Record year for sustainable finance market

The sustainable finance market surged by 26% last year on the back of rising demand for green bonds and sustainability-linked loans – making 2018 the seventh consecutive record year for sustainable financing, with $247bn (£192bn) worth of debt instruments raised.

These are used to finance projects with environmental or social benefits, and are increasingly issued by governments and corporations to raise money for green initiatives.

“The markets are responding, with new products emerging such as green loans, green commercial paper and sustainability-linked loans,“ said Dan Shurey, head of green and sustainable finance at BloombergNEF, which compiled the data.

While green bonds continue to make up the largest part of the market, issuance grew by just 5% last year, compared to 68% in 2017, while sustainability-linked loans surged 677%. These are loans linked to the sustainability performance of the borrower. Last November, for example, French electricity company EDF agreed a €4bn credit facility tied to its environmental targets.

Meanwhile, green sovereign debt hit $17.6bn in 2018, rising 64% from the previous year as countries like Belgium and Ireland continued to raise funds for climate change mitigation and adaptation.

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