Amundi, Europe\u2019s largest asset manager, and IFC, a member of the World Bank
\nGroup, today published their annual Emerging Market (EM) Green Bond Report. The second edition of the Amundi-IFC Emerging Market Green Bond Report 2019 focuses exclusively on green bond investments in emerging markets. With the aim of highlighting market progress and identifying future opportunities, this report offers to address the gap in public information on emerging market green bonds. The full report is availablehere.<\/p>\n
COVID-19 crisis and the current state of play<\/strong><\/p>\n As we publish this report, governments across the world are implementing unprecedented measures to fight one of the most acute pandemics since the Spanish Flu. Emerging market economies have far less room for fiscal and monetary manoeuvring, and as shown by early indicators, will be disproportionately hit by the COVID-19 crisis. Today, both green bond issuers and investors face the challenge of overcoming current market turbulence.<\/p>\n However, responsible investors with long-term allocations to emerging markets can collaborate with issuers through green bonds and ESG funds to unlock long-term capital and help issuers become more resilient. So far, investment flows since the start of the crisis have proven more resilient towards green investments when compared to their traditional counterparts. It is possible that investors view green issuers as more long-term oriented and flexible for weathering short-term volatility.<\/p>\n Debt capital markets offer essential funding for sustainable development<\/strong><\/p>\n Financing countries\u2019 climate and sustainable development commitments will require global investment Momentum is rapidly building for the global green bond market, which has now surpassed $700 billion in EM Green bond issuance in 2019:<\/strong><\/p>\n Globally, the green bond market outperformed in 2019, with a record issuance volume of $240 billion EM green bond growth continues to be led by China, with the East Asia and the Pacific region responsible The size of EM green bond issues ranged from $1.5 million to $2.9 billion in 2019. Benchmark-sized Financial institutions remain the largest issuing sector in emerging markets, making up 59% of issuances Regulatory and Policy developments are also helping to standardise practices and green finance Future potential for emerging markets green bond market<\/strong><\/p>\n Increased investor appetite for green bonds and growing awareness of green products are driving growth, Yerlan Syzdykov, Global Head of Emerging Markets at Amundi, said: \u201cAmundi is proud to have Although it is hard to assess the long-term impacts of the current crisis and there are still many challenges Jean Pierre Lacombe, Director of Global Macro & Market Research at IFC, commented: \u201cOver the Need for green investments is crucial: current pandemic shows responsible investors in
\non an unprecedented scale. IFC estimates cumulative climate investment potential of $29.4 trillion in
\nemerging market cities through 2030. Sustainable finance policies and products, like debt capital
\ninstruments, are already helping to plug this gap, by financing projects with environmental and social
\nbenefits.<\/p>\n
\noutstanding issues. This market is a crucial source of financing for projects with positive environmental
\nimpacts in both developed and emerging countries. Investor appetite for green bonds continues to grow,
\nand emerging market issuers are likely to benefit from increasing demand.<\/p>\n
\n(3% of total global bonds issued last year). EM green bond issuance increased by 21% to $52 billion,
\nbringing the overall market size to $168 billion. Issuances have been driven by greater recognition among
\nboth issuers and investors of the benefits they provide including stable and predictable returns, and a
\ngreater awareness of ESG products and strategies.<\/p>\n
\nfor 81% of the market. Other emerging markets drove the overall growth in 2019 with $18 billion of issues,
\nnearly triple that in 2018. Outside China, the leading issuers were: India, Chile, Poland, the Philippines,
\nthe United Arab Emirates, and Brazil, demonstrating greater geographical diversification. <\/p>\n
\nbonds of at least $300 million numbered more than 60 in 2019, marking a year-on-year increase of 25%.
\nSome 52% are in hard currency, and excluding China, local currency bond issues make up 9% of
\ncumulative EM green bond issuance. In emerging markets, renewable energy makes up the largest
\nsector for use of proceeds, followed by transport, green buildings, waste, water, biodiversity conservation,
\nand adaptation.<\/p>\n
\n(contrasted with 19% in developed markets), followed by non-financial corporates at 35%, sovereigns at
\n12%, government agencies at 5% and municipals at 0.1%. Non-financial corporates and sovereigns both
\nincreased their market share in the green bond space.<\/p>\n
\ndefinitions. As of 2019, national green bond guidelines have been established in at least 14 emerging
\nmarket countries and global initiatives, like the Green Bond Principles and EU Green Bond Standard, are
\nunderpinning many of the policies and strategies launched at national and regional levels.<\/p>\n
\nin terms of both issuance and investment. However, Amundi and IFC conclude that five key challenges
\nmust be addressed to further facilitate the expansion of the emerging markets green bond market:
\n
1. Quality and availability of information to identify, measure, and track green investment
\n
2. Supply constraints, including the limited availability of labelled green assets and a pipeline of
\ngreen projects
\n
3. Lack of awareness and know-how about issuing and investing in green products
\n
4. Overall macroeconomic and policy instability as well as challenges related to regulatory
\nframeworks, including harmonized standards, green definitions, and green taxonomies
\n
5. Underdeveloped capital markets with insufficient liquidity and high transaction costs<\/p>\n
\ncollaborated with IFC for the second edition of this report. Now, more than ever, as governments and
\ncommunities collectively tackle COVID-19, we recognise the importance of making our economy more
\nresilient to global shocks. Our research shows that debt capital markets can help close financing gaps
\nand mobilize capital for sustainable development in emerging markets.<\/p>\n
\nto scaling green bonds, momentum is building with more investors seeking to align their investment
\nstrategies with environmental considerations. Our research indicates that the green bond phenomenon,
\nespecially in emerging markets, shows potential signs of resilience during these unprecedented times.\u201d<\/em><\/p>\n
\npast decade, green finance has moved from a niche market to one that is increasingly mainstream. The
\nnext decade is critical for transitioning to low-carbon economies and mobilizing investment for sustainable
\ndevelopment. As economies face many challenges in light of the COVID-19 pandemic, green finance
\nprovides innovative solutions for building robust economies. This report highlights where green bond
\nmarkets can be scaled up and what steps will be necessary.\u201d<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"
\nemerging markets can collaborate with issuers through green bonds to unlock long-term
\ncapital and help issuers become more resilient for shocks to come<\/p>\n","protected":false},"author":20,"featured_media":94561,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1470],"tags":[1655,1859,1867,1854,1849,1826,1682,1651,1437,1724,1686,1453,1452,2091,1685],"_links":{"self":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/94563"}],"collection":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/comments?post=94563"}],"version-history":[{"count":0,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/94563\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media\/94561"}],"wp:attachment":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media?parent=94563"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/categories?post=94563"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/tags?post=94563"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}