Net Zero Investor covered last month’s Climate Bonds Initiative (CBI) annual conference in London. There is good news and some interesting developments.
The good news: “In the first half of the year, the cumulative volume of GSS+ [green, sustainable and sustainability-linked] bonds stood at $6.2trn.” Blackrock noted “Issuance growth is linked to investor confidence… green bonds are seen as one of the cleanest ways of deploying capital into the energy transition.”
The interesting developments:
“CBI’s chief executive and co-founder Sean Kidney kicked off the day’s proceedings with a spirited address. ‘If we want to get the beasts of finance moving, we need to make sure that this is about creating opportunity’, said Kidney…
Kidney’s view was that part of the reallocation would come from redefining what counts as a climate investment. For green bonds, this means figuring out which hitherto untapped territory green bond markets might venture into.
Investors speaking at a subsequent panel had some answers. ‘There are new issuers coming to the market from hard-to-abate sectors’, said Christina Bastin, a portfolio manager at Man Group.
Jake Goodman, a senior sustainability investment analyst at Federated Hermes had a similar story to tell. ‘Labelled issuance from brown sectors is incredibly important’, he said.”
I haven’t followed the green bond market closely in quite some time so I’m not up to date on issuances. In the past, corporate issuers tilted toward “clean” or at least “light brown” sectors such as financial services and technology. However, a very quick review of issuer data from International Capital Market Association (IMCA) showed a surprising number of companies from industrials and utilities – sectors that in reality should benefit the most from deploying capital toward sustainability projects. It appears the green bond market expects this to continue.
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