On the back of a disappointing 2018, corporates returned with a vengeance in 2019 and set all-time record highs for supply in the green bond market. Core to this resurgence was a sharp pick-up in supply from the utility and energy sector as well as increasing supply from real estate companies. It is not surprising to see these types of issuers drive supply as they represent the categories most easily defined from a Green perspective.

Corporate supply has historically been driven by utilities, but diversity is picking up:

Corporate supply in the green bond market

Also positive to see was the notable increase in supply coming from non-traditional sectors, such as supermarkets/retailers, consumer staples and telecoms. Granted, total corporate, non-utility/energy/real estate issuance totalled only USD30bn, or a third of corporate supply. But still, it represents an important step for the Green bond as we have started moving beyond the traditional categories and issuers. Notable issuances came from issuers highlighted below.

Selection of corporates that issued Green, Social or Sustainability bonds in 2019:

Corporate green bond issuers

2020 outlook: A story of increasing diversity (of issuers and assets)

Looking ahead in 2020, we have high hopes for this trend of industrial corporates to continue. Besides increasing diversification and overall supply, the corporate sector is also important from another perspective – innovation. We have been accustomed for some time to seeing SSAs, banks and traditional utility companies issuing Green bonds. However, corporate supply brings with it the difficult but exciting challenges of applying a Green frame of reference to more intricate and complicated activities typically found within corporates.

With this new bulk of issuers starting to look at the sustainable bond markets, we will increasingly face the question of “how to define Green (or Social)?” Obviously, we now have some guidance for these discussions in the form of the EU Taxonomy and the list of 67 activities (as it currently stands). For more insight into which sectors will likely drive supply, see the Climate Bonds Initiative’s list of sector criteria, available on its website. Below is a list of the criteria currently available and under development.

Sector criteria available for certification:

Sector criteria under development:

 

 

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