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Nov 08, 2024 17:12 CESTOVERVIEW - Cumulative green bond issuance in Europe at EUR 122bn
Chart by CBI (www.climatebonds.net).
Europe has remained a cornerstone of the global green bond market, with cumulative issuance totalling EUR 122 billion (USD 145bn), representing the largest regional market.
The Climate Bonds Initiative (CBI) publishes its first comprehensive overview of Europe’s green bond market. The report, sponsored by White & Case, is available at https://www.climatebonds.net/files/files/The%20Green%20Bond%20Market%20in%20Europe.pdf. Below you can read a brief overview, republished by Renewables Now.
EUROPE AT THE FOREFRONT OF GREEN BOND ISSUANCE
The first green bond was issued in 2007 by the European Investment Bank (EIB) to raise funding for climate-related projects. Since then, Europe has reached cumulative issuance of EUR 122 billion. Issuers span the continent and the spectrum of issuer types.
-- 145 entities have come to market, or around a third of the global total;
-- issuances come in a variety of debt formats, currencies and tenors;
-- 98% of issuance benefits from external reviews and reporting standards are high;
EUROPEAN GREEN BOND MARKET IS DIVERSE
Issuers as of the end of the first quarter of 2018 include 48 companies in the energy sector, 35 financial institutions, 23 property companies, 17 local governments and three sovereigns. The seven debut issuers from 2018 and 48 from 2017 have already contributed over EUR 34 billion to the market: half of that linked to sovereign issues from France and Belgium.
Diversification to date is a big accomplishment but it would be good to see more corporate issuance, especially from nations with large economies and highly-developed and active bond markets including the UK, Germany and France.
| Region | Country | 2017 | Issued (EUR million) | Q1 2018 | Issued (EUR million) |
| -- | France | 6 | 11,823 | 1 | 100 |
| -- | Italy | 5 | 4,176 | -- | -- |
| -- | Germany | 5 | 2,530 | -- | -- |
| -- | UK | 4 | 1,876 | -- | -- |
| -- | Spain | 3 | 1,620 | -- | -- |
| -- | Switzerland | 3 | 766 | -- | -- |
| -- | Belgium | -- | -- | 2 | 4,600 |
| -- | Austria | 1 | 300 | -- | -- |
| Nordics | Sweden | 10 | 2,506 | 2 | 150 |
| -- | Norway | 4 | 259 | 1 | 1,000 |
| -- | Denmark | 2 | 1,750 | -- | -- |
| -- | Iceland | -- | -- | 1 | 163 |
| -- | Finland | 1 | 100 | -- | -- |
| CEE | Lithuania | 1 | 300 | -- | -- |
| Poland | 1 | 137 | -- | -- | |
| Latvia | 1 | 20 | -- | -- | |
| Slovenia | 1 | 14 | -- | -- | |
| Total | -- | 48 | 28,177 | 7 | 6,012 |
ENERGY AT TOP SPOT FOR ALLOCATIONS, BUILDINGS AND TRANSPORT RISING
European issuers have always allocated a substantial part of green bond proceeds to the energy sector. However, the share of Energy in the overall mix has dropped in recent years as the amounts channelled towards Buildings and Transport have risen.
Belgium’s green sovereign OLO allocates 85% of proceeds to rail investments, echoing a 2017 trend: French, Spanish and Italian government-backed rail companies tapping the green bond market in size. With big plans to upgrade rail transport across Europe, we would expect to see Transport pull further ahead.
The Last Word
Europe has spearheaded the development of the green bond market, fostering engagement at a global scale. The sample of identified potential green bond issuers spanning the climate-aligned sectors in our taxonomy proves that the region is still far from reaching its full potential.
As the market keeps expanding, we expect to see the corporate and banking sector taking on a bigger role, with green bond deals diversifying further.
Strong political impetus is expected to continue driving market evolution and improvement, such as through the adoption of a common EU green asset taxonomy in 2019 as part of the Commission action plan on sustainable finance, banks implementing the reporting recommendations set out by the Financial Stability Board’s Taskforce for Climate-related Financial Disclosure and starting to green-tag loans.
Initiatives around energy efficiency such as EeMap for mortgages and the development of European Property Assessment programme (E-PACE) should provide further support.
(EUR 1 = USD 1.19)
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