ESG bonds may top $10-bn mark

Mumbai: The ESG-focused fund-raising (green bonds) market, which has already scaled an all-time high so far this year, is set to cross the $10-billion-mark by December, according to Wall Street investment banking major JP Morgan, which has advised 12 of the 13 such bond issuances out of the country so far this year totalling $6.24 billion.

According to the bank, the overall bond issuances from the country may touch $25 billion this year, having already raised $17.5 billion so far, of which ESG-compliant bonds constitute $6.2 billion. Globally, the environmental, social and governance (ESG) has become a key board-room topic since 2013-14 and soon investors have also been asking on the ESG principles of their investee companies. The ESG idea has caught the attention of domestic corporates, investors and analysts as well and since 2015, 41 companies have raised over $17.2 billion in such funds of which $6.24 billion this year alone.

It can be recalled that in 2016, JP Morgan globally introduced a ban on financing of new coal mines and tighter restrictions on the financing of new coal-fired plants, which was expanded last year to include a full ban on providing lending, capital markets or advisory services to companies deriving the majority of their revenues from the extraction of coal, and by 2024, a phase out remaining credit exposure to such companies. Earlier this year, it set a target to bring $2.5 trillion for solutions that support climate change and contribute to sustainable development over the next 10 years.

This includes one trillion for green initiatives like renewable energy and clean technologies. "We've been part of all the 12 ESG/green bond sales this year so far, and we have a strong pipeline of ESG fund-raising for the rest of the year. So far domestic companies -- mostly renewable energy players and infrastructure companies-- have raised $6.24 billion and we see this scaling the $10-billion-mark this year," Madhur Agarwal, managing director, debt capital markets, at JP Morgan India said. He also expects the overall forex debt raising to cross $25 billion this year, which will be the highest ever.