ESG Bonds Boom

ESG Bonds Boom

Green, Social, and Sustainable Bonds (ESG Bonds) are becoming increasingly relevant on the capital markets. The volume issued is growing exponentially from year to year. With the Swiss Exchange and BME, SIX offers corresponding listing locations and trading venues in Switzerland and Spain.

In December 2020, the Climate Bonds Initiative (CBI) announced a milestone: The global cumulative issuance volume of green bonds had grown to over USD 1 trillion within the last 13 years. Although this represents only a fraction of the USD 100 trillion global bond pool, the average annual growth rate of green bond issuance between 2007 and 2020 is 95%, according to the CBI. And the green bond boom continues unabated in the current year: By mid-April 2021, 2.5 times the volume of the same period last year had already been issued globally.

The first green bond was issued by the European Investment Bank (EIB) in 2007. Multilateral development banks such as the EIB and the World Bank are still among the largest issuers of green bonds today. They therewith finance projects that contribute to climate protection, for example in the field of renewable energies, or research and development in mitigating climate change.

Sovereigns, supranationals and agencies (SSAs) played a leading role in the kick-off of these financial instruments during the initial years. However, with the growing relevance of sustainable performance indicators (ESG indicators) for investors and the increasing integration of these factors in corporate governance policies, both the funding purposes and the type of issuers diversified. Nowadays, the private sector represents 70% of the volumes issued in ESG bonds.


On the SIX Swiss Exchange 46 green bonds are currently listed and tradable in five different currencies (EUR, CHF, USD, NZD, AUD, CAD). In 2019, the first sustainability bond was added to this "green category". It was issued by Raiffeisen Bank Switzerland for the financing of social and ecological projects. In autumn 2020, Novartis followed with a sustainability-linked bond: The coupon of this bond is linked to the achievement of certain sustainability targets. The outstanding volume in all three ESG bond categories on the SIX Swiss Exchange amounts to approximately CHF 17.5 billion.

Spain, a home market of SIX since the acquisition of BME, is among the ten most active jurisdictions in the ESG bonds issuance world ranking according to the latest statistics published by different international organizations that monitor this market. During the last decade, more than 40 billion euros of ESG labelled bonds have been issued. The issuers include relevant Spanish financial market participants such as the energy producers Iberdrola and Naturgy, and the telecommunications company Telefónica; banks such as BBVA, Santander and CaixaBank; the railroad infrastructure manager ADIF, and many public institutions like the Community of Madrid and the state-owned bank ICO (Instituto de Crédito Oficial).

In the course of Covid-19, many public entities in Spain started to increasingly issue social bonds aimed to fight the effects of the pandemic. Throughout 2020 the Basque Government and the Community of Madrid not only issued green, but also social and sustainable bonds and registered them in the BME Fixed Income markets. Some of these issues are specifically linked to the financing of projects to deal with the health sector’s needs stemming from Covid-19 and to help mitigate the inequality generated by the negative effects the economic crisis is having on disadvantaged groups.

With its “Green Deal” and the corresponding Action Plan on Sustainable Finance, the European Union has taken an international leadership role in ESG and transparency regulations, with, for example, the Green Bonds Standard, the Sustainable Finance Disclosure Regulation (SFDR), and the Taxonomy for Sustainable Activities.  Further, the EU incorporated a more comprehensive sustainable approach to its budget and recently established the EU Next Generation Recovery Fund, for which sustainable financing will be a basic pillar. Growth in the corresponding financial instruments and products thus does not appear to be waning for the time being. With BME and the Swiss Exchange, SIX offers corresponding listing locations and trading venues in Switzerland and Spain.