Green bonds issuance within emerging markets surged by 34% year-on-year, surging to $135bn in 2023, stated Amundi, one of Europe’s largest asset managers, and the International Finance Corporation, a member of the World Bank Group, in the sixth edition of the emerging market green bonds report, on 22 May 2024. Moreover, the broader category of global green, social, sustainability and sustainability-linked (GSSS) bonds also hit a milestone, exceeding $1trn, in line with the record high set in 2021.
The robust performance of GSSS bonds contributed to their increased prominence in international capital markets, constituting 2.5% of global fixed income issuance in 2023, up from 2.2% the previous year. This surge can be attributed to concerted efforts by governments and corporations in developing economies to address climate challenges.
Projections outlined by Amundi indicate a sustained growth trajectory for sustainable bonds issuance in emerging markets, with a forecasted 7.1% year-on-year increase for GSSS bonds and 7.5% growth for green bonds, extending until 2025. These forecasts hinge on a stable global landscape characterized by subdued inflationary pressures and minimal geopolitical escalations.
The report also highlights significant initiatives introduced in 2023 within the GSSS bonds arena, including the launch of new taxonomies in the Asean region, Latin America and the Caribbean, and Singapore, alongside funding initiatives targeting biodiversity conservation efforts.
In a press statement, Susan Lund, vice president of economics and private sector development at the IFC, underscored the imperative of deepening capital markets to finance sustainable projects in emerging economies. She emphasized the necessity of regulatory enhancements and standardisation of best practices to sustain the growth of the GSSS bonds market.
Echoing this sentiment, Yerlan Syzdykov, global head of emerging markets at Amundi, anticipated continued growth in green bonds issuance within emerging markets. He attributes this growth to factors such as, “an acceleration of the energy transition, a competitive pricing advantage for issuers compared to developed markets, and favourable macroeconomic conditions, such as high nominal yields at a time of relatively slow growth, which typically favours fixed income over equities.”
The 2023 report also noted that sovereign green bonds issuance witnessed robust growth, surging by 33% globally and an astounding 226% in emerging markets, while renewable energy projects garnered the largest share of funds raised from green instruments in emerging markets and developing economies during 2023, capturing 37% of the total, followed by green buildings, which accounted for 29% compared to 9% the previous year.
The full emerging market green bonds report 2023 is available .