The green, social, and sustainability (GSS) bond market is expected to reach €1.1 trillion in issuances this year, according to NN Investment Partners (NN IP).
As sovereigns and corporations seek fossil fuel alternatives and other low-carbon transportation options, the asset manager cited investor urgency in financing the energy transition.
Another reason for market growth due to increased issuances, according to NN IP, is that some segments, such as sterling investors, have lagged, implying "more room for growth."
Green bond issuances in US dollars increased in the fourth quarter of 2021, allowing issuers in the US and around the world to allocate to green bonds. The green bond market, according to NN IP, will continue to grow as more issuers enter the market.
Recent regulations, such as the Sustainable Finance Disclosure Regulation (SFDR) and the EU Taxonomy, according to the Netherlands-based asset manager, have also aided the market's growth.
"Since mid-2021 the green bond market has grown exponentially as it has gained support of investors to allocate in solutions that can create a positive environmental impact," said Douglas Farquhar, client portfolio manager, green bonds at NN IP.
"Short duration and corporate green bond funds remain popular due to the potential to obtain high yield, performance and a positive environmental impact. The rapid growth in our green bonds strategies underlines that green bonds are being recognized for the pivotal role they play in the energy transition, contributing to meeting net zero goals and addressing climate change."
NN IP also announced the addition of Roel van Broekhuizen to its green bonds team as a portfolio manager for the firm's green bond strategies.
Van Broekhuizen, who joined the team in early March, will assist in the monitoring of new market developments in the GSS market as well as supporting NN IP's green bond portfolios. By fLEXI tEAM