FRANKFURT AM MAIN (AFP) – Almost half of so-called “green bonds” issued last year were in euros, the European Central Bank (ECB) said yesterday, highlighting an opportunity for the single currency to gain importance on the global stage.
“European Union (EU) residents are the largest issuers of green bonds. In 2019 more than half of global issuance was concentrated in the EU and almost half of global green bond issuance was denominated in euro,” the ECB said in an annual review of the currency’s international role.
In the ECB report, “green” bonds are described as “earmarked to finance investment projects with an environmental benefit”.
The market segment is growing, rising from just 0.2 per cent of global bond issuance in 2014 to 2.85 per cent last year, or USD205 billion, ECB economists found.
Of that amount, some 45.4 per cent was issued in euros, compared with 25.7 per cent in dollars and 28.9 in other currencies.
ECB President Christine Lagarde told European Parliament lawmakers on Monday that green bonds were one of the areas where “the euro already has a head start and provides possible avenues to strengthen its global appeal”.
In its report, the ECB noted that recent years have seen a surge of non-eurozone residents issuing green bonds denominated in euros, reaching around 60 per cent in the first quarter of 2020.
“The consolidation of the EU role as a global hub for green finance could strengthen the euro as the currency of choice for sustainable financial products, bolstering its international role,” it said.
But the EU has struggled to set up a so-called “taxonomy”, clearly marking out which investments count as environmentally-friendly and preventing so-called “greenwashing” – in effect covering up harmful spending with a veneer of environmental packaging. Battles have raged between member countries over whether technologies like nuclear power should be classified as green.