26 June 2020

SSEI: UNCTAD WIR 2020 Looks at Sustainable Finance

The World Investment Report, now in its thirtieth year, includes a special chapter, on investment in the Sustainable Development Goals. Capital markets that are aligned with sustainable development can be instrumental in filling the financing gap for the SDGs.

Green bonds continue rapid growth

The global green bond market saw a 51% year-on-year increase in 2019, rising to nearly $260 billion. The proceeds of green bonds are primarily used in three sectors (energy, buildings and transport), all of them also seeing significant year-on-year growth. More analysis in the WIR 2020.  

Which exchanges are the leading venues for green bonds?

European exchanges have taken the lead in this area, with Deutsche Boerse Group being the largest platform for trading green bonds in 2019. It was followed by the Luxembourg Green Exchange and exchanges in France and the United Kingdom; exchanges in China and Singapore also feature in the top 20 largest exchanges for green bonds. More here.       

Why ESG matters  

Investment services firms have created indices to facilitate investment in companies that demonstrate good ESG practices that contribute to the achievement of the SDGs. Sustainability equity index data are also reinforcing the view of many investors that sustainability issues are material to the performance of industries in the long run. An example is FTSE Russell’s Environmental Opportunities index, more details here. 

Covid-19 response bonds boost social & sustainability bond market

COVID-19 response bonds have been rapidly deployed to fund crisis relief and recovery; the value of such bonds issued in the first quarter 2020 already exceeds the total value of social and sustainability bonds issued in all of 2019.  COVID-19 pandemic response bonds were the subject of the Q2 SSE Webinar; a summary of the discussions can be found here. For detailed coverage of social bonds related to Covid-19, please read the WIR 2020.    Stock exchanges are facilitating the fast-growing market in COVID-19 response bonds by waiving listing fees and are assisting listed companies, especially small and medium enterprises (SMEs), by providing fee relief and introducing flexibility in rules. You can find the details here. 

New Stock Exchange Trends Analysis

According to the SSE’s Stock Exchange database, the last decade has witnessed a sharp increase across a range of sustainability mechanisms undertaken by exchanges, covering sustainability reporting, training, and regulations as well as the development of relevant tools and platforms for the development and transaction of sustainability-themed financial products.  In the WIR 2020, you can find a complete analysis of the latest trends. 

SSEI