“Green” Bonds (ESG bonds) likely to cross $10 billion globally by December 2021, says JP Morgan

The ESG-focused fund-raising (green bonds) market, which has climbed to an all-time high so far this year, is set to cross the $10-billion-mark by December 2021, according to investment banking major JP Morgan. The bank has so far advised 12 of the 13 such bond issuances out of the country this year totalling up to $ 6.24 billion.

According to the bank, the overall bond issuances from the country may touch $25 billion this year, having already raised $17.5 billion so far, of which ESG-compliant bonds constitute $6.2 billion.

Globally, the environmental, social and governance (ESG) has been gaining momentum since 2013-14 and by now investors have also been asking about the ESG principles of their investee companies.

The ESG idea has gained traction with domestic corporates, investors and analysts as well since 2015, 41 companies have raised over $6.24 billion this year alone.

In 2016, JP Morgan had globally introduced a ban on the financing of new coal mines and tighter restrictions on the financing of new coal-fired plants, which was expanded last year to include a full ban on providing lending, capital markets or advisory services to companies deriving the majority of their revenues from the extraction of coal, and by 2024, phase-out remaining credit exposure to such companies.

Earlier this year, the bank had set a target to bring $2.5 trillion for solutions that support climate change and contribute to sustainable development over the next 10 years. This includes $1 trillion for green initiatives like renewable energy and clean technologies. “We’ve been part of all the 12 ESG/green bond sales this year so far, and we have a strong pipeline of ESG fund-raising for the rest of the year. So far domestic companies, mostly renewable energy players and infrastructure companies have raised $ 6.24 billion and we see this scaling the $10-billion-mark this year,” said Madhur Agarwal, managing director, debt capital markets, JP Morgan India to PTI.

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