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ESG finance: green bonds up, social bonds down

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Social bonds continue to struggle this year, with volumes for the first quarter at 38% lower than in the same period in 2022 (Photo: Narinder Nanu/AFP/Getty Images)

 

A study has found that after a difficult 2022 for sustainable debt, green bond volumes have jumped in the first quarter, almost matching levels seen at the start of last year.

A new report by the Climate Bonds Initiative recorded $204.8bn of sustainable debt for the the first quarter of 2023, representing a 17 per cent increase on levels recorded in the last three months of last year.

The CBI says that there were $122.9bn worth of new green bonds between January and March, compared to the $97.5bn of the previous quarter and just shy of the $129.7bn registered in the first quarter of 2022.

Social bonds, however, continue to struggle, with volumes of $30.6bn for the first quarter, 23 per cent lower than the previous three months and 38 per cent lower than the first quarter of 2022. A recent survey by Goldman Sachs Asset Management revealed that a perceived scarcity of products and poor diversification are the biggest barriers to social bond investment.

Overall, the value of aggregate sustainable debt remains down on 2022, sitting 21 per cent lower than that recorded in the first three months of that year.

Despite the soft start to the year for most types of sustainable debt, the CBI forecasts that total outstanding issuances will surpass the $4tn threshold in the second quarter of this year. The collapse of Silicon Valley Bank hurt March volumes, it explains, and the collapse of Credit Suisse “paralysed issuers”.

“As fixed income markets recover, a more selective approach to bond buying is likely to favour sustainable bonds,” CBI chief executive Sean Kidney predicted.

You can read the full report here.

 

A service from the Financial Times