Investment opportunities in emerging markets could generate over $10tn by 2030, the International Finance Corporation and Amundi, a European asset manager, said in a joint publication.
The ‘Emerging Market Green Bond Report 2020,’ published on Monday, provides an overview of emerging market green bond developments over the past year and discusses policy and regulatory changes driving issuance.
It highlighted that despite last year’s economic challenges, the global green bond market proved resilient, achieving a key milestone of $1tn in cumulative issuance since 2007, with issuance of $280bn in 2020.
During the period, emerging market green bond issuance was robust with 174 green bonds amounting to $40bn in issuance from 101 issuers, adding that seven emerging markets issued green bonds for the first time.
East Asia and the Pacific accounted for the largest share of green bond issuance in emerging markets, at 76 per cent.
In 2020, China remained the largest green bond issuer in emerging markets, despite a fall in issuance, from over $30bn in previous years to $18bn, due to the COVID-19 crisis and a government push to issue pandemic-related bonds.
Outside China, emerging market green bond issuance rose 21 per cent in 2020 to $22bn, representing faster growth than the 17 per cent increase in global green bond issuance.
The report showed that 2020 also saw continued interest from a diverse pool of issuers, with $300m issuance from non-financial corporates.
Financial institutions make up 50 per cent of cumulative green bond issuance by volume in emerging markets, which contrasts with 19 per cent in developed markets.
Director of Global Macro and Market Research at IFC, Jean Pierre Lacombe, was quoted to have commented, “Robust investor appetite and increasingly supportive policy environments will continue to support the growth of green bond markets in emerging markets.
“This is now critically important, with investment for sustainable development urgently needed to lessen the pandemic’s profoundly negative social and economic consequences. This is especially true as regards the damage done to efforts to reduce global poverty, where several additional years will now be needed to regain ground lost due to COVID-19.”
The Global Head of Emerging Markets at Amundi, Yerlan Syzdykov, added, “Through this unique and innovative partnership with IFC, Amundi remains committed to the development of the green bond market in emerging countries through vigorous and robust engagement efforts with different market participants to boost both supply and demand of green bonds.
“Financial markets are set to play a key role in supporting sustainable projects and the outlook for emerging market green bond issuance remains robust, with issuance expected to hit $100 billion over the next three years.”
