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Green Bonds

Carbon-heavy Bonds Dwarf Green Alternatives

Bonds issued by emissions-intensive sectors outnumbered green bonds by 2.5 to 1 last year, according to new figures from the London Stock Exchange Group. Green bond issuances in 2023 hit US$540 billion, up 7% year-on-year. But those issued by carbon-intensive sectors stood at US$1.4 trillion in issuance, accounting for about a third of all non-financial bond issuances. Still, green bonds were on an upward trend, making up 7% of total new issuances in 2023, compared to 2% of the entire value of outstanding bonds. For LSEG, the gap between green bond and carbon-intensive bond issuance “highlights the potential opportunity for rapid growth in the green and transition bond markets if the low-carbon transition accelerates”. Overall, LSEG found the green economy was the second top-performing sector after tech. It calculated that the global green economy had a market capitalisation of US$7.2 trillion and recorded a 13.8% compound annual growth rate over the past 10 years. Companies with green revenues accounted for about 8.6% of global listed equity markets as of April 2024, the report found. Energy efficiency investments were best-performing, but renewable energy underperformed the benchmark. Downsizing at some large US green companies earlier this year has also meant the green economy’s share fell slightly from 8.9% at the end of 2023 to 8.6% in Q1 2024, the report said.

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