Europe’s sustainable bond and loan issuance grows 89% in 2021 – AFME

By Samuel Indyk

LONDON (Reuters) – European issuance of sustainable bonds and loans jumped 89% last year, data from the Association for Financial Markets in Europe (AFME) shows, as issuers tapped growing demand from investors concerned about climate risks and social inequality.

In its European ESG Finance quarterly report covering the fourth quarter and full year, AFME said that the issuance of bonds and loans focussed on environmental, social and governance (ESG) matters nearly doubled to 749.8 billion euros ($850.7 billion) in 2021 from 396.4 billion euros in 2020.

The proportion of ESG bonds issued in Europe more than doubled in 2021, accounting for 20.2% of total European bond issuance versus 9.3% in 2020, the data showed.

“ESG bond Issuance in 2021 largely benefited from sovereign and supranational issuers entering the market,” AFME said.

“As governments finalise their ESG funding programmes, going forward, green bond supply growth will be contingent on greater participation by the corporate sector and on seizing the potential of the ESG securitisation market.”

AFME data showed a slowdown in growth of global ESG funds in 2021. ESG funds grew just 12% last year, a slower pace than in 2020 and 2019 when global ESG funds grew 28% and 21%, respectively.

ESG equity funds remained the largest asset class with 50.3% of total ESG funds, more than double the size of fixed income funds, which accounted for 22.1% of the total, AFME said.

($1 = 0.8814 euros)

(Reporting by Samuel Indyk; Editing by Saikat Chatterjee and Emelia Sithole-Matarise)