2017 Policy Highlights & Review and Forecasts for 2018

In 2017 we saw:

The year of the sovereigns and the rise of country level and regional green guidelines;

Targeted incentives increasing support for issuers and public sector issuers leading market growth;

Cross-country and public-private partnerships gaining momentum. 

 

As was foreshadowed at the beginning of the year, 2017 was the year of the sovereigns, marked by a gargantuan EUR9.7bn (USD10.7bn) issuance from France, the first Pacific and island-state issuance from Fiji and the first African sovereign from Nigeria. You can read more in Green Bond Policy Highlights 2017. 

Though we have not yet seen any comprehensive National Capital Raising plans detailing governments’ green infrastructure goals in light of the Paris Agreement, these will emerge as they are tied to countries’ efforts to meet Nationally Determined Contributions (NDCs) and Sustainable Development Goals.

 

The rise of green guidelines

The number of regulations, guidelines and listing requirements for green bonds from finance and environment ministries, regional associations and stock exchanges has grown quickly in 2017.

Domestic guidelines are largely aligned with international definitions, with some differences remaining around the eligibility of projects for the use of proceeds.

Asia is at the forefront of these developments with green bond regulation in China, India, Indonesia, Japan and ASEAN, as well as listing requirements in the Shanghai, Shenzhen and Taipei Stock Exchanges.

 

Preferential treatment for green bonds

New forms of support from policymakers have been implemented in Singapore, Malaysia and China including grant schemes, tax incentives and the fast-tracking of green bonds. These help lower the initial hurdle for new issuers as well as making it more attractive to issue green over conventional debt, in an attempt to boost financing to low carbon and climate-resilient infrastructure.

 

Public sector issuers lead last year’s market growth

Public investments are also the largest contributor to the growth of the green bond market in 2017, with state-backed agencies, central governments, development banks and transport agencies amongst the top issuers for the year. 

 

Cross-country and public-private partnerships 

As foreseen at the beginning of the year, green bonds maintained their momentum on the international finance agenda thanks to increasing collaboration on green finance across countries, such as the UK-Brazil Green Finance Partnership, and between private and public entities like the European High-Level Expert Group on Sustainable Finance and the Chinese Belt and Road Initiative.

 

The Last Word – 2018 and beyond

In 2018, we expect the trend in market growth to continue, and our initial Climate Bonds estimate is for issuance to reach USD250-300bn. The public sector, through sovereign and sub-sovereign issuance and innovative regulation, will increasingly create and shape markets with the milestone of reaching USD1 trillion in green bonds by 2020 growing in prominence as an international green finance objective.

This means more sovereign green bonds, improving taxonomies and definitions of green, greater harmonisation of guidelines from financial regulators and additional policy support to tilt the playing field towards green investments.

Download the full Green Bond Bond Policy Policy Highlights here. 

‘Till next time

Climate Bonds 

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