Bonds and Climate Change: the State of the Market in 2012
This report is an in depth analysis of the climate-themed bonds market’s size. It explores the key investments themes and regional markets and also identifies three key ways to accelerate market expansion.
The Report highlights that 67% of the market is originated in Europe, followed by USA (17%), Russia, Canada and China all at 3% each. UK institutions have issued the largest amount of climate-themed bond with 23% of the global total.
Further growth in the climate-themed bond market over the coming year is expected. However, investor engagement is currently hampered by a number of factors – and authors identify three key ways of accelerating market expansion.
- Standardise and certify: third-party certification of climate-themed bonds based on agreed standards could both reduce repetitional risks and enable market liquidity.
- Aggregate to scale and index: institutional investment market requires suitable deal flow with sizes over $500mn. Aggregation vehicles therefore are required in order to refinance the climate economy.
- Structure to investment-grade: policy risk is a major constraint to investment in the climate economy. Governments and public finance could adopt measures to counter this problem.