climate-aligned-bonds

Invest in Climate-aligned Bonds

Moving capital markets for a low-carbon, climate-resilient future

Invest in Climate-aligned Bonds

Moving capital markets for a low-carbon, climate-resilient future

At a glance

What are Climate-aligned Bonds? 

As investors move towards decarbonising portfolios and integrating Environmental, Social and Governance (ESG) considerations into investment decisions, deals with high climate impact and well-documented green credentials have never been more crucial.  

Climate-aligned Bonds (CABs) fill the gap for financing underlying climate-aligned activities that may not be as visible and transparent as labelled bonds, but address climate issues and promote a low-carbon economy. These include the development of renewable energy sources and transport systems.

The CAB universe is worth US$913.2 billion today – nearly half the labelled universe, according to Climate Bonds data. In a space where private capital is key to scaling the low-carbon solutions the world urgently needs, the investment opportunities are substantial. 

CABs versus climate/green bonds: What’s the difference?

A targeted focus

Unlike green bonds which accommodate broad environmental aspects, CABs target climate change issues.

Unlabelled potential

Unlabelled potential

CABs support climate-aligned initiatives but have not been labelled as green by their issuers – and are therefore likely to go unnoticed by prospective investors.

Pure-play issuers

Where labelled green bonds are primarily issued by diversified companies, the unlabelled portion of the CAB universe derives mostly from pure-play issuers.

What makes CABs viable and attractive?

Wider investment opportunities

The CAB universe expands opportunities for building climate-themed portfolios beyond labelled green bonds.

Runway for growth

The CAB market size exceeds US$1 trillion and is expected to mature by 2029.

Uncover possibilities

CABs identify untapped areas of potential where future green bonds can be labelled.

Introducing the Climate Bonds Initiative

The Climate Bonds Initiative (CBI) is an international, investor-focused, and not-for-profit working to mobilise the US$100 trillion bond market to drive economies’ climate resilience. 

In 2021, DBS sponsored the flagship Climate-aligned Bonds & Issuers Research Report. The report sheds light on capital flows financing green assets that may not be as visible and transparent as labelled bonds, and identifies opportunities to scale-up the labelled green bond market. 

China is home to the most Climate-aligned Bonds

Globally, China leads the trend in Climate-aligned Bonds, accounting for over a third of outstanding bonds. China-based transport companies dominate the Asia-Pacific climate-aligned scene.

Opportunities in developed markets

Developed markets present immense potential for refinancing opportunities, with more than half of the CABs set for maturity by 2029. This will likely boost green labelled bond issuance.

Emerging markets are transiting to climate resilience

Emerging markets are feeling the pressure to accelerate their shift towards sustainability. This could spell greater possibilities for green labelled bond issuance, particularly in renewable energy.

 

Click below to download the Climate-aligned Bonds & Issuers Research Report.

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