Essential Role For GSS+ Bonds in Just Transition

A report from the London School of Economics’ Grantham Research Institute (GRI) has underscored the importance of green, social, sustainable and sustainability-linked (GSS+) bonds in mobilising just transition investments. The report is part of a new project between the GRI and Climate Bonds Initiative (CBI) to support greater utilisation of the labelled debt market for the just transition. It highlighted bonds as being a “particularly effective” financial instrument for the just transition because they enable a targeted approach through use-of-proceeds issuances, noting also that the larger size of the bond markets offers “greater potential impact” than public equities. The GRI report flagged a “more diverse” range of debt issuers, including development banks, education and health authorities, and housing associations. Development banks are responsible for 48% of just energy transition-related bond issuances, the largest share, followed by the private sector, comprising 17% by financial corporate issuers and 10% by non-financial corporates. A new methodology that identifies GSS+ bonds in the CBI Social and Sustainable Bond Database also found that volumes of sustainability bonds that relate to a just transition in the energy sector stands at US$548 billion, representing 13% of the wider GSS+ market as of July 2023. 

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