As markets wobble, sustainable finance suffers too

The fledgling market for sustainable finance suffered a decline in first half activity alongside the overall markets, according to new data from Refinitiv.

In the first half of 2022, equity issuance for sustainable companies dropped by 42% compared with the same period last year to US$14.1 billion. The second quarter was particularly rough, with financings down by 95% from the first quarter.

The issuance of sustainable bonds was also down 23% in the first half, totalling US$422.1 billion, and the volume of deals was down 11%.

“As a percentage of global debt capital markets proceeds, sustainable finance bonds accounted for a 9% of overall [debt market] activity during the first half of 2022, down slightly from 10% a year ago,” Refinitiv reported.

In particular, green bond issuance was down 4% to US$232.7 billion, and the number of deals was down 13% from last year.

Sustainability bond issuance dropped 26% to US$74.4 billion in the first half, and social bonds raised US$56.0 billion, down 60% from last year.

Refinitiv reported that BofA Securities led the league tables for sustainable bond underwriting in the first half, followed by HSBC and JP Morgan.

On the equity side, Morgan Stanley was the top underwriter, with Goldman Sachs ranking second and BofA Securities in third place.

The data also showed that sustainable lending activity declined 11% in the first half to US$325.3 billion.

However, merger & acquisition activity involving sustainable companies was a bright spot. The value of sustainable M&A deals was down just 3% in the first half to US$90.6 billion, and the volume of transactions actually rose 22% in the first half to an all-time high.

JP Morgan was the top M&A advisor for deals involving sustainable companies, followed by Goldman Sachs, and Morgan Stanley.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.