Market for green bonds surpasses $2 trillion

With the revelation that $2 trillion worth of green bonds have been issued since the first one was released 15 years ago, the market for them has reached new heights.

The Climate Bonds Initiative (CBI), a non-profit organization that supports investments in low-carbon economies and provides guidance to governments and regulators, conducted research that identified the milestone.

Their study, which was funded by First Abu Dhabi Bank (FAB), examined information on bonds issued from the mechanism's 2007 start and the third quarter of 2022 that were self-identified as being in line with the Paris Agreement.

The research was made public as world leaders gathered in Egypt for the COP27 summit to discuss ways to combat climate change.

In order to prevent a "climate catastrophe," CBI CEO Sean Kidney cautioned that during the next three years, investment in sustainable finance must reach at least $5 trillion.

He admitted that it is a "ambitious target," but added that focusing more on directing money into emerging markets (EM), particularly countries in the Middle East and Africa (MEA), would be crucial for success .

"To stand a chance of meeting the Paris Agreement’s 2050 targets, we must slash emissions in half this decade," Kidney continued.

"This means scaling capital flows to climate causes at speed, starting with an annual $5trillion of sustainable finance being issued by 2025."

The MEA's green, social, and sustainability (GSS+) financing market was a particular focus of the CBI's investigation, which revealed $33.2 billion in regionally-sourced theme debt.

It was discovered that there is room for expansion because the total volumes are less than 1% of the worldwide market.

Rula Al Qadi, managing director of FAB, stated that the company intends to invest $75 billion in sustainable finance by 2030.

"Climate change is not purely a scientific challenge - it’s also an economic one," he continued.

"If we’re serious about achieving the Paris Agreement recommendations, then we’ll need an immense economic transition that includes significant investment in infrastructure and innovative technology."

By fLEXI tEAM