From its inception in 2007, the growth of the Green Bond market was relatively slow but in recent years volume of issuance has increased significantly, propelled by the realisation amongst politicians, regulators, issuers and investors that Finance can be a valuable tool in the fight against climate change. Global Green Bond issuance increased 80% in 2017 to $155bn*.
Multilateral Development Banks were the pioneers in the market but now issuers from all sectors and of different sizes have come to the market.
As the market evolves, new complexities emerge with it. There are now Social Bonds and Sustainability Bonds as well as Green Bonds. The market continues to balance the flexibility that has served it so well so far with an increasing demand for standardization. No global standard for ‘green’ currently exists and there are numerous competing (or complementary) taxonomies. The Green Bond Principles have underpinned the market but other frameworks have emerged in China and India, for example, and the EU intends to bring out its own Green Bond Standard in the near term. Questions such as the need for issuers to provide Impact Reporting continue to be debated. Issuers need to balance the cost and resource implications of issuing a Green Bond with benefits such as investor diversification.
All this means that the process and route map for existing and potential Green/Social/Sustainability Bond issuers is becoming more complex.
MMC will bring its practical, hands-on experience and an independent stance to helping issuers and other market participants to navigate this pathway.
*Climate Bonds Initiative.