Green, social and sustainability bond issuances hit $322.6 billion in 2019, comprising 5.4% of global bond issuances. Green bonds made up 80% of 2019 issuances but have seen their share slip year after year to their social and sustainable counterparts.
Since 2015 GSS bonds have grown their share of the bond market despite record high industry issuance.
Green bonds, or bonds which the proceeds are to be used for environmental and climate related projects, were largely issued by corporations in 2019, issuing $114 billion, $59 billion of which was issued by non-financial companies.
European entities led the way in issuances with about 45% of the market. North American and Asian issuers each contributed 23% to the green bond market in 2019.
Sustainability bond growth has been strong in recent years, helped in part by a growing number of categories and vague definitions of what constitutes sustainability. The primary focus of the bond class is in projects that work towards a more sustainable future, such as decarbonization.
Concern over these bonds stems from the projects the proceeds are intended for, particularly what are called transition projects. These projects typically focus on reigning in a companies dependency on carbon output, often heavy industries, but can be left open-ended and subjective towards the use of the proceeds.
Moody’s expects 2020 issuance to be about $400 billion, a 24% increase over 2019. GSS bond issuances rose 60% between 2018 and 2019.