Sustainable Debt Issuance Chronicles 78% Growth to $465 Billion in 2019: BNEF

A new record was set in 2019 for the volume of sustainable debt issued globally in any single year, with the total thumping $465 billion globally, up a significant 78 percent from $ 261.4 billion in 2018.

Last year also saw all-time, cumulative issuance of sustainable debt smash through the $1 trillion barriers, and reach $1.17 trillion by December 31, 2019, based on the latest figures of the comprehensive sustainable debt universe captured by research company BloombergNEF (BNEF).

Jonas Rooze, the lead sustainability analyst at BNEF, said that “our data show sustainable finance continuing to power ahead on a global basis. The steep increase is fueled by end-investors’ concerns about the threat of climate change, and the desire of many big companies, banks and government leaders to be seen as behaving responsibly.”

Sustainable debt covers a variety of instruments, from the well-established area of green bonds to the fast-emerging category of sustainability-linked loans. Green bonds, constituting more than half of the entire sustainable debt market in 2019, saw $ 271 billion issued – up from $182 billion in 2018. Green bonds are securities with proceeds used entirely for environmentally friendly projects, like a renewable generation or marine habitat conservation.

The report also saw an almost-threefold increase in the volume of sustainability bonds issued last year, to a record $46 billion. “This is the biggest jump for sustainability bonds ever, showing interest from borrowers and investors in securities that combine support for both social and environmental activities,” said Mallory Rutigliano, green and sustainable finance analyst at BNEF.

Some of the most spectacular growth of all is being seen in sustainability-linked loans, now the second most popular thematic debt type. This category, consisting of loans linked to the borrower’s performance on defined environmental, social or governance (ESG) criteria, enjoyed a 168 percent jump in volumes to $122 billion in 2019. A new sustainability-linked bond category was introduced in the last half of 2019. Enel, the Italian utility company, issued the four inaugural bonds in this category in September and October. The coupons on these securities are tied to Enel’s renewable energy generation goals.

The report further added that innovation of this kind is not unusual in Europe, which has pioneered the field and still makes up 53 percent of the global market for all sustainable debt. In 2019, the EMEA region issued $262 billion worth, with AMER and APAC vying for second place with $95 billion and $80 billion, respectively.

For yet another year, the mortgage financing organization Fannie Mae was the number one issuer of global sustainable debt, securitizing mortgages to the tune of $22.8 billion. Following this is the energy provider Royal Dutch Shell PLC, which issued a sustainability-linked loan for $10 billion (its first-ever themed instrument of any kind) in December. The governments of the Netherlands and of France were notable sovereign issuers in 2019, together issuing $13.3 billion.