Climate protection and sustainability – everyone wants to be there

Climate protection and sustainability are issues that currently dominate the public debate and also influence the capital market. The ESG formula broadens the perspective of the issuer view and green bonds broaden the investment spectrum in the sense of the „mega topics“ mentioned above. Green bonds are part of the view that the capital market must place greater emphasis on the sustainability factor, both on the issuer side and on the investor side.

When is a bond green? The key to answering this central question lies first and foremost in the use of the funds raised with the bond. Green bonds are primarily used to finance or refinance new or existing projects in the field of environmental and climate protection. It will be difficult to avoid a certain ‚definitional breadth‘ when determining what suitable ecological projects are. However, in order to support an efficient and expanding Green Bond market through transparency and standardisation, standardisation approaches are of great relevance. Two of these approaches – the ICMA Green Bond Principles and the (planned) EU Green Bond Standard – are briefly presented in the study.

After three quarters, the market for corporate green bonds denominated in euros with an issue volume of EUR 21.4 billion (for 43 bond transactions) has already surpassed the level of the previous record year 2017 (EUR 17.3 billion for the year as a whole). Utilities are by far the largest issuer industry, followed by transport and telecommunications companies. With regard to regionality, it should be noted that the majority of Euro Green Bonds also originate from companies in the euro zone, with Italy, France, Germany and the Netherlands leading the ranking as countries of origin.
The standards for ESG investments are currently still partly in the phase of sharpening and specification. Therefore, one can only hope that in a few years Green will still be in there where it says Green.

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