# Green bonds are set to drive corporate ESG debt out of slump in 2023 -Barclays
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-01-05
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Barclays predicts $460bn ESG bond sales rebound in 2023
Meta Description: Barclays forecasts corporate ESG bond issuance to reach $460 billion this year, driven by green bonds, after a 22% drop in 2022 due to higher interest rates.
URL: https://financedigest.com/green-bonds-are-set-to-drive-corporate-esg-debt-out-of-slump-in-2023-barclayshtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-01-05t201545z3lynxmpej030phrtroptp4usa-stocks-1736814622847-compressed.jpg)

By Isla Binnie

NEW YORK (Reuters) – Global sales of corporate bonds with environmental, social and governance (ESG) targets will rebound this year and top $460 billion, Barclays said, after the asset class had its first setback in 2022 as higher interest rates weighed on credit markets.

ESG bond volumes swelled over the past few years but dropped by 22% in 2022 amid a broader slowdown in corporate bond issues, as companies faced significantly higher borrowing costs due to aggressive monetary tightening actions by global central banks fighting inflation.

Corporate ESG [bond issuance](https://www.financedigest.com/mitsubishi-ufj-to-postpone-at1-bond-issuance-in-credit-suisse-fallout.html "Mitsubishi UFJ to postpone AT1 bond issuance in Credit Suisse fallout") fell to $362 billion last year from $461 billion a year earlier, Barclays said in a credit research note. It expects ESG bond [sales to grow by 30%](https://www.financedigest.com/renault-revenues-rise-30-in-q1-on-higher-sales-and-prices.html "Renault revenues rise 30% in Q1 on higher sales and prices") this year and rebound to almost the same levels of 2021, predominantly driven by green bonds.

We expect [green bond issuance to continue to dominate the market thanks to strong demand and a long list of green projects that need funding as companies put decarbonisation plans](https://www.financedigest.com/eu-announces-plans-to-lead-green-industrial-revolution.html "EU announces plans to lead green industrial revolution") into action,” Charlotte Edwards, Head of ESG FICC Research at Barclays, said in the note.

Shifting the planet’s energy system away from fuels that emit greenhouse gases will [cost $2 trillion](https://www.financedigest.com/deloitte-research-reveals-inaction-on-climate-change-could-cost-the-worlds-economy-us178-trillion-by-2070.html "Deloitte research reveals inaction on climate change could cost the world’s economy US8 trillion by 2070") a year by 2030, according to estimates from the International Energy Agency.

Companies and [banks have crafted new instruments to help fund](https://www.financedigest.com/bank-funding-for-renewables-stagnates-vs-oil-and-gas-report.html "Bank funding for renewables stagnates vs oil and gas – report") the transition.

Among ESG debt options, green bonds’ dominance is yet to be challenged by a newer type of instrument, sustainability-linked bonds, which carry penalties for borrowers if they [fail to meet](https://www.financedigest.com/virtual-meetings-the-big-mistakes-that-can-make-online-communications-fail.html "Virtual Meetings – The big mistakes that can make online communications fail") certain targets.

[Companies can secure cheaper financing through green](https://www.financedigest.com/green-cloud-one-way-your-company-can-commit-to-sustainability.html "Green Cloud: one way your company can commit to sustainability") bonds, Barclays said, and their relative appeal has increased even further as investors doubted the key performance indicators used in the less mature sustainability-linked securities.

Volumes may have been stunted by concerns from investors [around greenwashing in the market](https://www.financedigest.com/roller-screw-market-ending-up-at-a-valuation-of-around-us-457-5-mn-by-2031.html "Roller Screw Market Ending Up At A Valuation Of Around US$ 457.5 Mn By 2031") (due to concerns around unambitious targets, immaterial KPIs and small penalties),” Edwards said.

Issuance of SLBs declined sharply to $60 billion from $95 billion in 2021.

(Reporting by Isla Binnie; additional reporting by Davide Barbuscia; Editing by David Gregorio)


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---