1H 2022 Sustainable Finance Market Overview

Jan 25, 2022 12:26 PM ET
  • In 2021, greater than $1.6 trillion in sustainable financial debt tools were provided, setting a new record and also bringing the total market to over $4 trillion.

The growth came against the backdrop of COP26, to name a few events, which brought restored commitments to mobilize public as well as personal climate financing from federal governments and also brought together personal actors with campaigns like the Glasgow Financial Alliance for Net Zero. Provided the proliferation of ESG right into financial items and stakeholder buy-in, several regions are now taking a look at exactly how to standardize the market using plans such as taxonomies.

  • Green bonds increased in issuance between 2020 and 2021, with volumes reaching greater than $620 billion. Social and also sustainability bonds with each other reached a record $400 billion in issuance in 2021, enhanced by federal government bonds, mainly from supranationals. However, social bonds began to see a slip in offerings in 2H compared with the initial half of the year, largely due to the elimination of some essential Covid-19 relief program funding.
  • Net flows into ESG ETFs rose to a record $128 billion in 2021. Nevertheless, even more labeling requirements are required, as sustainable standards are irregular. Global variations such as these have resulted in a real 'taxomania' creating around the world. After the EU pioneered its Taxonomy for specifying sustainable tasks, other countries consisting of the U.K., Singapore as well as South Africa have actually been inspired to establish their own, comparable classification systems.
  • Transition-labeled money has mostly failed to take off, as providers are uncertain regarding the meaning and also investors are doubtful about greenwashing. A more preferred alternative for heavy-emitting industries has actually been sustainability-linked lendings and also bonds, which were the fastest growing themes in the ESG fixed income market in 2021. With each other, these reached more than $530 billion-- four times the volume used in 2020.

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