Green Bond Market Heats Up Despite Transition Wobble
SEB's Green Bond report dives into the energy transition and sustainable finance.
This issue of SEB's Green Bond report explores the recent slowdown in transition investment and why it might be temporary. The good news? Sustainable debt and clean energy stocks seem to be bouncing back. January 2024 saw the highest-ever issuance of new sustainable debt, suggesting a positive outlook for the year.
"While 2023 missed the mark on the energy transition, it seems like a temporary blip, not a shift," says Thomas Thygesen, head of strategy and sustainability at SEB Equity Research. "The underlying technology is still pushing us forward."
Thygesen points to declining prices and increasing adoption as signs of a technological revolution in clean energy. "Prices are falling not just for renewables but also for related technologies like electric vehicle batteries. This will eventually lead to a zero-emission energy system, but maybe not as fast as we need." He stresses the need for more policy support, especially in Europe and developing economies.
Sustainable finance market shows signs of recovery
The report also updates us on the sustainable finance market. While bond and loan transactions dropped for the second year in a row in 2023, data suggests both sustainable debt and equities hit a low point late last year and are poised for growth in 2024.
"January 2024 was a pleasant surprise," says Gregor Vulturius, lead scientist and advisor at SEB's Climate & Sustainable Finance. "It was the best January ever for sustainable finance, with over $147 billion in new issuance. Sustainable bonds accounted for more than 4% of global debt issuance in January, and 8% in Europe."
Tackling greenwashing
This edition tackles the issue of greenwashing. SEB's regulatory experts summarise recent EU actions against misleading sustainability claims, including the Green Claims Directive and new disclosure regulations.
The report also previews an updated Nordic position paper on green bond impact reporting, due in March, and summarises a recent SEB seminar on greenwashing risks.
For more sustainable finance news
Source: SEB
