One month after the end of 2021, the global issuance of green bonds has skyrocketed to the amount of 428.2 billion dollars, according to data from the Climate Bond Initiative (CBI), which has far exceeded what was seen in 2019 and in 2020.
The figure registered from January to November of this year is already 54% higher when compared to the record reported in all of 2019, a year prior to the pandemic. When contrasted with what was observed in 2020, the most difficult year due to the health contingency, the amount is 69% higher.
The rebound achieved this year is explained by the preference that investors are having in the face of the new mandates to favor sustainable investments, even when the tension in global financial markets has re-emerged due to high inflation and the new strain of coronavirus that is bordering on to new confinements, as well as concerns about the global economic recovery.
“With countries around the world stepping up their efforts to reduce carbon emissions and investor appetite, the green bond market is booming and continues to grow year by year,” indicated an analysis by the World Economic Forum (WEF).
A reflection of this “appetite” for green investments is the reception of the first Green Bond NextGenerationEU issued by the European Commission last October, which reached a total collection of 12,000 million euros. Investor demand was more than 11 times the amount obtained, with which investor positions exceeded 135,000 million euros.
Likewise, the offer of green bonds launched last November by the Hong Kong government, for the equivalent of 3,000 million dollars (since it was placed in dollars and in euros), registered an oversubscription for the tranche denominated in dollars of 2,900 million and for the two offers in euros, it reached more than 2,200 million euros.
The CBI maintains its objective of reaching green issues for an amount of 500,000 million dollars by the end of 2021, supported by the expectations of next sovereign placements, as the governments of Spain and the United Kingdom have already done, as well as Germany that led out your fourth offer.
Green wash worries
Given the strong growth that year after year is registered in the green bond market in the world, the “greenwashing” or green washing (false or misleading statements to make you believe that a company, project or product is green or benefits the environment when not quite the case) is a strong global challenge for the market for green bonds and other sustainable investments, the WEF stated in a report.
In fact, he stressed that to prevent this type of deceptive practices and to give greater security to investments, regulators and the industry itself are already working hard to address this problem.
The rating agency S&P Global Rating indicates that the lack of a standardization in this market and the disclosure of information after an issuance has generated fears among investors that the claims of “green bonds” made by issuers may be exaggerated or little. reliable.
It even refers to a survey carried out by Quilter Investors in May 2021, in which it was found that when it comes to thematic investments (green, social or sustainable), the so-called green washing is the greatest concern for approximately 44% of investors. interviewed.
According to the survey, investors seeking to act more responsibly and maximize their environmental impact have become “increasingly sensitive” to the effects of companies that potentially believe they are exaggerating their “green credentials” in order to capitalize on the growing demand for financial products with a positive environmental and social impact.
Given this, he suggests that regulations and principles could help mitigate environmental laundering risks, but “the road to harmonization is long and tortuous.”
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