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Green Bonds – A Growing Green Market

Author: Lise Pretorius – Head of GCX Strategy

Why Green Bonds?

Reorienting global growth towards a climate-resilient, socially inclusive future in line with the Sustainable Development Goals will require a reallocation of capital towards sustainable outcomes. Central to this shift will be the innovations in finance that allow investors to “do well by doing good”. Green Bonds have emerged as a strong and growing solution in this space, signalling growing investor interest in the green economy. Like traditional bonds, green bonds are investment vehicles that offer a fixed return for the investor, but because capital raised from Green Bond issuance’s are invested in “green” projects, they have the added bonus of creating positive environmental impact (Climate Bonds Initiative, 2017).

How big is the market?

Issuance’s of Green Bonds globally totaled $29.5 billion in the first quarter of this year, with Moody’s Investors Services predicting 2017 will see $120bn worth of Green Bonds issued – overtaking the 2016 record of $93,4bn (Chestney, 2017). To put this growth into perspective, cumulatively around $203bn has been issued since the launch of the first green bond by the European Investment bank in 2007!

Who issues Green Bonds?

Literally, hundreds of green bonds have been issued all over the world by parastatals, private companies, development finance institutions, cities and municipalities, and more recently even countries. While they have been issued in at least 33 countries around the world, the US, Netherlands, France, Germany, and China have the largest volumes issued, with over $10m each (UniCredit, 2017).

What’s the African market looking like?

South Africa’s first green bond (the first on the continent) was launched by the Industrial Development in 2012 – a R5bn bond for investment in clean energy infrastructure. The City of Johannesburg followed as the first local municipality to list a green bond on the JSE in 2014 – a R1,46 bn issuance to finance initiatives such as biogas to energy and the Solar Geyser Initiative (City of Joburg, 2014). More recently, the City of Cape Town’s R1bn Green Bond – which was launched in July this year – will fund projects aligned with the City’s Climate Change Strategy, including measures to secure long term water availability.

Bucking the trend of Green Bonds being issued by corporates and parastatals, this year Nigeria will issue a N150bn sovereign green bond for projects covering energy efficiency, resource efficiency, renewable energy, clean technology, and sustainable forest management. The pilot issue, which will be launched in the third quarter of this year, of N12bn to support projects in afforestation, renewable energy, and rural electrification (Govt. of Nigeria, 2017). Poland and France were the first to issue sovereign Green Bonds, and alongside Nigeria, Bangladesh, Morocco, and the Philippines are set to issue theirs this year (Floods, 2017)

Looking forward, Kenya’s Central bank governor was quoted by Reuters as saying that a Green Bond may be “down the road” (Geddie & Strohecker, 2017).

What’s in store for the future?

Now that investors are warming up to green bonds, there are calls for the need standardise definitions, set clear standards, and ensure verification of green impacts to avoid greenwashing (Floods, 2017)



Chestney, N. 2017. Moody’s cuts forecast for 2017 green bond issuance to $120 bln. Reuters [Online] Available at:

City of Joburg. 2014. Joburg pioneers green bond. [Online] Available at:

Climate Bonds Initiative. 2017. Explaining Green Bonds. Climate Binds Initiative [Online] Available at:

Floods, 2017. Green bonds need global standards. Financial Times [Online] Available at:

Government of Nigeria, 2017. Background Paper: Issuing Nigeria’s Green Bonds. Medium [Online] Available at:

Geddie, J., & Strohecker, K. 2017. From Africa to Asia, governments considering ‘green’ bond sales. [Online] Available at:

UniCredit. 2017. Green Bonds: The Chartbook – the state of the market. [Online] Available at:

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