June 20, 2024
Green Bond Market

Green Bond Market is Estimated To Witness High Growth Owing To Sustainable Investments

The Green Bond Market is estimated to be valued at US$ 479.60 billion in 2023 and is expected to exhibit a CAGR of 10% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.

Market Overview:
Green bonds are fixed-income financial instruments used to fund projects and initiatives that have positive environmental and climate benefits. Green bonds facilitate investment in green projects such as renewable energy, energy efficiency, sustainable water management, biodiversity conservation, and pollution prevention. They help mitigate climate change by lowering carbon emissions.

Market key trends:
The rising awareness about environmental sustainability has increased the demand for Green Bond Market Growth and sustainable investments globally. Governments and companies around the world are actively promoting renewable energy and green infrastructure projects to reduce their carbon footprint. This has significantly driven the issuance of green bonds to fund various environmental projects. According to a report, green bond issuance reached $270 billion in 2019, surpassing the yearly total set in 2018. Majority of the bonds were issued in the renewable energy and low-carbon buildings sectors. The continued momentum of sustainable financing is expected to further fuel the growth of the global green bond market over the forecast period.

Porter’s Analysis

Threat of new entrants: High capital requirements and economies of scale make the industry unattractive to potential new entrants.

Bargaining power of buyers: Large investors and institutional buyers enjoy high bargaining power influence pricing and terms.

Bargaining power of suppliers: Issuing banks and financial institutions enjoy bargaining power as they fundraise and bring issuances to the market.

Threat of new substitutes: Substitute financing options like regular bonds pose a threat but green bonds address sustainability goals of investors specifically.

Competitive rivalry: Intense competition exists among key players for market share and leadership in green financing.

SWOT Analysis

Strengths: Growing environmental concerns driving demand. Provides channel for sustainability-focused investments.

Weaknesses: Lack of uniform standards leads to complexity. Higher issuance and compliance costs compared to regular bonds.

Opportunities: Regulatory support and policies promoting a low-carbon economy will boost growth. Untapped emerging markets remain opportunities.

Threats: Changes in policies and subsidies can impact issuances. Stricter rules may increase compliance burden for issuers.

Key Takeaways

The global green bond market is expected to witness high growth, exhibiting CAGR of 10% over the forecast period, due to increasing commitments by governments and corporates towards clean energy and sustainability goals. The US market currently dominates with over 30% share but China is emerging as the fastest growing market for green bonds in Asia Pacific region.

Regionally, the Asia Pacific region is expected to be the fastest growing market for green bonds over the coming years. Countries like China, India and several Southeast Asian nations are formulating policies and incentives to boost renewable energy investments to meet climate targets.

Key players operating in the green bond market are Bank of China, China Development Bank, European Investment Bank, Natixis, Societe Generale, Iberdrola, Banco Santander, Abu Dhabi Islamic Bank, KfW, BNP Paribas, UniCredit, Credit Agricole, DBS Bank, Standard Chartered, NatWest Group. These financial institutions are playing a leadership role in channeling more investments towards green projects.

1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it