LONDON, December 22 (IFR) - The global green bond market is forecast to grow by €300m in 2021, supported by the publication of the final version of the EU’s green bond standards and bond issuance from the EU itself, as well as other sovereigns, says Dutch asset manager NN Investment Partners.
The global supply this year, and in 2019, was around €200m and the new €300m expected by NN IP next year will push the total green bond market volume to €1trn.
A major catalyst for the significant annual increase will be the finalisation of the EU Taxonomy and EU Green Bond Standard. According to NN IP this will not only further standardise and professionalise the green bond market, but also increase the understanding of whether economic activities are environmentally friendly and how they can transition to becoming more sustainable.
In addition, investors will have a clearer picture of what exactly they are investing in while borrowers will have greater guidance on how to identify green assets or activities.
Activities may be labelled green or sustainable providing they contribute to one or more of six environmental objectives or enable other activities to make a substantial contribution; do no significant harm to other environmental objectives; and comply with social and governance safeguards, according to the taxonomy.
Meanwhile, the standard requires that bonds labelled green comply with the taxonomy.
Inaugural issuers will also play a key role in the expansion of green supply in 2021. Green bond issuance from the EU will begin. Some €100m is expected next year and €225m is due to be issued in total.
First time issues are also expected from Italy, Spain, the UK, Denmark, Ukraine and Slovenia, according to NN IP. Previous issuers such as the Netherlands, France and Germany are also likely to return.
(Reporting by Edward Clark; Editing by Robert Hogg)
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