The Canadian green bond market is poised to grow in tandem with the global market as a large part of the world moves to reduce carbon emissions, says the Investment Industry Association of Canada (IIAC).
In a newly released position paper, the IIAC states that in 2017 US$156.9 billion in global green bonds were issued through about 1,500 green bond issues. Just in the first half of this year, US$74.5 billion were released, a four per cent increase over the first half of last year.
For all of 2017, issuance was 80 per cent higher than the supply in 2016, according to the CBI, a recognized leader in green bond financial information.
Several initial Canadian issuers have placed their green bonds in international markets, but in the last few years domestic investors have been very receptive to a Canadian green bond supply, says the IIAC. Some of these investors have signed onto the UN’s Principles of Responsibility Investment guidelines.
Debt markets expected to embrace green market sector
The IIAC believes Canadian debt capital markets will embrace the green market sector as the increase in socially and environmentally related projects are funded by mainstream investors committed to sustainable projects.
“The sector has already gained traction as a broader base of issuers and investors have entered the marketplace,” it says. “Various provincial governments have taken important steps to recognize the importance of climate change issues by implementing carbon taxes, cap and trade and other initiatives.”
Ontario Premier Doug Ford officially announced plans in early July to end the province's cap-and-trade program.
As well, the Saskatchewan government is asking the province’s Appeal Court to rule on whether the federal government can impose a carbon tax.
Saskatchewan wants to know whether Ottawa’s plan to bring in a carbon price for provinces that don’t have one violates the Constitution.