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NNIP predicts major European green bond growth in 2021

green bondsGreen bond issuance will be 50% higher in 2021, driven partly by EU rules such as the Green Bond Standard, an asset manager predicted.

NN Investment Partners (NNIP) forecasts that green bond issuance will be €300 billion, partly with the coming year seeing “major changes” that will be supportive of the European green bond market.

Among these are the final version of the EU’s Green Bond Standard, which will curb trends towards a wider range of eligible green assets, the firm said.

Also, the EU will start issuing green bonds from Q2 onwards for an estimated amount of €225 billion. This is equivalent to one third of its Covid-19 recovery package.

Other governments – including Italy, Spain and the UK - will start issuing green bonds in 2021, NNIP said, and the estimated the global green bond market will be worth €1 trillion in total.

The Green Bond Standard, along with the EU Taxonomy, will be the first driver of the green bond market “surge” in 2021, stemming from the EU’s Sustainable Action Plan to finance sustainable economic growth.

Jovita Razauskaite, green bond portfolio manager at NNIP, said: “These new regulations herald what could be a watershed decade for climate change mitigation, with Europe leading the way via its target to be carbon-neutral by 2050. ESG and green finance are really entering the mainstream. The pandemic has created a positive boost too, as a lot of countries clearly need more funding, and with green ambitions stronger than ever the green bond market will be widely viewed as a major opportunity.”

Another driver for the firm’s prediction are Next Generation EU-Bonds (NGEU), of which €225 billion is dedicated to environmental projects between 2021 and 2023.

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