(Bloomberg) -- Sustainable debt, a category of credit investments used to fund everything from conserving marine habitats to fighting climate change, grew at a record pace in 2019 and is forecast to keep expanding.
Global issuance of green bonds and loans, as well as other types of sustainable debt, totaled $465 billion last year, up 78% from $261 billion in 2018, according to data compiled by BloombergNEF. The outstanding volume of sustainable debt now exceeds $1 trillion, with borrowers ranging from the French government to Royal Dutch Shell Plc, the data showed.
Issuance is likely to continue to keep growing in 2020 supported by large repeat green bond issuers and the increasing popularity of other types of sustainable debt, said Mathias Leijon, head of Nordea Bank Abp's corporates and institutions unit. The market will also become more sophisticated as investors “will increasingly demand that the green contribution of any given issuer be explained,” said Leijon.
Supply of sustainable debt is expanding as the institutional investors that dominate credit markets shift money and attention toward environmentally-conscious investments. And with 2019 a year in which climate change was thrust into the spotlight like never before, leaders of many big companies, banks and governments want “to be seen as behaving responsibly,” said BNEF lead sustainability analyst Jonas Rooze.
See also: Green Debt Fever Spreads as Investors and New Borrowers Pile In
Green bonds, where the proceeds are used for environmentally-friendly projects, made up the majority of the issuance last year, totaling $271 billion, the data show. Sustainability-linked loans, which often have interest rates linked to a borrower's performance on environmental, social or governance issues, were the fastest-growing sub-sector.
--With assistance from Jacqueline Poh.
To contact the reporter on this story: Alastair Marsh in London at amarsh25@bloomberg.net
To contact the editors responsible for this story: Daniel Hauck at dhauck1@bloomberg.net, Tom Freke
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