First half of the year marked by Growth in ESG corporate bond issuance European, which increased to the equivalent of 93 billion euros, keeping pace with the overall strong market activity and stabilizing at around 25% of total bond volumes. This is stated Scope Ratings in a research on the topic, saying it expects full-year ESG emissions to grow by 40% on annual basis.
Europe, corporate ESG bonds boom
Expectations for higher emissions take into account the increase in 30% on an annual basis in the first half of 2024 and weaker volumes in the second half of 2023. The projections are supported by the higher level of investments required in the context of the energy transition and by the recovery of emissions from the real estate sectorwe read in a note.
In Scope Ratings discussions with various broadcasters in its coverage universe, regarding their preference for ESG bonds over standard bonds, the common message is that the key factor is reputation, i.e. gaining credibility with one’s ESG efforts rather than pursuing better returns (greenium), as the latter are not significant.
Scope Ratings Analysis
When asked about their preference for green bonds over other typesthe ESG, issuers have said this is because green bonds are considered the most credible by investors. French utility EDF said its green bond framework “is seen as a strong working tool that offers transparency to the market”.
Scope Ratings points out that most ESG bond issuers are companies with large portfolios of tangible assets. Therefore, their green bond outlook may not necessarily apply to companies in transition or operating in other sectors, which adopt business models asset light.
