Green recovery bonds: where do companies invest money post-COVID?

Post lockdown, one of the key questions is how the private sector is embracing a green recovery.

Since 1 April we’ve seen around $20 billion of corporate green-labelled debt globally (source: Dealogic). Based on NWM data on much of this “green recovery bond” sample, we can dig deeper into where this money is being put to work.

Firstly, it’s clear that utilities are leading the way with over half of post-COVID-19 supply. This sector has seen its carbon transition capital expenditure programmes rise significantly in recent years: sizeable investments in electricity generation, transmission and distribution are needed to support electrification objectives.

Debut issuers prove that green continues to be on the rise

Encouraging news: Around 40% of issuance has come from companies new to the green asset class.  Despite the significant stress treasurers have been under in recent months, they’ve continued to prioritise establishing new green financing frameworks.

Renewable energy projects clear frontrunners

The type of issuance has had a distinctly “dark green” characteristic, with around half of financing estimated to contribute towards the Renewable Energy ICMA[1] project category.

Given the scale of carbon emissions from real estate (estimated at approximately 40%), green buildings make up a surprisingly small portion (6%) of issuance thus far. Of course, building assets can also rely on a host of private financing sources.

Green with a social lens

Still, just analysing the project category – of which issuers typically only select one for each $ invested – risks discounting a company’s broader sustainability objectives associated with the project. The variety of proposed UN Sustainable Development Goals (SDGs) contributions referenced in a framework can help here.

These tell an interesting picture: when apportioned, an estimated 60% of the analysed green bond issuance has been earmarked for (partly) social focused goals – in particular #11 “Sustainable cities and communities”. This suggests that companies’ green agendas continue to take into account their societal responsibilities.

Green bonds market to boost recovery

How are companies proposing to report back on the environmental impact? The lion’s share of issuers promises to use well-understood CO2 emission avoidance or renewable energy generation metrics, helping the drive towards impact reporting standardisation. We look forward to seeing them follow through on this in the next twelve months. From our current vantage point it’s clear: post-COVID-19, we’re still seeing a healthy green bond market that is poised to be a meaningful contributor to the economic recovery in the quarters to come.

Thank you to Saakshi Arora for her excellent research assistance.


  1. NatWest Markets, based on European and US green bond issuance from 1 April-3 July. Apportioning, for example for project categories, is done on a pro rata basis.
  2. International Capital Market Association
  3. Global Alliance for Buildings and Construction 2018 Global Status Report

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