Interest in green and social bonds is growing in Chile, according to the Santiago stock exchange. Since mid-2018, just over US$560mn in such instruments has been issued via the bourse in eight operations and so far this year the tally is US$366mn.
The Santiago bourse’s green and social bond market is the first of its kind in the region and complies with international standards established by global non-profit the Climate Bonds Initiative.
Under the framework, fixed-income instruments classed as a green or social bond can be issued and traded. Proceeds are used for financing or refinancing qualifying projects or schemes. The move is part of a wider sustainability strategy being executed by the exchange.
“There is growing interest in this market among companies, in an environment in which investors evaluate firms not just on returns or profits, and see that the vision of sustainability in the daily running of the companies adds value and allows a long-term business projection to be made,” Santiago stock exchange CEO José Antonio Martínez said.
Last month Chile became the first country in the Americas to issue a sovereign green bond, for US$1.42bn. It was more than 12 times oversubscribed. The move was part of government efforts to meet greenhouse gas reduction commitments.
As of June 20, Chile was the seventh biggest issuer of sovereign green bonds globally. Rating agency Moody’s expects global green bond issuance to hit US$200bn in 2019, up 20%.
“Factors contributing to growth in 2019 and beyond will include strong investor demand for sustainable investment products, governmental focus on addressing climate change and increasing numbers of repeat green bond issuers,” Moody’s said in a report.
In related news, the government on Tuesday launched a public-private working group, organized by the finance ministry, IDB, the British embassy in Chile and the UN’s environment program. The focus will be on climate risk management and green financing instruments.