Since the first security was issued 15 years ago, the green bond market has climbed to new heights with a healthy flow of $2 trillion, according to research released at COP 27 from the Climate Bonds Initiative (CBI), a not-for-profit which promotes low-carbon economy investment and advises governments and regulators.
CBI said its First Abu Dhabi Bank (FAB) backed study analysed data of self-labelled bonds aligned with the Paris Agreement issued between the mechanism’s launch in 2007 and the third quarter of 2022.
CBI CEO Sean Kidney noted that investment in sustainable finance needs to reach at least $5 trillion over the next three years to avert a “climate catastrophe”.
He acknowledged it is an “ambitious target” but said the key to success would be a greater focus on channelling capital into emerging markets (EM), including those in the Middle East and Africa (MEA).
Kidney added, “To stand a chance of meeting the Paris Agreement’s 2050 targets, we must slash emissions in half this decade.”
The CBI’s analysis also focussed specifically on the MEA’s green, social and sustainability (GSS+) debt market and recorded $33.2 billion of thematic debt originating from the region.
It found that cumulative volumes are less than 1% of the global market, indicating growth potential.
FAB managing director Rula Al Qadi said they plan to pump $75 billion in sustainable finance by 2030.
He added, “Climate change is not purely a scientific challenge – it’s also an economic one. If we’re serious about achieving the Paris Agreement recommendations, then we’ll need an immense economic transition that includes significant investment in infrastructure and innovative technology”.
