Sustainability

Sustainable Finance Round Up: December 2022

By: Bridget Realmuto LaPerla

January 24, 2023 - 2 minutes

In a forest, looking up through the trees

The Sustainable Finance Round Up Series delivers clients with digestible trends and take-aways on sustainable market movement.

Market Musings

December saw a muted sustainable debt market relative to global debt. FY 2022 issuance totaled US$1,512B – eclipsing the $1 trillion threshold for the second year in a row – albeit retreating roughly 16% (US$300B) from 2021. Even with an overall YoY decline in sustainable issuance and flows in 2022, YTD totals continued in-line with the multi-year trend up for sustainable debt, indicating the 2021 total issuance was likely an outstanding year benefiting from market tailwinds and lower interest rates. Currencies and sectors help explain this end of year change.

In December, the typically dominant USD and EUR markets saw the bulk of the YoY decline, which corresponds to the YTD change since 2021, down 18% and 32% respectively.1 Alternatively, CAD and CNY (not presented) continued their YoY rise in new issuance, up 38% and 48% respectively.1 We'll share more in our forthcoming 2022 Sustainable Finance Round Up.

This month, we focus on financial institutions and social bonds, as the lead sector and one of the few products gaining traction YoY within the December sustainable debt market.

Financial Institutions Dominated December's Slow Month of Issuance

With elevated inflation feeding a global cost-of-living crisis, in December we observed a 57% increase in social bonds across sectors YoY. This social and environmental theme is acutely relevant in EMEA and APAC, where new policies and funds dedicated to social bonds are observed across Europe and in Japan.3-6 With that said, last month most financial institutions focused on issuing green loans and bonds, particularly with CNY issuance, which has demonstrated persistent increase in sustainable issuance since 2018.2 With new innovative templates for this sector brought to market, more social bonds may be on the horizon for financial institutions globally.

Data dashboard showing year-over-year debt and top sustainable debt issuing sectors.

Bloomberg; Corporate/Government bond new issuance data (excluding loans) as of 1/3/2023.
Bloomberg; Percentage of new issuance dollar value across sustainable debt products (including loans) as of 1/3/2023.

TD Securities' ESG Solutions

TD Securities' ESG Solutions team is the centralized environmental, social, and governance (ESG) expert resource, delivering ESG financing advisory services, ESG thematic and investor insights, and carbon markets solutions to help clients reach their goals.

Disclaimer

The views or opinions expressed herein represent the personal views of the writer and do not necessarily reflect the views of TD Securities or its affiliates.

This material is intended to provide commentary on the market for commodities discussed herein.

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Bridget Realmuto LaPerla
Director, ESG Solutions

Biography

Bridget joined the ESG Solutions team as a Director in July 2022. Based in Boston, she is a published ESG investing specialist with buy- and sell-side experience, providing ESG advice and solutions to corporate and institutional clients. Prior to joining TD, Bridget was the Co-Head of ESG Research at State Street Associates, presenting insights with academic partners and leading the bank's client engagement on ESG market signals. Her research is published in several peer-reviewed journals.