Green bonds issuance in emerging markets ‘to reach $100bn by 2023’

The post-pandemic recovery is expected to provide significant opportunities for green and sustainability-related projects, including renewable energy, green urban infrastructure and climate-smart agriculture

The Big Zero report

The issuance of green bonds in emerging markets is estimated to reach around $100 billion (£71bn) by 2023.

That’s according to a new report from IFC – a member of the World Bank – and European asset manager Amundi, which suggests the post-pandemic recovery is set to provide significant opportunities for green and sustainability-related projects, including renewable energy, green urban infrastructure and climate-smart agriculture.

They believe as countries start to move out of this global crisis, recovery paths in emerging markets are expected to be widely divergent and will require substantial fiscal policy support.

The report adds emerging economies will need to incorporate green objectives in their recovery, with efforts to not only mitigate climate risks and environmental challenges but also to increase resilience to future shocks.

According to the IFC, investment opportunities in emerging markets could generate more than $10 trillion (£7tn) by 2030 and create more than 200 million jobs in green sectors.

The global green bond market achieved a key milestone of $1 trillion (£0.7tn) in cumulative issuance since 2007, with issuance of $280 billion (£200bn) in 2020.

During that period, green bond issuance in emerging markets was robust with 174 green bonds amounting to $40 billion (£28.6bn), with seven emerging markets issuing them for the first time.

East Asia and the Pacific accounted for the largest share of green bond issuance in emerging markets, at 76%, with China remaining the largest green bond issuer in 2020, despite a fall in issuance, from more than $30 billion (£21bn) in previous years to $18 billion (£12.8bn) due to the COVID-19 crisis and a government push to issue pandemic-related bonds.

Outside China, green bonds issuance in emerging markets rose 21% last year to $22 billion (£15.7bn), representing faster growth than the 17% increase in global green bond issuance.

Largest emerging issuers include Chile, Brail and Indonesia, with seven debut issues including Egypt, Kazakhstan and Saudi Arabia.

Jean Pierre Lacombe, Director of Global Macro & Market Research at IFC said: “Robust investor appetite and increasingly supportive policy environments will continue to support the growth of green bond markets in emerging markets.

“This is now critically important, with investment for sustainable development urgently needed to lessen the pandemic’s profoundly negative social and economic consequences. This is especially true as regards the damage done to efforts to reduce global poverty, where several additional years will now be needed to regain ground lost due to COVID-19.”

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