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What has been the growth and composition of the green bond market?

The market has grown from about US$4 billion in 2010 to over US$37 billion in 2014.

As discussed earlier, the EIB issued the first climate-focused bond in the form of a structured product in 2007. In 2008, the World Bank issued the first bond labeled "green" for mainstream investors with a fixed coupon. By 2010, they were joined for the first time by other MDBs such as the IFC and by public entities (governments, agencies, and municipalities) in issuing a total of about US$4 billion worth of climate-focused bonds. This total nearly tripled in 2013, as corporations, energy utilities, and other agencies entered the market, and several issuers drastically increased the issue size (figure below). This trend continued in 2014, when the green bond market volume rose to over US$37 billion, over half of which was issued by corporations such as Toyota and public entities such as the State of Massachusetts. To date (mid-July 2015), green bond issuances in 2015 have reached about US$23 billion.

Most investors have been investing in green bonds within their existing portfolios—responding to interest in supporting climate-focused activities. Asset managers have set up dedicated green bonds funds or have set targets for funds under management that should include green bonds. For example, Nikko Asset Management set up a World Bank Green Bond Fund in 2010. A few years later, announcements were made by Zurich Insurance and Natixis Asset Management's Responsible Investment management company, Mirova, to set up portfolios dedicated to green bonds in the magnitude of US$1 billion and €1 billion, respectively. In late 2014 and early 2015, the treasuries of Barclays Bank and Deutsche Bank set up dedicated funds to invest ₤1 billion and €1 billion in green bonds, respectively.
(Nikko Asset Management, "Nikko Asset Management Europe Set to Launch Green Fund with World Bank Bonds," press release, Feb. 23, 2010).

(Zurich Insurance Group, “Zurich Invests Up to USD 1 Billion to Help Communities Adapt to Climate Change,” press release, Nov. 18, 2013).

(Natixis, “Green & Sustainable Bonds: Growth with Staying Power?” Cross-Expertise Research report, Dec. 1, 2014).

(Barclays, “Barclays Pledges £1bn to Rapidly Growing Green Bonds Sector,” press release, Sept. 22, 2014).

(Deutsche Bank, "Deutsche Bank Invests EUR 1 Billion in Green Bond Portfolio," press release, Feb. 23, 2015).


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