Buoyed by the strong demand from offshore investors, ESG bonds worth $9.4 billion were issued out of India YTD 2021 against $1.3 billion in 2020. This growth trajectory is only set to continue, the executive director of JP Morgan India writes
More than 50 Indian companies have signed up to the global Science Based Target initiative in order to cut emissions of greenhouse gases
It has been an exceptional year for global debt capital markets primary issuance with considerable growth in ESG bonds. Global & Asia ex-Japan G3 ESG bonds supply this year hit all-time record levels at $528.5 billion and $70.8 billion (YTD 2021), respectively. While Asia’s share of global ESG bond supply lags that of the US and Europe, it is encouraging to witness an almost three-fold increase in volumes coming out of the region versus that of the whole of last year ($22.9 billion).
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G3 ESG bonds issued out of India showed a similar trajectory with $9.4 billion worth of ESG bonds issued YTD 2021 against $1.3 billion in the full year 2020. This volume represents almost 44 percent of the total $21.2 billion bond issuance out of India YTD (as compared to 20 percent for Asia (ex-Japan)—a clear reflection of how India has been at the forefront. The trend is expected to continue for both India and Asia, with JP Morgan’s research estimating ESG issuances out of Asia to reach up to $100 billion in 2022.
The rise of ESG financing has been meteoric and represents an irreversible structural change. The drive to improve sustainability, which comes from issuers, investors, suppliers or customers, the government, the regulators, NGOs and the public, means that ESG considerations are only going to grow in significance—beyond the annual review to structuring or transforming day-to-day activities. It’s no longer a push or a pull initiative among the stakeholders but a wholesome approach whereby each stakeholder appreciates the importance of ESG in combating climate change and undertaking necessary actions to implement an effective ESG framework and strategy.
(This story appears in the 14 January, 2022 issue of Forbes India. To visit our Archives, click here.)