Sustainable Finance Expected to See 55% Growth in 2021, Says Credit Agricole Group

by | Jan 20, 2021

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Sustainable finance saw another strong year in 2020, supported mostly by the issuance of social bonds and the rise of sustainability-linked bonds — and the momentum is expected to continue, with 55% growth in 2021, according to Crédit Agricole CIB.

Sustainable finance in 2020 was driven by the Covid-19 crisis, which has highlighted the need to develop resilience to risks and shocks (including those related to climate and the environment) and by climate neutrality commitments. Such commitments are spreading in several countries, and some are already backed by investment plans, the organizations say.

The pandemic has brought into laser-like focus how the health of the planet affects human health which, in turn, affects the way people live and work, according to deVere Group, an independent financial advisory and fintech organization. These shifts in values and new economic realities have meant that the way companies respond to the public health emergency are being carefully scrutinized by investors in terms of their social and governance policies.

55% Increase in Sustainable Finance

The momentum in the “green, social and sustainability supply” will lead to an increase of 55%, to about $726 billion in 2021, compared to the amount issued in 2020, says Damien de Saint Germain, head of credit research and strategy at Crédit Agricole CIB. “Agencies and supras should remain the larger source of supply, with large names shifting the majority of their issuance to a sustainable format.”

The development of sustainability-linked instruments, the emergence of social bonds alongside green bonds, and the upcoming EU Taxonomy regulation are strong trends, and are “excellent news in sustainable financial markets,” says Tanguy Claquin, global head of sustainable banking. “Issuers now have in hand a range of instruments responding to different responsible investment strategies.”

Crédit Agricole CIB is the corporate and investment banking arm of Credit Agricola Group. Crédit Agricole CIB has a 6.5% market share of the green, social and sustainability bonds market, according to Bloomberg.

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