Sovereign green issuance is acting as a catalyst to implement climate goals and drive green finance development. As of November 2020, 22 national governments had issued sovereign Green Social & Sustainability (GSS) bonds totalling USD96 billion, in which 16 were green, 2 social and 4 sustainability bonds.
This survey, undertaken by the Climate Bonds Initiative and supported by HSBC, finds that curbing climate change was the leading reason why governments issue GSS bonds. Sovereign issuers can serve as role models for other types of issuers and can provide investors with safe, liquid investment opportunities. GSS bond market creation as well as enhanced collaboration, and extra transparency were all considered positive benefits to issuing bonds by most participants.
While the momentum is growing, increasing the number of GSS issuance and supporting initial emerging market transactions should be the key climate finance objectives for governments, central banks and development finance institutions. Prospects look optimistic – 14 nations have indicated inaugural issuance in 2021-2022, and there is still huge potential.