US Launch Climate Bonds Flagship Report, Climate Week New York

The 5th annual ‘Bonds and Climate Change: State of the Market in 2016’ report will be presented today at the HSBC Sustainable Financing Briefing by Sean Kidney, CEO of Climate Bonds Initiative, as part of the opening events of Climate Week.

This annual flagship report from Climate Bonds is the only global analysis of the climate-aligned bond universe. Our analysis discovers and quantifies those bonds that are being used to finance low carbon and climate resilient infrastructure; this includes bonds that are labelled as green as well as bonds that are financing climate solutions but do not carry the green label.

Key findings include:

• The global climate-aligned bonds universe now stands at $694bn outstanding – A jump of $96bn (16%) from the 2015 figure. This total is comprised of unlabelled climate-aligned bonds at $576bn and labelled green bonds at $118bn
• The universe is made up of over 3,590 bonds (issued from Jan 2005 to May 2016) from 780 individual issuers across transport, energy, buildings and industry, water, waste and pollution and agriculture and forestry
• In the US climate aligned universe – corporates accounted for 67% of the US total, Muni / provincial / city 23% and project bonds 10%
• At 16%, the USA is the second largest country of issuance behind China. Burlington North Santa Fe is the largest issuer from within the USA, making up 17% of USA issuance alone. While issuers in the
• Energy theme tend to be much smaller, they are also more numerous with over 200 separate Energy issuers making up a total of $28bn issuance
• Climate Bonds identified $30bn of climate-aligned US muni bonds, 68% of which are unlabelled, $9.7bn is labelled, $20.4bn is unlabelled
• Transport accounts for 58% of the US climate aligned universe, energy at 25%, water at 6%

Labelled US green bonds:

• USD is the dominant issuing currency for labelled green bonds – making up 42% of issuance
• Of US green bonds – Muni / provincial / city make up 44%, corporate at 30%, ABS at 18% and banks at 7%
• Largest green bond issuers: Toyota (USD 2.99bn), Southern Power Company (USD 2.24bn) and Apple (USD 1.5bn)
• Prominent municipal issuance includes MTA (USD 782m & 558m) & SFPUC (USD 240m)
• 40% of the entire global Water theme is made up of US issuers, primarily Municipal bonds which have been labelled as green bonds

The USA is well placed to build its domestic green bond base through the municipal markets and more high profile corporate issuance.

 

Sean Kidney, Climate Bonds CEO:

“The USA is well placed to build its domestic green bond base through the municipal markets and more high profile corporate issuance. Further opportunities exist in clean energy, infrastructure, transport, water and low carbon commercial buildings, particularly in major cities.”

“Internationally, the recent G20 and associated GFSG report recognition of green finance directions now give the US via its development, finance and environment organisations, a unique opportunity to assist smaller nations in green bond demonstration issuance, early market development and regulatory support.”