Climate-Aligned Bonds Soar To Reach $600 Billion

A new report has reported climate-aligned bonds have reached a total of $597.7 billion since 2005, a 20% increase on a year earlier, with almost a third of this year’s increase linked to the rapid growth in the green bond market.

The report was published by the Climate Bonds Initiative, and represents the only publication that attempts to estimate the global flow of climate-aligned bond financing. Commissioned by the HSBC Climate Change Centre of Excellence, the Bonds and Climate Change: The State of the Market in 2015 report is the result of analyzing the unlabeled climate-aligned bond market as well as the labeled green bond market.

According to the report, the climate-aligned bond market is currently made up of 2,769 bonds from 407 issuers, and span six climate themes: transport, energy, buildings and industry, agriculture and forestry, waste and pollution, and water.

Interestingly, low-carbon transport accounts for $418.8 billion, or 70% of the total climate-aligned bonds market, followed by clean energy, which itself accounts for $118.4 billion, or 20%.

Of the transport sector, rail accounts for 95% of the figure, primarily from state-backed entities.

Energy, on the other hand, is made up of a range of renewable energy power generators, including hydropower, wind, solar, bioenergy, geothermal, and nuclear.

“Investors representing $43 trillion of assets under management signed a statement at last September’s UN climate summit about the importance of addressing climate change and their willingness to invest accordingly, subject to meeting their risk and yield requirements,” said Sean Kidney, CEO of the Climate Bonds Initiative.

“This report shows them that there’s a large and liquid $600 billion universe of bonds they can invest in – and it’s 90% investment grade.”

Watch the video below to see a introduction of the key findings from the report.

The full report is available here.