ESGFebruary 2, 2021

Green Bond Issuance Sets New Record in 2020

Despite turbulent second quarter, global green bond market grows for ninth straight year.

Reported by Michael Katz

Green bond issuance grew for the ninth straight year, climbing to a record high of $269.5 billion at the end of last year, up from $266.5 billion in 2019, according to not-for-profit organization Climate Bonds Initiative, which said 2021 could be another record year, with issuance rising to as high as $450 billion.

The $3 billion increase in issuance from 2019 was rather modest compared with the previous year, when issuance ballooned by more than $95 billion between 2018 and 2019. The sharp deceleration in growth was due the impact of the COVID-19 pandemic on the green bond market during the second quarter. However, record-breaking issuance during the third quarter helped prevent the end of the market’s nearly decadelong winning streak.

Green bonds, loans, and sharia compliant sukuk bonds originated from 53 countries, while green loans and green sukuk—i.e., not including bonds—originated from 23 countries in 2020, more than twice that of the previous year when those instruments originated from only 11 countries.

While the market has been growing for the past nine years, green bonds have been accelerating sharply over the past five years, with 60% average annual growth since 2015. In the past five years, the green debt capital market has grown from a cumulative volume of $104 billion to $1.05 trillion at the end of 2020.

The US had the largest issuance of green bonds by country with $51.1 billion, followed by Germany with $40.2 billion, and France with $32.1 billion. China and the Netherlands rounded out the top five with $17.2 billion and $17 billion in issuance, respectively. The next five highest totals were in Sweden, Japan, Canada, Spain, and Norway.

Fannie Mae was the largest green bond issuer last year with a total issuance of $13 billion through its Multifamily Green MBS program, which finances green mortgages backed by multifamily properties that have green building certifications or display audited efficiency improvements. Germany was the second largest ranking green bond issuer in 2020, thanks to its inaugural green sovereign bond, at $12.8 billion; and French state-owned transport company Société du Grand Paris was the third largest green bond issuer at $12.2 billion.

The Climate Bonds Initiative said transport operators and sovereign nations led the largest certified issuers. Société du Grand Paris was the largest certified issuer last year, followed by the New York Metropolitan Transportation Authority (MTA), which issued $4 billion in climate bonds during the year, and the Republic of Chile, which issued $3.8 billion worth of the bonds.