Bonds and Climate Change: the State of the Market in 2012

Publisher
Climate Bonds Initiative in association with HSBC Climate Change Centre of Excellence
Publication date
May 2012
Type
Reports
Category
Environment/Climate Change
SRI/Sustainable Finance
Discipline
Environmental Management
Finance
Language
English
Link
http://climatebonds.net/resources/bonds-and-climate-economy/
Free/Pay for content
Free
 

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.

  1. Standardise and certify: third-party certification of climate-themed bonds based on agreed standards could both reduce repetitional risks and enable market liquidity.
  2. 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.
  3. 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.

 

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