018,” says Moody’s analyst Matthew Kuchtyak by adding the green bond market remains on course to eclipse our 2019 forecast of $200 billion of total issuance.
According to the report, corporates were the strongest contributors to overall green bond issuance in the second quarter, with $14.9 billion of non-financial corporate issuance and $13.6 billion of financial corporate issuance accounting for 22 percent and 20 percent of total volume, respectively, adds Kuchtyak.
European issuers accounted for a leading 54 percent of total issuance, driven by the large debut $6.7 billion sovereign green bond from Netherlands. Continued green bond market growth would be supported by the European Commission’ proposed taxonomy for environmentally sustainable economic activities and a report on a proposed EU Green Bond Standard, says Moody’s.
Additionally, the International Capital Market Association’ new Green and Social Bond Principles guidance documents represent an important step toward harmonizing the global green and social bond markets. Issuance of social and sustainability bonds also continues to grow rapidly, with the development of these more nascent markets mirroring the green bond market of a few years ago.
Social and sustainability bond issuance rose to a record level in the second quarter, with a combined $16.7 billion of issuance. The $30 billion of combined first-half social and sustainability bond issuance represents a 103% increase over the same period last year.
Previously, International Finance Corporation (IFC), a member of the World Bank Group, reported with about 1.2 billion more people expected to live in Asian cities in 35 years, the cities have the potential to attract more than $20 trillion in climate-related investments in six key sectors by 2030.
The agency analyzes climate-related targets and action plans in six regions, identifying opportunities in priority sectors such as green buildings, public transportation, electric vehicles, waste, water, and renewable energy.
It highlights innovative approaches that cities are already using—such as green bonds and public-private partnerships—to attract private capital and build urban resilience.
It says with its plans, policies and projects, the Asia Pacific region has the highest climate smart investment potential of any region in the world, with by far the biggest opportunity in green buildings, estimated at a US$17.8 trillion opportunity by 2030.
IFC Regional Director for East Asia and the Pacific, Vivek Pathak stated, “In Jakarta, there’s about $30 billion investment opportunity, particularly in green buildings, electric vehicles and renewable energy. The report shows mega-cities in Asia also have significant potential for investments that yield emission reductions.”
Globally, green buildings will account for $24.7 trillion of cities’ climate investment opportunities. Significant investment potential exists in low-carbon transportation solutions such as energy-efficient public transport ($1 trillion) and electric vehicles ($1.6 trillion). At the same time, clean energy ($842 billion), water ($1 trillion) and waste ($200 billion) remain essential components of sustainable urban development.
In Asia Pacific, the report estimates the investment potential in green buildings is $17.8 trillion, in waste $104 billion, public transport $352 billion, renewable energy $407 billion, climate-smart water $571 billion, and electric vehicles $783 billion.
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