1. Green Bonds Rise:
To crack the USD1 bln issuance in one year and continue to anchor the market, with social/sustainability bonds stabilizing and Sustainability Linked Bonds still being the fastest growing part of the market.
2. Post COP 26 Halo:
This will underpin the market with a lot of sovereign issuances to draw focus on country commitments plus corporate commitments/pledges to grow. Key thematics from COP 26 to continue; net zero alliances, deforestation, methane commitments, etc.
3. Year of Transition (Finally):
More references points now available for strategy and decarbonization trajectories. We will see more use of proceeds bonds/loans focused on transition.
4. Beyond Carbon Will Mainstream:
Use of proceeds and KPI/Targets will shift to rapidly include more water, biodiversity, adaptation/resilience and socials issues.
5. More Net Zero Commitments Made:
Finally, more action and implementation plans to be put forward to support growing ambition. Strategies/plans articulated in more detail and more commitments called out if they include offsets and no detail on action/implementation.
6. Price Differentiation for Labelled Instruments :
This will become clearer with “socium”-social premium and “greenium” green premium growing and the quantitative aspects of sustainable bonds and loans become more quantifiable (impact, reporting, expected impact, pricing dynamic in primary and secondary markets).
7. Methane (CH4) – will get more Air-Time:
Pardon the pun, however, as we know methane is multiple times worse for the atmosphere and global warming even though it only lasts for a shorter period in it. The main culprit industries such as agriculture, O+G, gas users will be under intensifying pressure to address CH4.
8. Proliferation of Sustainable Finance Products:
We expect to see more sustainability linked guarantees, deposit structures (linked), trade finance propositions being use of proceeds or sustainability linked based.
9. Linked Instruments Grow Exponentially:
Both linked loans and bonds growing very strong over 2022 as the market has been tested and what good looks like is becoming clearer.
10. Geography and Industry Diversification:
This will speed up over 2022 with Africa, Middle East Asia and LATAM driving diversity of geography and more sectors coming to market especially agriculture, mining and chemicals.
