Green debt issues hit a record high in September

The ICMA defines green debt in particular as an obligation that exclusively finances ecological projects. Eager to show new commitments, companies have carried this historic volume of emissions more, compared to States, according to investment experts.

Debt to specifically finance the sustainable transition: Global “green debt” issues stood above $ 50 billion in September, a record, and are increasingly used by both governments and governments. companies.

Adidas, EDF, Orange … but also Germany, Egypt, Sweden: companies and States have multiplied the issuance of green debt to a level never seen last month. They were five times lower in August.

Thanks to September, green debt issuance since January 1 reached $ 176.3 billion, up 26% from the same period in 2019.

This amount includes green debt as defined by the International Capital Market Association, the global professional organization of bond market players, and according to data aggregated by the Bloomberg agency.

The ICMA defines green debt in particular as an obligation which exclusively finances “green” projects, that is to say in one of the categories it identifies such as renewable energies, the preservation of biodiversity, greener housing. ..

“In 2019, green debts represented less than 5% of the volume of debts issued”, however recalled Monday in a speech at the European Forum of Sustainable Finance Isabel Schnabel, influential member of the executive board of the European Central Bank (ECB). The euro zone is the main issuer of this type of bond.

This year, September undoubtedly benefited from the postponement of numerous operations during the first half of the year, when emissions were down slightly compared to the previous year.

“The volume of corporate issues was greater than that of states,” notes Jovita Razauskaite, green debt specialist for NN investment Partners.
Towards a new greenwashing?

Yet it was the arrival of a sovereign issuer that made the headlines, with Germany’s first green issue, amounting to 6.5 billion euros. The country plans a second of 5 billion by the end of the year.

“We expect an even wider range of issuers in the future. Industrial companies are expected to come more and more into the market, while supra-national debts will increase when the European Union starts financing close to ‘a third of its recovery plan with green debt, “recalls Ms. Razauskaite.

However, the sector still has a lot to do, particularly in the evaluation of projects. “The environmental ratings of green bonds – when they exist – are often inconsistent, not comparable and, sometimes, unreliable,” said Isabel Schnabel, pointing to the risk of “greenwashing”.

This is how “transition bonds” appeared on the market in 2019, their much more vague name possibly allowing polluting sectors, such as gas, to be able to claim them.

The issuance of green debt is also not correlated with a lower CO2 emissions at the company level, including over time, according to a study published in September by the Bank for International Settlements.

Other companies, such as the luxury house Chanel, issue “sustainability linked bonds”, where the money can be used for any project, but the company is committed to achieving goals. sustainable development and, in case of failure, to pay penalties. From January 1, 2021, they will be accepted as collateral by the ECB, the institution announced in mid-September.

“There are evaluation criteria, but the investor must make his own selection” according to his requirements and the available data, adds Ms. Razauskaite.

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