Sustainable debt challenges gloom to record spectacular growth in 2020

Sustainable debt challenges gloom to record spectacular growth in 2020

Sustainable debt had an exceptional year in 2020, despite the challenges posed by the Covid-19 pandemic, increasing by 29% from the previous year to reach $ 732.1 billion. Sustainable debt is defined as bonds and loans raised for environmental and social purposes. There has been spectacular growth in social and sustainability bonds, with a late surge in green bond issuance further boosting growth, according to new figures from research firm BloombergNEF (BNEF). Social bonds, which are issued to raise funds for measures to improve employment, public health and education outcomes, have increased sevenfold to $ 147.7 billion. Durable bonds also saw strong growth, with issuance 81% higher than the previous 12 months to $ 68.7 billion, while the largest segment of the market, green bonds, hit a new record of $ 305.3 billion, up 13% from 2019. However, green loans and loans tied to sustainability goals both fell 15%, reflecting the global economic slowdown caused by the pandemic. “The Covid-19 disruption affected the issuance of some sustainable debt securities in 2020, but boosted others,” said Mallory Rutigliano, sustainable finance analyst at BloombergNEF. “The global growth of almost 30% in the market has shown that sustainability continues to be a priority for investors, businesses and governments. This relatively new market is now seen as a tool that global economies can use to rebuild a greener and more socially just business. The explosion in social bond issuance has been the big story of the year for the sustainable debt sector, fueled by investor appetite for products that address the impacts of the coronavirus pandemic and recession that followed, which caused widespread unemployment and highlighted a number of other social issues, including the problems of the odd-job economy and the challenges many people face in accessing health care.

Highlights

  • According to Forbes, “sustainable debt defies gloom to record spectacular growth in 2020”.
  • Sustainable debt is defined as bonds and loans raised for environmental and social purposes. There has been spectacular growth in social and sustainability bonds, with a late surge in green bond issuance further boosting growth, according to new figures from research firm BloombergNEF (BNEF).

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