With green financing levels at record highs, corporate treasurers now have access to a source of funding that can play a vital role in supporting their organisations’ sustainable goals. Here, we explain how to perfectly marry sustainable finance with environmental, social and governance aims, including the transition towards a circular economy model.
Green financing for corporates is on a roll. Despite the turbulent nature of 2020, with the Covid-19 pandemic causing widespread disruption in all areas of financial life, the year still saw a record level of green bond issuance. According to data from the Climate Bonds Initiative (CBI) released in January 2021, by the end of December 2020, green bond issuance had hit $269.5bn. This just pipped the level of issuance seen in 2019 ($266.5bn) and showed that the market remained robust despite the challenges presented by the pandemic.
The CBI data includes other positive signs for green financing. Diversity of financial instruments is becoming more mainstream, with green loan and green sukuk origination locations more than doubling year-on-year, from 11 countries in 2019 up to 23 in 2020. Add green bonds to that mix and 53 countries originated green financing last year. Meanwhile, the average annual issuance of green debt grew by 60% between 2015 and 2020, with the market passing the cumulative $1tr. milestone in December 2020.
This momentum has accelerated further in 2021. Data from Refinitiv Deals Intelligence shows that green bond issuance hit $259bn in the first half of the year, almost three times higher than at the same point last year. Meanwhile, in October 2021, Japan’s Nippon Telegraph and Telephone Corporation (NTT Group) produced one of the largest single issuances of green bonds by a company that the world has ever seen. The offering, made up of three-year, five-year, and 10-year tranches, was valued at ¥300bn – approximately $2.6bn. According to data compiled by Bloomberg, this makes it the biggest offering ever of environmentally-friendly debt in Japan.