Global green bond issuance reaches record high of $351B in first half of 2023

Republished By Plato

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Global green bond issuance raised record levels of capital from investors in the first six months of this year with the market topping $350 billion for the first time.

That is according to a new analysis this week from law firm Linklaters, which predicts the global green bonds market is on track for a record year.

The firm analyzed industry figures from Bloomberg and found that a total of 1,758 sustainable bond products were issued from Jan. 1 to June 30, raising a total of $568 billion in the period.

Linklaters said green bonds continued to dominate the sustainable bond market, with 935 green bonds issued during the period, raising $351 billion and making the first half of the year a record six months in terms of the value of capital raised from investors.

Green bond issuance by banks accounted for most of the capital raised in the first half of the year at $123 billion, which Linklaters said was “much higher” than previous years and likely a result of the global banking sector’s efforts to ramp up the financing of green projects as part of bank’s net zero strategies.

While analysis showed Asia Pacific saw “significant” growth, Europe was the largest green bond market with 448 green bonds issued so far this year, raising a total of $190 billion.

Linklaters highlighted how market growth comes against a backdrop of a continually evolving regulatory landscape in Europe, with the EU Green Bond Standard expected to be adopted in the autumn.

As the momentum in green finance markets continues, the law firm urged green bond issuers to seek legal advice to help them navigate the fast-moving regulatory landscape and ensure that their products comply with emerging standards.

“Despite the continued uncertainty posed by the macroeconomic backdrop, the first two quarters have been strong and consistent for sustainable bonds generally and green bonds in particular,” said Amelia Rice, capital markets managing associate at Linklaters.

“It will be interesting to see whether the pace of issuance accelerates further throughout the course of this year as governments, financials and corporates look to finance a growing number of green projects.”

Ben Dulieu, capital markets partner at Linklaters, warned that as the urgency of the climate transition intensifies, so too will scrutiny of sustainable finance products.

“Greenwashing is at the top of the agenda for regulators across the world and recent developments such as the political agreement on the EU’s Green Bond Standard will aim to bring increased transparency and confidence to the market,” he added.

“Issuers and underwriters will need expert advisers guiding them through the upcoming regulatory changes and to help them respond thoughtfully to the increased scrutiny on the robustness of sustainable bond products.”