Climate Action

Green bonds market on track for a record half trillion year

Green, Social and Sustainability (GSS) bonds, Sustainability-linked bonds (SLB), and Transition bonds reached $496.1 billion in H1 2021 as markets surge.

  • 03 September 2021
  • Olivia Story

Green, Social and Sustainability (GSS) bonds, Sustainability-linked bonds (SLB), and Transition bonds reached $496.1 billion in H1 2021 as markets surge.

The Climate Bonds Initiative’s report states the half a trillion total represents 59% year-on-year growth from the equivalent period in 2020. This sets the sustainable debt market on track to reach record highs.

The green debt volumes of 2021 reached a record high for any half-year period since 2007 with $227.8 billion. This volume is past halfway of the 2021 year-end forecast of $450 billion, leading the new projected year-end forecast to be $500 billion.

Sustainability bond issuance has seen a 20% year-on-year growth, with S&S bonds compromising 47% of the labelled debt issuance in H1 2021. Social and Sustainability issuance raises funds for projects aimed to achieve Sustainable Development Goals (SDGs).

Sustainability-linked Bonds (SLB) have specific Key Performance Indicators (KPIs) and Sustainability Performance Targets (SPTs). In H1 2021, SLB issuance amounted to 6% of the total labelled debt issuance.

Transition bonds play a vital role in supporting the global transition to the Paris Agreement targets, by allowing high emitters to fund their shift towards cleaner and more sustainable operations.

Recent pressure has been placed on policymakers to amplify the rate of green growth, with the UK including green bonds in the bond-buying programme by the end of 2021 to ensure UK environmental pledges are in action.

Krista Tukiainen, Head of Research and Reporting, Climate Bonds Initiative said: "We are pleased that our initial projections for green bond market growth are likely to be exceeded as other thematic issuance proliferates across a range of sustainability and SDGs related outcomes. Climate Bonds will continue to monitor the global GSS market and the development of the transition label.”

“We expect a stream of COP26 timed commitments from the financial sector, more sovereign green issuance and an acceleration of policy measures, including the EU bond program, will be ongoing momentum drivers of market growth for what will be record 2021 and strong start in the first half of 2022.”

Sean Kidney, CEO, Climate Bonds Initiative said: “The green finance revolution is underway with a powerful beginning to a pivotal decade for climate action. These figures show the tremendous potential for acceleration in the market for this and following years. Reaching the vital milestone of the first $1trillion in annual green investment opens a green window in global capex flows against 2030 targets. Trillions towards clean technologies, transition and building climate resilience can become a reality. The climate emergency demands no less from policy makers, regulators and institutional investors.”