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CLIMATE-ALIGNEDBONDS & ISSUERS
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Prepared by Climate Bonds Initiative.
Sponsored by DBS Bank.
Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative11. Introduction
About this report
The Climate Bonds Initiative (Climate Bonds)
has been researching investment opportunities
in bonds financing climate-aligned assets since2012. This is the eighth edition of the Climate
Investment Opportunities: Climate-Aligned
Bonds & Issuers report which is a Climate Bonds
flagship publication.
The research presented in this report identifies
unlabelled climate-aligned bonds (‘climatealigned bonds’) – these are bonds that are notexplicitly labelled as green or any other thematic
label by the issuer, but that finance climaterelated activities or projects.
The report presents an overview of the global
climate-aligned universe (Chapter 2), which isfollowed by separate sections on developed
markets (DM) (Chapter 3) and emerging markets(EM) (Chapter 5).1 China is analysed separately
in Chapter 4 as it is the source of considerable
climate-aligned issuance. Spotlight sections on
low-carbon transport (page 21), green hydrogen(page 22) and real estate companies (page 24) arealso included. The latter is based on a proprietary
framework developed by Climate Bonds which
identifies the top performing property companies
from a disclosure and transparency perspective.
Climate Bonds is also launching a climatealigned dataset which contains detailed
information at the bond level. Together, thereport and dataset aim to help investors andother stakeholders understand and discoveradditional opportunities for climate-aligned
investments which are not as visible as labelledgreen bonds.

Summary figures

Contents• 420 climate-aligned issuers

1. Introduction 2• 311 fully-aligned issuers• 109 strongly-aligned issuers• 45 countries, 33 currencies• USD913.2bn of outstanding climatealigned bonds, USD >1tn of climatealigned bonds issued• Fully-aligned issuers: issuers thatderive ≥ 95% of revenue fromclimate-aligned activities• Strongly-aligned issuers: issuers thatderive ≥ 75% of revenue fromclimate-aligned activities• Unlabelled climate-aligned bonds: bondsthat finance climate-aligned activities but
are not labelled by the issuer.
• Labelled bonds: bonds issued to finance orrefinance projects with green and/or social
purposes- e.g. green bonds. These bonds
are not included in this analysis.
• Labelled bonds from climate-aligned
issuers: green bonds issued by either fully-

3. The global climate-aligned universe 4
4. Developed market (DM) overview 95. China: the largest source of climatealigned bonds 14
6. Emerging markets overview 16
7. Spotlight on transport 21• Top three issuers: China Railway Corp
(USD230bn), SNCF (USD53.7bn), EDF(USD52.1bn)

8. Spotlight on green and low-carbonhydrogen 23• Top climate themes: Transport(USD502.3bn), Energy (USD219.3bn) and
Water (USD91.2bn)

9. Conclusion 26

Context
Good reporting practice is crucial as investors are
increasingly moving towards decarbonising theirinvestment portfolios. This has, in part, encouragedsome entities to increase disclosure on theirenvironmental impacts. However, many are still
not incorporating clear climate-related metrics intheir annual and/or financial reports, thus making
it challenging for investors to effectively identify
unlabelled climate investment opportunities.
Labelled bonds, including green bonds, benefit froma greater degree of transparency, as disclosure on
the green credentials of the funding is often provided
alongside financial information. This is due towell-established green definitions and market
guidelines, which provide investors additional

Glossary• Climate-aligned issuers: issuers that derive
at least 75% of their revenues from climatealigned business activities. These comprise:

2. Research methodology 3aligned or strongly-aligned issuers. Thesebonds are not included in this analysis.
• Other labelled bond issuers: issuers who haveissued labelled bonds but who derive <75%of revenue from climate-aligned activities.
These are not included in this analysis.
• Climate-aligned bond universe or climatealigned bonds: terms to describe the fulluniverse of climate-aligned outstanding
bonds, i.e., unlabelled outstanding bonds
from fully- and strongly-aligned issuers.3• Certified Climate Bonds: issuers can certify
debt instruments under the Climate Bonds
Standard. Certification confirms that thebond is aligned to the Paris Agreement andto keeping global warming well below 2°C.
Many bonds in this report may be eligible forcertification but have not yet been certified.

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative

8. Spotlight on real estate companies 24
Annexes 27
Endnotes 34

transparency on the use of proceeds – thereby
minimising the risk of greenwashing. Findings fromthe Climate Bonds Green Bond European Investor
Survey, published in November 2019, confirm thatinvestors value deals with high climate impact andclear green credentials, also highlighting a gap in
the market for green bonds issued by corporates –especially those in the real economy.2
The identification of a wider range of climate
instruments is therefore crucial to shed light oncapital flows financing climate-aligned activities
which may not be as visible and transparent aslabelled bonds, as well as to identify opportunities
to scale up the labelled green bond market. In
2018, Climate Bonds identified more than USD1tn
of climate-aligned bonds, with an additional
USD389bn of labelled green bonds. To date,
the labelled green bond market has more thandoubled, having reached more than USD1tn.
Persistent low interest rates and central bankquantitative easing policies have contributed toincreased demand for all types of bonds. Appetite
for green bonds is increasing as the number ofdedicated funds is rising rapidly. The European
Central Bank (ECB) has stated that green bondpurchases under its EUR3.7tn purchase asset
programme (APP) constitute around 20% of theeligible universe, which exacerbates the shortageof labelled bonds in the market. Climate Bonds
expects policy initiatives to increase the emphasis
on sustainable investment, for example via
the implementation of the European Union’s
Sustainable Finance Action Plan. These demand
factors provide a substantial incentive for climatealigned issuers identified in our research to cometo the market with labelled green bonds. The
availability of more green bonds will contributeto the cycle of more dedicated investment, andissuers will have further incentive to prioritise
climate friendly expenditures and investment.

2

2. Research methodology
This research identifies climate-aligned bonds.
These bonds are not labelled as green bonds by theissuer, but finance climate-aligned activities/assets.
Climate-aligned bonds are identified via two researchphases: the ‘issuer screening’ and the subsequent‘identification of climate-aligned bonds’:

Issuer screening
Climate-aligned bonds are identified at the issuer
level, via analysis of the revenue streams for a
global pool of public and private companies.4
Only companies/entities (or their subsidiaries
and/or financing arms) with outstanding debt are
eligible for inclusion.
• Entities that derive at least 75% of theirrevenue streams from climate-aligned activities
are classified as strongly-aligned issuers• Entities that derive at least 95% of theirrevenue streams from climate-aligned
activities are classified as fully-aligned issuers
Both of the above are classified as climatealigned issuers.
Issuers are excluded from the analysis if:• They derive less than 75% of their revenues
from climate-aligned activities• They have no debt outstanding• There is insufficient information to determine
their climate-alignment
N.B: The issuer screening phase was based on
publicly available sources of information, suchas annual reports, sustainability reports, andcompany websites. Occasionally, issuers provided
direct information which helped clarify theclimate-aligned nature of their business activities.
Such information was treated confidentially, andonly presented at an aggregate level.

Identification of climate-aligned bonds
Bonds issued by climate-aligned issuers are defined
as climate-aligned bonds as they finance and/or refinance operating activities that have been
identified as climate-aligned. The total climatealigned outstanding debt is calculated as follows:• For fully-aligned issuers: 100% of outstanding
debt is considered climate-aligned.
• For strongly-aligned issuers: a pro-rata amountbased on the issuers’ percentage alignment
is considered climate-aligned. For example,
if an issuer is 80% aligned, then 80% of its
outstanding debt is considered climate-aligned.

Issuer screening: revenue stream analysis

Pool of eligible
climate-aligned
issuers• The combination of climate-aligned
outstanding volume issued by fully- andstrongly-aligned issuers is defined as ‘climatealigned outstanding debt’.5 The latter
represents the underlying data for our charts
and market analysis below.6
N.B: All green, social, and sustainability (GSS)
labelled bonds issued by climate-aligned issuers
are excluded from the current analysis. For
more information on the labelled bond universe,
please refer to the Climate Bonds ‘State of theMarket’ series.7

Climate-aligned activities
Climate Bonds has identified seven climate
themes: Energy, Transport, Buildings, Water,
Waste, Land use & agriculture, and Information &Communication Technologies (ICT). The specificclimate-aligned activities and assets within these
themes, along with the relevant eligibility criteria,
are listed in the ‘climate-aligned activities’ table(Annex II).

Identification of climate-aligned bonds

Fully-aligned
issuers(≥95% climatealigned revenues)

100% of theiroutstanding bonds

Strongly-aligned
issuers(≥75% climatealigned revenues)

Pro-rata alignment(%) of outstanding
bonds

Issuers not aligned(<75% climatealigned revenues)

Bonds excluded

Climate-aligned
outstanding bonds+

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative3

Climate-aligned universe

USD913.2bn

Buildings

Water

Waste
EnergyTransport

ICTLand use

Labelled universe

USD1.7tn

Pandemic

Transition
SDGs
SocialGreen

Sustainability
Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative4

3. The global climate-aligned universe
USD913.2bn of outstanding climate-aligned bonds
120• 420 climate-aligned issuers

600• 311 fully-aligned issuers

100

Climate-aligned outstanding bonds

500• 109 strongly-aligned issuers

80

Climate-aligned deal count400• 45 countries• USD913.2bn of outstanding climatealigned bonds• USD >1tn of climate-aligned bonds issued

USD Billions• 33 currencies

60

300

40

200

20

100

0

0

• Top climate themes: Transport(USD502.3bn), Energy (USD219.3bn) and
Water (USD91.2bn)

Global context: The need toscale up climate finance
Recent years have witnessed increased flows ofcapital towards low-carbon assets and economic
activities, with substantial growth of the labelled
GSS bond market. Unfortunately, such efforts fallshort of what is needed to meet more stringent
climate targets: estimates suggest that an annual
USD6.9tn in infrastructure investment alone, as
well as a corresponding figure between USD1.6tn
and USD3.8tn for the energy transition, is
required to meet the Paris Agreement targets.8,9,10
Driving private capital towards low-carbon
investments is key to scaling up climate finance:
public money alone is not sufficient for theinvestment needed. This research identifies
additional opportunities for investors beyond
the public realm to help facilitate the climatetransition that is urgently needed.

20
05
20
06
20
07
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08
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09
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20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20

• Top three issuers: China Railway Corp
(USD230bn), SNCF (USD53.7), EDF(USD52.1)

Source: Climate Bonds Initiative

A universe of USD913.2bn of climate-aligned
bonds has been identified as part of our 2020
research, highlighting sizeable investment
opportunities. This accounts for approximately
half of the labelled universe,11 which amounts to
USD1.7tn according to Climate Bonds data.12(SNCF) and Électricité de France (EDF) are both
domiciled in France. North America is home to
65 issuers and USD119.7bn. Rail company Union
Pacific Corp (USD22bn) is the top issuer in theregion, followed by Hydro-Québec (USD17bn)
and American Water Capital (USD8.4bn).

Global climate-aligned
universe analysis

EUROFIMA is the only supranational climatealigned issuer, with USD8.8bn of outstanding
climate-aligned bonds. Africa is also home toone single climate-aligned issuer: Umgeni Water
Services, which accounts for USD140m.

The climate-aligned universe continues toexpand. The 2020 climate-aligned research
identified a total of 420 climate-aligned issuers
from 45 countries. The total climate-aligned
bond universe is almost equally split between
DM and EM, with 1% of volume coming fromsupranational institutions.

China13 and France together account for
more than half of the total climate-aligned
universe. The latter, which represents almost afifth of the climate-aligned volume, is home toten climate-aligned issuers which mostly operate
in the transport and energy sectors. Notably, ICT
company Orange SA ranks third with USD38bn
of outstanding climate-aligned bonds. The
United States (US) comes in third in the global
ranking, with 45 issuers being identified as

Asia-Pacific is the top region, accounting
for USD436.6bn issued by 183 climate-aligned
issuers. Bonds from China represent the vast
majority of issuance from the region at 74%,
and 36% of the global total. Europe ranks
second, accounting for USD321.3bn of climatealigned debt and 121 issuers. Top issuersSociété Nationale des Chemins de fer Français

Top 10 climate-aligned countries
Country

Asia-Pacific tops the unlabelled climate-aligned universe
400

Climate-aligned outstanding debt

1600

350

Climate-aligned deal count

1400
1200

300

USD Billions

250

1000

924

200

800

150

600

100

400

318
220

50
0
Asia-Pacific

Outstanding
climatealigned debt
(USD)

Market
share
(%)

China

325bn

36

France173.6bn

19

United States

86.6bn9South Korea

59.8bn7

United Kingdom

53.9bn6

Canada33.1bn4Germany

31.4bn3

India

28.6bn3Austria

16.6bn2

Brazil16.2bn

2

1800

1794

EuropeNorth
America

Latin
America200
242

Supranational

Africa0

Deal count450

Deal countSummary figures

Source: Climate Bonds Initiative

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative5

climate-aligned. Most US companies fall under
the transport, water, and waste themes, with
examples from Tesla (USD5.6bn), American Water
Capital, (USD8.4bn) and Republic Services Inc(USD5.7bn).

CNY accounts for 35% of the climate-aligned universe

USD
17%

52% of bonds are issued in hard currency
with EUR (21%), USD (17%) and GBP (8%) being
the most popular. CNY is, nonetheless, the top
currency at 35%, also accounting for the largest
share of bonds issued in soft currency.

Climate-aligned issuers operating in low-carbon
transport prefer tenors of up to 20 years (63% ofvolume in this theme). Renewable energy issuers
favour medium tenors, with 50% of climatealigned bonds maturing within 10 years. Around
20% of climate-aligned bonds in the Energy
theme exceed 20 years. Water companies favour
longer tenors, with most of the volume maturing
in longer than 20 years. On average, land use,
waste and ICT issuers prefer medium-length
tenors, with 5–10 and 10–20-year buckets taking
the largest share by volume.

CHF 2%BRL 1%

Source: Climate Bonds Initiative

Chart 90% of climate-aligned bonds are investment grade14
Perpetual>20Y

10-20Y

5-10Y

0-5Y
0
USD Billions
AAA

AA

100
A

BBB

200
BB

60%

40%

20%

0

250-500m

B

300

C
Source: Climate Bonds Initiative

80%

50-250m

Others 2%

CNY
35%

100%

Up to 50m

CAD 3%

EUR
21%

Deals larger than USD1bn represent 42% of the climate-aligned volume

Climate-alignedbonds

INR 3%KRW6%

JPY 2%

Just over 60% of climate-aligned bonds are rated
by international rating agencies. Almost theentire climate-aligned universe (90% of volume)is investment grade. Only 6% is non-rated, while
4% is high yield. Almost 30% of the climatealigned universe is AAA-rated, followed by 22%
being AA-rated. BBB and A-ratings account for
20% of volume each.
Short-to-medium tenors are the mostfrequent: 32% of volume falls in the 5–10-year
bucket, followed by 26% maturing within 10–20
years. Around a fifth of climate-aligned bonds
have shorter tenors of up to five years, while
17% fall in the longest tenor bucket, maturing in
20 years or more. Perpetual bonds are the least
frequent at 5%.

GBP
8%Deal count(3282)
500m-1bn>1bn

Small-sized deals are the most frequent by
number with almost 70% of climate-aligned
bonds, by number, below benchmark size. A
further 45% of deals fall in the USD50–250m
bucket, while around 25% is up to USD50m.
Deals in the USD250–500m bucket account for
14% of the total. Benchmark and large deals
are less frequent: 7% of bonds are larger than
USD1bn, while 9% fall in the USD500m–1bn size
bucket. China Railway Corp is the top issuer withdeals larger than USD1bn (115), followed by EDF(32) and SNCF (19).
Conversely, large deals comprise most of theclimate-aligned outstanding volume: 42% ofclimate-aligned outstanding debt is larger than
USD1bn, while benchmark-sized deals accountfor 22% of the outstanding volume. Most deals
larger than USD1bn are issued by railway
companies; three deals are from Tesla. The
largest climate-aligned deal was issued by HydroQuébec (CAD7bn/USD6.1bn).

Source: Climate Bonds Initiative

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative6

Transport dominates the climate-aligned
universe followed by Energy (24%), Water (10%),
ICT (4%), Waste (4%), Land use & agriculture(2%) and Buildings (<1%).15 Railway companies
account for 90% of the transport climatethemed volume, with companies operating inpublic transport, electric vehicles (EVs), hybrid
vehicles, shipping, buses, storage (EV battery), EV
charging stations and bicycles accounting for theremaining 10%.

More than 50% of climate-aligned bonds are issued by transport companies
Waste 4%

Buildings <1%

ICT 5%

Land use &agriculture 2%

Water
10%

Transport climate-aligned companies are also
widespread across the globe. In the Asia-Pacificregion, three quarters of climate-aligned bonds
are issued by transport companies (most ofwhich are based in China), while in Europe theseaccount for 40% of the volume.
Energy is the second climate-aligned theme,with a similar share of volume in Asia-Pacific(21%) and Europe (24%). After China Railway
Corp (USD230bn), Indian Railway Finance(USD22.8bn) and Korea Rail Network Authority(USD16.8bn) are the top issuers for transport
in the Asia-pacific region, while Korea ElectricPower Corp (USD25.3bn), China National Nuclear
Corp (USD10.6bn) and China Three Gorges(USD9.1bn) are the top issuers for energy. In
Europe, EDF (USD52.1bn), Vattenfall (USD4.8bn)
and Ørsted (USD3.4bn) are the top issuers forenergy, while SNCF (USD53.7bn), Deutsche Bahn
(USD31.2bn) and OeBB-Infrastruktur (USD16.5bn)
are the top issuers for transport.
Asia-Pacific, Europe and North America
are also home to a wider variety of issuers
operating across all the climate themes. Water
companies issue 16% of the European climatealigned volume and 13% of the total in North
America. Waste management companies aremostly based in the US, with Republic Services
Inc (USD5.7bn), Waste Management Inc(USD5bn) and Waste Connections Inc (USD3bn)
representing the top three issuers. Land use &agriculture companies are also mostly based in
North America, with a stronger presence in the US;
International Paper Co (USD6bn) is the top issuer.
Latin America is dominated by energy
companies (75%), with a smaller presence of theWater (12%), Transport (8%) and Land use (5%)
themes. Brazil is the top climate-aligned country
in the region, with 35 climate-aligned issuers.
Eletrobras (USD3.1bn) is the top issuer for energy,
followed by Cemig Geracao e Transmissao(USD2bn) and Engie Brasil Energia (USD1.2bn).
Colombia is the second climate-aligned country
in the region (five issuers), followed by Costa Rica
(two issuers). Brazil’s Suzano SA (USD1.2bn) is the
only land use company in the region.
Africa is home to a single climate-aligned issuer,
Umgeni Water Services Pty Ltd (USD140m),
operating in the water sector. Rail company
EUROFIMA (USD8.7bn) which finances rail
projects across Europe is the only supranational
climate-aligned issuer.

Transport
55%

Energy24%

Source: Climate Bonds Initiative

Asia-Pacific is the largest source of climate-aligned bonds
AfricaSupranational
Latin America
North America
EuropeAsia-Pacific0
USD Billions
Transport

Energy

100

Water

200

Buildings

300

Waste

400

ICT

Land use

Source: Climate Bonds Initiative

Opportunities to scale uplabelled issuance
The maturity profile of the unlabelled climatealigned bond universe shows that there aresubstantial opportunities to scale up the labelledbond universe. Companies which operate in
the themes that are linked to climate-aligned
business activities could refinance their maturing
liabilities via the labelled bond market, andhence benefit from the extra visibility offered bysuch instruments.
More than 40% of climate-aligned bonds will
mature by 2024, offering a volume of USD372bn
which could be refinanced with labelled bondsin the short term. This is equivalent to almost
40% of the labelled green bonds issued by Q3
2020. An additional USD223.7bn (25% of theclimate-aligned universe) could be refinanced
by 2029. This could increase the availability ofgreen bonds by 65% within nine years (based on
current market size).

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative

Most opportunities for refinancing arise fromclimate-aligned issuers with transport andenergy-related operations: three quarters of
the climate-aligned bonds maturing by 2024
are issued by the former, while 25% come fromthe latter. An additional 14% and 4% could be
refinanced from transport and energy issuers by
2029, respectively.
Around 7% of climate-aligned bonds maturing by
2024 originate from water companies, while 4%
are from the ICT theme. Around 6% of climatealigned bonds from Waste, Land use, andBuildings, amounting to USD33.8bn, will roll off
by 2029 and could be refinanced under the green
bond label.

7

Climate-aligned issuers alreadyissuing labelled green bonds

Maturity profile of the climate-aligned bond universe
350

Approximately 30% of climate-aligned issuers
included in this report have already come to themarket with labelled bonds. These include top
climate-aligned issuers such as SNCF, EDF, China
Three Gorges, EUROFIMA and Ørsted.

The overlap between climate-aligned issuers
which have already issued green bonds isimportant as it suggests that almost a third ofthese entities have already discovered the extra
value brought by the label. Multiple benefits
of issuing green bonds were highlighted by 83
issuers interviewed for the 2020 Green Bond
Treasurer Survey conducted by Climate Bonds.16
Such benefits include a broader investor baseand new engagement opportunities, enhanced
reputation and visibility, as well as strengthened
company internal integration. Some climatealigned issuers have only issued labelled bonds.
Verbund AG, Austria’s largest electricity provider,issued two green bonds for a total of USD688m.

Reporting practice
The global health and economic crisis
resulting from the outbreak of COVID-19
has revealed the danger of understating thephysical risks of climate change. Governments,
businesses, and investors worldwide havecome to realise the importance of adapting
and reacting to the challenges presented byunforeseen disruptions. As investors seek
better information to price risk and makeinformed decisions about the allocation ofcapital, mandatory and voluntary reporting
schemes on sustainability have multiplied inrecent years. Yet there is no single approachfor how companies should identify andpresent environmental and climate change
information in mainstream financial reports.
Therefore, the information available isinconsistent. This has resulted in an increased
reporting burden on organisations, andhas made it hard for investors to evaluate
and compare companies with respect totheir sustainability performance and hence
make informed investment decisions. The
gap between investors’ expectations andcurrent reporting practice, both in the quality
and granularity of information disclosed,
represents a significant challenge.

Transport

250

Waste

Energy
ICT

Water

Buildings

Land use

200
150
USD Billions

Altogether, 91 climate-aligned entities haveissued green labelled bonds (USD56.5bn), while
five companies issued sustainability labelledbonds (USD933.6m). Only one issuer came to themarket with a social labelled bond (USD386m).
Climate-aligned issuers have collectively
issued USD57.8bn worth of Green, Social andSustainability (GSS) debt, which is not includedin the scope of this analysis.

300

100
50
0
20202024

20252029

20302034

20352039

20402044

20402044

Beyond2050

Source: Climate Bonds Initiative

Global climate themes
Climate theme/Rank

Amount (USD)

Market share (%)

Issuer number

1. Transport

502.3bn

55

88

2. Energy219.4bn

24

187

3. Water

91.2bn1074

4. ICT

49.1bn510

5. Waste34.0bn431

6. Land use & agriculture

17.0bn2

37

7. Buildings

113m

<1

3

Task Force on Climate-related Financial
Disclosures (TCFD)• Increased transparency to facilitate
informed allocation of financial capital

The industry-led TCFD was established by the
Financial Stability Board in 2015 to develop effective
climate-related disclosure enabling more informed
decision-making, which would, in turn, enable
stakeholders to understand the carbon-related assets
in the financial sector and the financial system’s
exposure to climate-related risks.17 To achieve its
objectives, the Task Force developed a framework
including four thematic areas for climaterelated corporate disclosure on adoptable by
all organisations. These are to be disclosed incompanies’ public annual financial filings involuntary supplemental reports.

• Reveal risks and opportunities

Climate Disclosure Standards Board(CDSB) Framework
Updated in 2018 to align with therecommendations of the TCFD, the CDSB
Framework assists companies to streamline
their reporting cycles. By complying with the
Framework, companies can gain tangible
business benefits, including:• Improved organisational reputation• Added value to existing mainstream
financial reports

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative• Track and benchmark progress• Stay ahead of upcoming regulatory
requirements and policy changes• Boost competitive advantage
Our 2020 climate-aligned analysis relies
strongly on mainstream, publicly available
reports as sources of information. Some
aspects of disclosure, particularly clarity
and specificity around definitions andenvironmental performance of assets andactivities, remain problematic. It is crucial thatcompanies continue to improve disclosure
to enable comparisons to be made andinvestments to be aligned with low-carbon
assets and activities. Governments have an
important role to play in improving the quality
and consistency of disclosures by introducing
more stringent reporting requirements.
As demonstrated by CDSB, even Europe’s
largest companies are falling short of adequate
disclosure despite the availability of resources
and relatively mature reporting processes.18

8

4. Developed markets (DM) overview
DM summary figures

USD464.8bn of climate-aligned bonds originate from DM
200

50• 203 climate-aligned issuers

Climate-aligned outstanding bonds• 155 fully-aligned issuers
40• 48 strongly-aligned issuers

Climate-aligned deal count160• 14 currencies• Top three issuers: SNCF(USD53.7bn),
EDF (USD52.1), Orange SA(USD38.1bn)• Top climate themes: Transport(USD502.3bn), Energy (USD219.3bn) and
Water (USD91.2bn)

120

20

80

10

40

0

0

20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20

• USD522.4bn of climate-aligned
bonds issued

USD Billions• USD464.8bn of outstanding climatealigned bonds

30

Deal count• 21 countries

Source: Climate Bonds Initiative

DM context
This section focuses on DM issuers and bonds.
The urgency and importance of fighting climatechange has been widely recognised at a global
level. The Paris Agreement marked a pivotal
moment in global climate negotiations with
196 parties formally committing to decarbonise
their economies at the Conference of the Parties(COP) 21 in Paris.19 Developed markets will play a
key role in leading the transition to a low-carbon
economy while prompting and supporting
emerging economies to follow suit.
Europe has emerged as a pioneer in the green
financial and economic policy space. In addition
to its commitment to cut GHG emissions by atleast 55% by 2030,20 the European Commission
also kickstarted the process of defining green
and sustainable economic activities in 2016,
culminating in the publication of the Taxonomy
Regulation in 2020.21 The accompanying DelegatedActs define the technical screening criteria for
economic activities that can make a substantial
contribution to climate change mitigation
and adaptation.22 The EU Taxonomy Climate
Delegated Act, which was adopted in June 2021,23
will help to meet the objectives of the European
Green Deal by guiding companies and investors
on defining green assets, projects and activities– thereby supporting their transition towards
carbon neutrality and resilience.

In the US, the change in administration in late
2020 saw President Joe Biden reinstate thecountry into the Paris Agreement. Soon after,
on Earth Day 2021, President Biden hosted avirtual global climate summit which brought
together 40 world leaders to galvanise efforts totackle the climate crisis. On this occasion, Bidenannounced a renewed commitment to halve
the country’s emissions by 2030 compared to2005.24 A Climate Finance Plan with a focus on
International Finance was also released on thesame day. The US intends to double its annual
public climate finance to developing countries by2024, compared with what was budgeted during
the Obama-Biden Administration, and triple
adaptation finance by 2024.
The US also aims to support capital flows
towards low-carbon pathways via climate-aligned
investments, and to support climate-related
disclosure from financial and non-financial
institutions.25 The Securities and Exchange
Commission (SEC) has stepped up in this regard
by announcing the creation of a Task Forcefocused on identifying ESG-related misconduct,and its Division of Examinations announced thatclimate-related risks now represent a top priority
for the agency.26,27 Similarly, the Federal Reserve
has initiated two committees to investigate
the systemic risks arising from climate change.
Additional priorities from the US Climate Finance
Plan include mobilising private finance with thesupport of blended finance mechanisms, as wellas ending international financing of fossil fuels.

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative

Other key DM economies are similarly expanding
their climate pledges: announcements ofincreased ambition at the Leaders’ Summit on
Climate included Canada’s aim to achieve a
40–45% emission cut by 2030 compared to 2005,
while Japan ramped up its 2030 target to 46%
compared to its original 26% below 2013 levels.
The latest developments show growinginternational momentum for climate action andfinance, including from the private sector which isa key enabler to fund the low-carbon transition.
This is of particular importance to many DM
countries which contribute significantly to global
GHG emissions and are home to many of theworld’s largest corporations and well-developed
capital markets. The unlabelled climate-aligned
bond universe shows that there are wider
opportunities for responsible investing, as wellas to scale up the labelled bond universe. Many of
the climate-aligned bond issuers included in thisresearch have already issued green labelled bonds,
suggesting that they have already discovered
the intrinsic value of the label in preventing
greenwashing and increasing transparency.

9Top 10 DM climate-aligned
countries

Europe tops the unlabelled climate-aligned universe for DM
900

895
Climate-aligned outstanding bonds

250

Climate-aligned deal count

200

450
318

100

300
176

50

150
24

0
EuropeNorth America

Asia-pacific0

Supranational
Source: Climate Bonds Initiative

DM climate-aligned
universe analysis
Developed market countries account for
50% of the climate-aligned bond universe.
The 2020 research has identified 203 climatealigned issuers across 21 developed countries.
EUROFIMA is the only supranational institution,accounts for approximately 1% of the universe.
Europe is the top region overall, with
USD319bn of climate-aligned outstanding bonds(68% of the DM volume) issued by 112 issuers
domiciled across 14 countries. European climatealigned issuers alone account for more thanhalf of the issuers from DM. This is in line with
Europe’s global leadership in cross-sector climate
action, including the EU Taxonomy Regulation
on disclosure and definition of green assets andeconomic activities.28
France is the largest source of climate-aligned
debt (37% of DM volume) with ten climatealigned issuers mostly falling into the Transport(34%), Energy (30%), and ICT (22%) climate
themes. SNCF (USD53.7bn), EDF (USD52.1bn)
and Orange SA (USD38bn) are the top three
entities, with the first two also topping the
global ranking. The UK, Germany, Austria, Spain,
Norway and Switzerland all fall in the top ten DM
ranking. The UK ranks third, with 25 climatealigned issuers which operate predominantly in
the Water and Transport climate themes. The UK
top three issuers are: Thames Water (USD10.9bn),
Channel Link (USD5.8bn) and United Utilities
Water (USD5.3bn).
North America is the second most prolificregion in the DM climate-aligned universe(USD119.7bn, 26% of DM). The relatively small
volume of climate-aligned bonds from North
America can be traced back to the fact that munis
and government agencies such as Fannie Maeand Freddie Mac are not included in the current
report as these issuer types are beyond the scopeof the 2020 research.29 Munis and government
agencies account for 62% of the cumulative
green labelled issuance in the US.30

Outstanding
climatealigned debt
(USD)

Marketshare(%)

France173.7bn

37

United States

86.6bn19

United Kingdom

53.9bn12

Canada33.1bn7

Germany

31.4bn7Austria

16.6bn4Japan

13.4bn3

Spain

10.2bn2

Norway7.3bn

2

Switzerland

7.1bn

2

750

150

USD Billions

Country600

Deal count300

The Asia-Pacific region accounts for
only 4% of the DM universe, with 25 climatealigned issuers. Japan dominates the region’s
issuance at 77%; Central Japan Railway(USD7.4bn), Tokyo Metro Co (USD3.7bn) andOji Holdings (USD936m) are the top threecompanies.31 Hong Kong SAR ranks second,with USD2.6bn of climate-aligned outstanding
volume and nine climate-aligned issuers.
MTR (USD1.2bn) is the top issuer in Hong
Kong, followed by China Dynamics Holdings(USD303m) and China Water Affairs Group(USD300m). New Zealand is home to Mercury
NZ (USD414m) and Trustpower (USD253m),
both operating in the renewable energy
climate theme.
DM volume is issued almost entirely in
hard currency, predominantly in EUR (41%),
followed by USD (29%) and GBP (15%) –a ranking that mirrors the top three climatealigned countries. The remaining share mostly
comes from AUD, CHF and JPY. Only 3% of
the universe is issued in soft currency, of
which approximately 1% is NOK-denominated(USD6.6bn).

DM and EM make up an almost
equal share of the market

Medium-sized deals are the most common amongst
the EUR-denominated issuance with 121 deals (30%)
falling within the USD50–250m size bucket. Benchmarksized deals follow at 26% (102 deals). GBP-denominatedissuance follows the same trend. Conversely,
USD-denominated bonds tend to be larger: 111
deals (40%) fall within the USD250–500m size
bucket, while 75 deals (27%) are at least benchmark
size or larger. Smaller-sized deals are generally lessfrequent with 11% of the DM universe by number.
Almost the whole DM climate-aligned universe isinvestment grade (USD473.5bn, 91% by volume),of which the vast majority (89%) was issued in hardcurrency. Approximately 4% of deals are high yield,
while 5% are non-rated. A-rated bonds are the mostfrequent at 31% of volume, followed by BBB-rated
bonds at 30%. The reaming substantial share is AArated (29%). Almost the whole DM universe (94%)
is rated by international rating agencies; only 1%of volume is assessed by local rating agencies.

EUR is the top currency in DM
NOK 1%

Supranational 1%

GBP
15%

USD
29%
Emerging
Markets
49%

CAD
6%
JPY 3%Developed
Markets
50%

CHF 3%EUR
41%
Others 2%
Source: Climate Bonds Initiative

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative

Source: Climate Bonds Initiative10

Longer tenors are the most prevalent: a thirdof the climate-aligned volume and 30% of thedeal count falls in the 10–20 year size bucket,
while an additional 30% of volume matures inlonger than 20 years. A quarter of the outstanding
volume has shorter tenors, with 25% of deals
maturing in 5-10 years. Short tenors are by far
the least popular: only 13% of deals and 7% ofvolume matures in up to five years. Perpetualbonds account for 5% of the climate-aligned
universe and 2% of the deal count.
Longer tenors are also particularly popularamongst issuers operating in the Energy, Water,and Land use sectors, with 42%, 46% and 40%of their volume maturing in longer than 20 years,
respectively. Climate-aligned issuers operatingin transport favour tenors of 10–20 years (44% of
their outstanding volume), while tenors longer
than 20 years account for a quarter of theirissuance. Medium-length tenors are also fairly
common: 22% of volume from both transportand energy issuers falls into the 5–10-year bucket.
The latter is also the most favoured by issuers
operating in both waste and ICT sectors (50% and
45% of their outstanding volume, respectively).
Small-sized deals are the most frequent by
number with just below 60% of climate-aligned
deals below benchmark size. The USD50–250m
size bucket is the most popular, accounting forjust below 40% of the deal count. Smaller-sized
deals (up to USD50m) and the USD250–500m
bucket represent similar shares, each accounting
for approximately 20% of climate-aligned bondsby number. Benchmark-sized bonds and above
account for a quarter of the DM universe by
number. French issuers such as EDF, SNCF andOrange SA have issued multiple bonds larger
than USD1bn. These are followed by OeBBInfrastruktur (9 deals), Union Pacific Corp (7deals) and Deutsche Bahn (6 deals). The latterhas also issued several deals in the USD500m–
1bn and USD250–500m buckets.
Large-sized deals take the most substantial
share of the DM climate-aligned volume: 37% of
cumulative issuance is larger than USD1bn in size,
while benchmark deals (USD500m-1bn) accountfor around 30% of volume. Large deals are mostly
issued by energy and railway companies. Around
20% of the volume falls in the USD250–500m size
bucket, while 15% of issuance is up to USD250m.
Transport theme leads DM issuance in the2020 climate-aligned research. This is reflectedin DM too, where 42% of the volume is issued bycompanies operating in the Transport climate
theme. Energy (USD108.8bn) ranks second at 23%,
followed by Water (USD67.4) which accounts for
15% of the outstanding climate-aligned bonds. ICT(USD47.9bn) companies account for 10% of theuniverse, which comes predominantly (78%) fromtop French issuer Orange SA. Waste (USD31.8),
Land use & agriculture (USD13.3) and Buildings(USD1m) account for the remaining 10%.

91% of climate-aligned bonds are investment grade33
Perpetual>20Y

10-20Y

5-10Y

0-5Y
0
USD Billions
AA

50
A

100

BBB

BB

B

150
NR
Source: Climate Bonds Initiative

USD1bn+ deals account for 42% of the climate-aligned volume
100%
80%
60%
40%
20%
0
Climate-aligned bonds
Up to 50m

50-250m

250-500m

Deal count (1413)
500m-1bn>1bn
Source: Climate Bonds Initiative

More than 50% of climate-aligned bonds are issued by transport companies
Land Use 3%

ICT
10%

Waste
7%
Transport
42%

Water
15%

Energy23%

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative

Source: Climate Bonds Initiative11

Transport-related activities are dominated byrailway companies, which account for 90% of
the volume. SNCF (USD53.7bn), Deutsche Bahn
(USD31.2bn) and Union Pacific (USD22.1bn) are
the top three issuers. Railway infrastructure is a
key contributor to scaling up low-carbon mobility
since high-speed trains represent a viable
alternative to short-haul flights. Nonetheless,many trains are still fuelled by conventionalenergy sources, which calls for additional
investments to be redirected towards theelectrification of rail networks across the globe.32
Only 5% of the issuers operate exclusively in the
production of electric and hybrid vehicles, with
Tesla being the top exponent.
Companies generating energy from a rangeof renewable sources account for over 60%(USD67.8bn) of the Energy theme. These
are followed by vertically integrated utilities
which generate power from renewables at
18% (USD19.8bn). The remaining share comesfrom issuers which solely operate in eitherhydro, nuclear, solar, wind and energy storage/hydrogen. This suggests that most energy
companies choose to diversify their asset
portfolio with a range of different renewablegeneration technologies. Other than EDF, HydroQuébec (USD17.1bn), Vattenfall (USD4.8bn) andØrsted (USD3.3bn) are the top energy issuers.
Europe is home to a wide range of climate-aligned
companies operating across different climate
themes. As with all DM, Transport is the top themein Europe with USD130.7bn (41%) of outstanding
volume from 28 climate-aligned issuers. Energy
follows, with 41 climate-aligned companies and
USD77bn of outstanding bonds (24% of total
volume). Water accounts for 16% of the European
climate-aligned volume, while ICT accounts for
14%. The increasing role of ICT climate-aligned
issuance is encouraging as it presents interesting
prospects for further issuance in the labelled
universe, which has so far played a smaller role
(USD3.3bn of cumulative volume) compared toother more established themes.
Climate-aligned issuers from North America
also operate across a variety of climate themes,
with Transport (35%) and Energy (26%) being themost prevalent. The largest share of climatealigned volume comes from the US (USD36.4bn)
with most companies operating in the railway
sub-theme, except for Tesla which ranks second.
USD6.6bn of transport climate-aligned issuancecomes from six Canadian companies; Canadian
Pacific Railway (USD4.7bn) is the top issuer. Mostof the Energy climate-aligned volume comes from
Canada (USD24.3bn, 78%), with Hydro-Quebec
being the top issuer, as well as the source of thelargest deal included in the current research(CAD7bn/USD6.1bn). Water and Waste companies
are mostly based in the US (92% of cumulative
Water and Waste climate-aligned volume). Landuse takes a small share of the volume (7%), with
International Paper Co accounting for over 70%.

Railway companies dominate transport
Electric & Hybrid Vehicles 5%

Public Transport 4%
Shipping 1%

Railway90%

Source: Climate Bonds Initiative

Renewables dominate the energy sector34
Nuclear 4%
Solar 3%

Hydro
11%

Utilities
18%

Wind 1%
Battery, hydrogen &energy storage 1%

Renewable energy mix
62%
Source: Climate Bonds Initiative

Europe has the richest mix of climate themes
Supranational

North America

EuropeAsia-Pacific0
USD Billions
Transport

Energy100

Water

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative

200

ICT

Waste

300

Land use

Buildings

Source: Climate Bonds Initiative12

DM from the Asia-Pacific region operate almost
entirely in the Transport theme (80% of theregion’s volume, USD13.7bn). Japan is the top
country which accounts for 77% (USD13.4bn)of the DM share of the Asia-Pacific region. The
top energy company is Hong Kong-based Panda
Green Energy Group (USD112m), followed by
Japan Atomic Power (USD120m).

DM climate-aligned maturity profile
140
120
100
80

As introduced in the overview section, thematurity profile of the unlabelled climate-aligned
universe highlights opportunities for climatealigned issuers to refinance their business
operations with labelled green bonds.

60

More than half of the climate-aligned bonds
from DM will mature within approximately eight
years, which shows huge potential for scaling up
the labelled green bond market in the short tomedium term.
Just below 30% (USD134.2bn) of the outstanding
climate-aligned bond volume will matureby 2024, half of which comes from Transport
entities. Around 20% of volume from energy
issuers will also mature in the next three years,
while 30% comes from companies operating
across the Waste, ICT, Water and Land use
themes. An additional USD113.9bn (25% of the
DM universe) will mature by 2029.

Amount issued (USDbn)

Opportunities to scale uplabelled issuance40
20
020202024
Transport

20252029
Energy20302034
Water

20352039
ICT

20402044
Waste

20402044
Land use

Beyond2050
Buildings

Source: Climate Bonds Initiative

Top DM climate themes
Climate theme/Rank

Amount (USD)

Market share (%)

Issuer number

Climate-aligned issuers alreadyissuing labelled green bonds

1. Transport

195.7bn

42

51

2. Energy

108.8bn

23

73

Many climate-aligned issuers from DM havealready issued labelled bonds: 34 issuers haveissued green bonds, while Yorkshire Water
Services has come to the market with both asocial and sustainability bond. Indeed, all the
top climate-aligned issuers by volume havediscovered the value of the green label: SNCF
(USD7.8bn), EDF (USD6.5bn), Ørsted (USD3.1bn),
Adif-Alta Velocidad (USD2.7bn) and Bazalgette
Finance (USD1.1bn) are just some examples.
There remains further scope for climate-aligned
issuers to label their debt. EDF and SNCF, forinstance, have only labelled 12% and 15% of
their volume, respectively. Other companies,
such as Ørsted and Vattenfall, have issued alarger volume of labelled bonds compared totheir plain vanilla bonds.

3. Water

67.3bn15

33

4. ICT

47.9bn10

5

5. Waste31.7bn715

6. Land use & agriculture

13.3bn

3

25

1m

<1

1

7. Buildings

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative13

5. China: The largest source of climate-aligned bonds
China summary figures• 96 climate-aligned issuers• 69 fully-aligned issuers

Transport represents 80% of the climate-aligned bond market
Water 3%

Land Use 3%

Waste 1%

Buildings <1%• 27 strongly-aligned issuers• USD325bn outstanding
climate-aligned debt
• Top three issuers: China Railway
Corporation (USD230.1bn), China Railway
Group (USD12.3bn), China National
Nuclear Corporation (USD10.6bn)

Energy15%• Top three climate themes:
Transport (USD261.2bn),
Energy (USD48.5bn), Water (USD10.6bn)

Transport
80%• Top three currencies: CNY(USD321.3bn), USD (USD2.7bn),
HKD (USD1bn)

Source: Climate Bonds Initiative

China accounts for 36% of the
global climate-aligned universe

China
36%

Rest ofthe World
64%

Source: Climate Bonds Initiative

China context
With USD325bn of climate-aligned outstanding
bonds, China accounts for 36% of the overall
climate-aligned universe issued by 96 climatealigned companies. Most of the country’s
climate-aligned debt comes from the Transport
theme, with railway companies being the mostprevalent. The country has invested greatly inthe development of its high-speed rail network.
Growth has been rapid in the past decade.35 The
total length of high-speed rail tracks in China
came in at just under 38,000 kilometres at theend of 2020, making it the largest high-speed rail
network in the world.36

Despite the relevant share of climate-aligned
volume attributed to China, the country remains
the largest greenhouse gas emitter, contributing
to approximately 30% of global emissions.37 In
2020, China pledged to achieve carbon neutrality
by 2060, while more recently at the Leaders’Summit on Climate, China indicated that it will
start phasing out coal over 2026-2030.38
The commitment to become net zero by
2060 will require a shift to the country’s
energy paradigm with virtually all coal-fired
power plants to be phased-out, and a drasticchange in its energy generation mix. This
calls for an accelerated deployment of energy
from renewables to offset the phase-out of
conventional energy sources. Clean energy
technologies are available and scalable: China
has already played a key role in achieving
economies of scale for solar PV, facilitating its
penetration globally and subsequently bringing
down generation costs. A similar approach must
be taken to increase the uptake of storage andhydrogen technologies, which will allow for
more flexible integration of renewables into theenergy system. Increasing public and politicalwillingness to transition to a low-carbon andresilient economy across the globe can help
pave the way to meet net-zero targets.
The Chinese bond market is large enough toaccommodate the gap in climate funding.
Therefore, scaling up climate finance via labelledgreen bonds will be an inevitable path for China
if net-zero targets are to be met, with estimatessuggesting that the cost of the energy transition
alone could reach USD5tn.39

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative

China climate-aligned universe
analysis
Rail dominates China’s climate-aligned
universe (77% of China’s aligned volume, or
USD248.7bn) and is the primary reason that theTransport theme accounts for 80% of the total
debt. Railway companies are extensively statebacked, and rail bonds are typically large andliquid. China Railway Corp is the top issuer witha cumulative USD230.1bn of aligned outstanding
bonds, which accounts for 25% of the global
climate-aligned universe and 71% of China’s
climate-aligned universe.
Energy is China’s second largest climate theme
after Transport, and accounts for approximately
15% of climate-aligned outstanding volume(USD48.5bn and 37 climate-aligned issuers). The
top three issuers are China National Nuclear Corp
(3% of China’s volume, USD10.6bn), China Three
Gorges Corp (3%, USD9.1bn) and China Yangtze
Power (2%, USD7.8bn).
Water, Waste and Land use & agriculture accountfor over USD1bn of climate-aligned outstanding
debt. Water represents 3% of total volume(USD10.6bn and 22 climate-aligned issuers)
with Beijing Enterprises Water Group being the
top issuer (USD2.7bn). With USD2.4bn and 13
climate-aligned issuers, Waste makes up roughly
1% of the volume; Yunnan Water Investment Co
Ltd (USD<1bn) tops the theme’s ranking. Land
use & agriculture also accounts for 1% of volume(USD2.2bn and 3 climate-aligned issuers), with
Sinar Mas Paper China Investment Co Ltd being
the top issuer (USD1.5bn).

14

Shorter tenors are the most popular with
38% of cumulative volume maturing in up to
five years and 37% within the 5–10-year range.
Longer tenors, including those grouped into
10–20 and more than 20 years account for 20% of
cumulative volume.
Just under three-quarters of transport bonds
volume is issued with medium-length tenors(up to ten years). Longer dated bonds within the
10–20-year tenor bucket account for just undera quarter of transport issuance, while thosegrouped into more than 20 years represent only
1% of the volume. Bonds with long tenors areprevalent in the Transport theme only.
China’s aligned debt is almost entirely
CNY-denominated. Onshore issuance in CNY ispreferred by climate-aligned issuers, representing
virtually the entire universe by volume (justunder 99%, or USD321.3bn). The remaining shareof China’s climate-aligned debt is denominatedin USD (1%, USD2.7bn) HKD (<1%, USD1bn).
Most of the Chinese climate-aligned universe
has been rated by local rating agencies (84%of volume). Only a small share of bonds has aninternational rating (9%), while 7% is non-rated.
The entire share of Chinese climate-aligned
bonds is investment grade according to both
local and international rating agencies. Less than
1% of the universe is high yield, according tolocal rating agencies.

Opportunities to scale up
China’s labelled bond issuanceMore than half of China’s outstanding climatealigned bonds (56%) will mature by 2024. Thishighlights opportunities for climate-aligned
issuers to refinance their debt with labelledgreen bonds. Most opportunities come fromthe Transport theme, followed by Energy andWater. An additional USD69.7bn will mature by
2029, indicating more opportunities from 2025,
particularly for transport and energy issuers.
Some climate-aligned issuers have alreadyentered the labelled green bond market. China
Three Gorges Corp, the second-largest climatealigned issuer in the Energy theme and a leadinghydropower operator, tapped the labelled green
bond market; one deal was also earmarked
towards wind energy projects in Europe,
which was Certified under the Climate Bonds
Standard.40 Other climate-aligned issuers which
entered the labelled bond market include Beijing
Enterprises Water Group, Nanjing Metro Group Co
Ltd and CGN Power Co Ltd.

Tenors up to 10 years dominate issuance
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0
Transport
Up to 5Y

Waste

5-10Y

Land use

10-20Y

Water

ICTOver 20Y

EnergyBuildings

Perpetual
Source: Climate Bonds Initiative

84% of the CA universe is in local ratings
Perpetual>20Y

10-20Y

5-10Y

0-5Y
0
USD Billions
AAA

AA

50
A

BBB

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative

100
NR

150

C
Source: Climate Bonds Initiative15

6. Emerging markets overview
Asia-Pacific is the top climate-aligned EM region
100

75• 121 climate-aligned issuers• 87 fully-aligned issuers• 23 countries• Top three climate themes: Energy(USD62bn), Transport (USD45.5bn), Water(USD13.3bn)
This section focuses on EM. China has been
analysed separately from the rest of the EM
section as it accounts for a large share of
the market, which would have skewed total
numbers and the underlying analysis. For a
more in-depth analysis on China, please refer tothe preceding section.

EM context: The ‘build backbetter’ challenge
Climate change poses significant threats to
EM, many of which are at risk of suffering
disproportionately from the impacts of theclimate crisis. Sea level rise, frequent drought
periods as well as resource scarcity could trigger
severe economic downturns in these countries,
also seriously constraining their ability to meet
the Sustainable Development Goals (SDGs).
Scarcity of resources may also result in regional
conflicts. Moreover, the economic impact of theongoing COVID-19 pandemic on EM risk appetite
has caused a decrease of investment flows into
these countries.41 The pandemic represents a direthreat, yet it also represents an unprecedented
opportunity for EM to reboot and accelerate thelow-carbon transition.
Designing and implementing ambitious recovery
packages which integrate climate action isperhaps the biggest challenge faced by EMs.
Strong and sustainable recovery plans areneeded not only to support economic growth
but also to position countries on the right pathto achieve the SDGs. Increased investment insustainable and climate resilient infrastructure
has been identified as a top priority for the
coming decades.

USD Billions• 23 currencies• Top three issuers: Korea Electric Power
Corporation (USD25.3bn), Indian Railway
Finance Corporation (USD22.8bn), Korea
Rail Network Authority (USD16.8bn)

60

Number of issuers
50• 34 strongly-aligned issuers• USD123.3bn of outstanding climatealigned bonds

Climate-aligned outstanding bonds

63

80
60

45

40

30

20

15

9
1

0
Asia-pacific

Latin America

Europe0

Number of issuers

EM summary figures

AfricaSource: Climate Bonds Initiative

To date, post COVID-19 economic recovery
plans in many countries have also continued tosupport and even bail out polluting industries.
In South Korea, despite a commitment to invest
KRW73.4tn (USD62bn) by 2025 towards lowcarbon infrastructure as part of its Green New
Deal, the country has also extended support
measures to key carbon intensive industries, suchas aviation and shipbuilding42. A substantial shareof India’s stimulus package has been dedicatedto coal infrastructure. In Colombia, commitment
to renewable energy projects is accompaniedby spending proposals for mining.43 Such an
approach falls short of meeting carbon neutrality
targets which many EM countries have alreadycommitted to. Now more than ever it is crucial
to drive capital from and into the private sector
to fund low-carbon infrastructure together withpublic funding and policy action from central
governments in EM.

Top 10 climate-aligned EM
Country

Outstanding
climatealigned debt
(USD)

Marketshare(%)

South Korea

59.9bn44

India

28.6bn25

Brazil16.2bn9

Colombia

7.3bn

4

Thailand

2.6bn

4

Costa Rica

1.9bn

1

Czech Republic

1.3bn

<1

Indonesia

1.1bn

4

Laos

1bn

1

Mexico1bn<1

EM climate-aligned
universe analysis
EM account for 14% of the global climate-aligned
volume with USD123bn of outstanding bonds and
38% of bonds by number (1260). This indicatesthat unlabelled climate-aligned bonds from EMs
are relatively small compared to DM and China.
Asia-Pacific dominates total issuance with
73% of volume and 80% of deals, followedby Latin America which accounts for 24% ofvolume and 17% by deal count; EM from Europe
make up roughly 2% of issuance, both byvolume and deal count, while Africa represents
less than 1% of the market.
South Korea is the largest source of EM
climate-aligned bonds, both by amountoutstanding and deal count. India ranks second,with just below half of South Korea’s outstanding
amount, followed by Brazil. Combined, theremaining seven of the top ten countries
make up USD16bn of the climate-aligned debt
outstanding and 197 bonds.

EM account for 14% of the global
climate-aligned market share
Supranational 1%
Emerging
Markets
14%

China
36%

Developed
Markets
50%

Source: Climate Bonds Initiative

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative

16

KRW represents almost half of themarket share
THB 3%EUR 1%

COP 5%

IDR 1%
Other 3%

USD50–250m is the preferred deal size
100%
80%
60%
40%

USD
10%

20%
0

BRL
10%

Climate-aligned bonds

KNW
46%

Up to 50m

50-250m

Deal count (1260)

250-500m

500m-1bn

INR
22%

>1bn
Source: Climate Bonds Initiative

Maturity profile of EM climate-aligned bonds
Source: Climate Bonds Initiative

The average deal size is small across EM withthe preferred bucket being USD50–250m (61%of total amount issued, 54% of total numberof deals). The largest deals (USD1bn+) areconcentrated in Latin America, primarily in the
Energy theme (79% of volume, 75% of deals) but
also in Land use & agriculture (21% by volume,
25% by deal count).
81% of the universe is investment grade withalmost 90% of the EM climate-aligned universe
rated by international rating agencies. Roughly
3% of the universe is in local rating, while 9% is
not rated. Most of the climate-aligned universe isinvestment grade, in both international and local
ratings, with 81% of issuance being at least BBBrated. AA makes up almost half of the market,
followed by BBB at 31% and BB at 9%.
Short tenors are the most popular in the EM
climate-aligned universe. Roughly one quarter ofcumulative volume will mature in up to five years,
and just under half within the 5–10-year range.
Medium tenors make up 22% of the volume, with22% maturing within 10–20 years since issuance.
Long tenors (over 20 years) account for only 6%.

Transport
Waste

EnergyLand use

Water

ICT

Buildings

40

Amount issued (USDbn)

KRW dominates climate-aligned issuancein EM (46%). INR is the second most popularcurrency (22%) by volume, followed by USD
and BRL, each representing 10% of the market.
A large proportion of EM climate-aligned
outstanding bonds is in soft currency (89%), while
only 11% is in hard currency. Issuers that haveissued in hard currencies include Korea Hydro& Nuclear Power Co, Electrobras SA, Empresas
Publicas de Medellin and Instituto Costarricensede Electricidad.

60

20

0
20202024

20252029

20302034

20352039

20402044

20402044

Beyond2050

Source: Climate Bonds Initiative

Short tenors are the most popular in EM>20Y

10-20Y

5-10Y

0-5Y
0
10
USD Billions
AA

BBB

20
A

30
NR

BB

40

50

60

B
Source: Climate Bonds Initiative

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative17

EM climate themes
Climate theme/Rank

Amount(USD)

Marketshare (%)

Issuernumber

Top issuers

1. Energy

62bn

50

71

Korea Electric Power Corp, Korea Hydro & Nuclear Power, EPM

2. Transport

45.5bn37

16

IRFC, Korea Rail Network Authority, Bangkok Expressway and Metro

3. Water

13.3bn11

18

Korea Water Resources Corp, Cia de Saneamento Basico do Estado
de Sao Paulo, AEGEA Saneamento e Participaco

4. Land use & agriculture

1.5bn

1

8

Suzano SA, Moorim Paper, Pabrik Kertas Tjiwi Kimia

5. ICT

1.1bn

1

4

Indosat, Bali Towerindo Sentra, Sterlite Technologies

6. Buildings

<1bn

<1

1

Laster Tech Corp

7. Waste

<1bn

<1

3

Taiwan Environment Scientific, Aguas Andinas SA, Insun ENT

Refinancing opportunities in
the labelled bond market
There are substantial opportunities for issuers
across EM to refinance their debt with labelledgreen bonds in the near term, as almost half ofthe climate-aligned outstanding debt (46% orUSD57bn) will mature by 2024, with an additional
USD40bn (33%) maturing by 2029.
Korea Electric Power Corporation (KEPCO)
and Korea Hydro & Nuclear Power, the top two
climate-aligned issuers in the EM Energy theme,
have already entered the labelled green bonduniverse. The former has raised funds for new
and renewable businesses both domesticallyand overseas. The latter has earmarked its
labelled issuance for renewable energy, cleantransport and green buildings located in South
Korea and abroad. Other climate-aligned issuers
have already tapped into the labelled green
bond market, including India’s ReNew Power– one of its deals was also certified under the
Climate Bonds Standard & Certification Scheme.
Climate Bonds’ 2019 Green Bond European
Investor Survey revealed that investors want tobuy more labelled bonds from EM issuers. Most
development banks have programmes in place
to assist issuers through the process of GSS
bond issuance. Such help extends to identifying
eligible assets, preparation of framework, anddesigning post-issuance reporting.

EM: Energy theme analysis
Energy is the largest climate theme in EM with
USD62bn outstanding, accounting for 50% of
EM issuance. Within the theme, 66% of issuancecomes from South Korean and Colombian
issuers, both of which have ambitious renewableenergy targets in place. South Korea hascommitted to expanding its renewable electricity
share to 20% by 2030 and 30–35% by 2040, while
Colombia has been working to increase solar andwind capacity to 9% of the total by mid-2022,
on top of the share of power generation alreadyoriginating from hydro (70%). Colombia has also
developed a green recovery plan for the postpandemic era.44,45,46

Energy: Top 3 South Korean andColombian issuers account for
61% of the market

Energy dominates EM climatealigned universe
Wind 2%

Korea
Electric
Power Co
1%

Other
39%

Korea Hydro& Nuclear
Power Co 14%

Solar 1%

Utilities
15%

Hydro
16%
Renewable
Energy mix
67%

Empresas Publicas
de Medelin 7%
Source: Climate Bonds Initiative

Source: Climate Bonds Initiative

After South Korea, Brazil is the second-largest
country in the energy sector with USD10.5bn ofclimate-aligned outstanding volume, accountingfor 17% of the energy sector. Roughly 29% of
the Brazilian energy market is represented byEletrobras SA (USD3.1b), Latin America’s largest
electricity company. Brazil’s abundant sourcesof renewable energy, particularly hydropower,
positions the country amongst the least carbonintensive energy systems in the world.47

The top three issuers account for almost 90% of
the volume: KEPCO (61%), Korea Hydro & Nuclear
Power Co (20%) and Eletrobras SA (7%).

Mixed renewable energy makes up 67% of
the energy theme and encompasses issuers withmultiple eligible energy activities such as utilities
which operate wind, solar and nuclear assets.
We note that for the purposes of this report,
nuclear energy is included due to its low carbon
characteristics. However, we note that nuclear
energy is not yet certifiable under the Climate
Bonds Standard and is not included under the
EU Taxonomy. The debate around nuclear islargely concerned with non-climate features suchas waste and accidents. These are noted but notdiscussed in this report.

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative

Hydro is the second-largest sub-theme (16%),
followed closely by Utilities (15%). The top
three issuers for Hydro are Indian and Latin
American: NHPC Ltd (27% of Hydro volume),
Cemig Geracao e Transmissao SA (20%), Isagen
SA E.S.P. (11%). Almost half of the Utilities debt
is from Empresas Publicas de Medellin, one of
the largest EM climate-aligned issuers. Instituto
Costarricense de Electricidad ranks second, with
20% of the volume, followed by Copel Geracao e
Transmissao SA (9%).
Wind accounts for 2% of the Energy theme, and Solarfor 1%. The top three Wind issuers are Suzlon Energy
Ltd (60%), ReNew Power (17%) and Narmada Wind
Energy Pvt (8%). Within Solar, 55% of climatealigned outstanding debt is made up by two Thai
issuers: SPCG PCL (33%) and Thai Solar Energy
PCL (22%). The third largest issuer is Gigasolar
Materials Corp of Taiwan, with 13% of volume.

18

The role of development banks in sovereign GSS bond issuance
Development banks can support EM
throughout the whole process of issuing
sovereign GSS bonds. For example,
Farah Hussein, Senior Financial Officer in theWorld Bank Treasury described the potential
involvement as follows:

dialogue on ESG issues for all investments. The
technical assistance provided by the World Bank
Treasury to facilitate the issuance of GSS bonds ispart of the Bank’s broader work to promote andfinance sustainable development, encouragetransparency and supportive regulation, drive
resources towards national environmental
and social priorities, design and implement
better policies, strengthen institutions, inform
development strategies and contribute to theglobal agenda.

“The World Bank provides technicalassistance to EM public sector issuers todevelop sustainable capital markets, facilitatesustainable market-based solutions, promotesustainable investment, and engage in

The World Bank Treasury serves as an impartial
broker, sharing with issuers its own knowledge
and experience, including its innovative
market-based transactions such as Green
Bonds, Sustainable Development Bonds anddebt and risk management practices, expertisein sustainability issues, and relationships withmarket actors and convening power. The
Bank’s sustainable finance technical assistanceprogramme is generally funded by its own
administrative budget, donors, etc.”

EM Energy Climate Sub-Themes
Climate sub-theme/
Rank

Amount(USD)

Numberof issuers

Top issuers

1. RE Mix40.2bn20

Korea Electric Power Corp, Korea Hydro & Nuclear Power Co, Eletrobras SA

2. Hydro

9.6bn

13

NHPC Ltd, Cemig Geracao e Transmissao SA, Isagen SA E.S.P.

3. Utilities

9.3bn

14

Empresas Publicas de Medellin, Instituto Costarricense de Electricidad,
Copel Geracao e Transmissao SA

4. Wind<1bn

8

Suzlon Energy Ltd, ReNew Power Ltd, Narmada Wind Energy Pvt Ltd

5. Solar<1bn

12

SPCG PCL, Thai Solar Energy PCL, Gigasolar Materials Corp

EM: Transport theme analysis
Transport represents 37% (USD45.5bn) of the
EM climate-aligned bond universe and is thesecond-largest climate theme. Rail-related bonds
dominate the segment at 97%. Rail infrastructure
accounts for 50% of Transport debt. The remaining
half is composed of Railway-comprehensive(39%), Railway-freight (5%), Public transport(3%), Railway-passenger (2%), and Other (<1%).
The ‘Other’ category includes Railway-services,
Bicycle, EV charging stations and EVs.
Railwayfreight5%

Public transport 3%
Railway-passenger 2%
Other <1

Hydro
39%

Promoting the uptake of EVs
in emerging markets
There are several barriers preventing the uptakeof EVs in EM. On the supply side, reliable electric
power sources and charging infrastructureneed to be installed; EM oil dependency needs
to be broken; and broader political and social
acceptance reached to make EVs a viable
alternative. EV market penetration has begun inurban environments, which typically suffer froma high number of annual premature deaths fromtransport-related pollution.48 While government
and municipal interventions are crucial to easethe current pressure on profitability of the EV
business case in EM and to support growthof the market, private capital investment canplay an important role in bridging the gap thatexists due to lacking public financial resources.49
Climate-aligned debt can contribute to meet thefinancing needs of the EM EV market.

Railwayinfrastructure50%

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative

19

EM Transport Climate Sub-Themes
Climate sub-theme/
Rank

Amount(USD)

Numberof issuers

Top issuers

1. Railway-infrastructure

22.8bn1

Indian Railway Finance Corp

2. Railway-comprehensive

17.9bn2

Korea Rail Network Authority, Ceske Drahy AS

3. Railway-freight

2.4bn

5

GMexico Transportes SAB de CV, MRS Logistica SA, Rumo SA

4. Public transport

1.3bn

2

Bangkok Expressway & Metro PCL, SuperVia- Concessionaria de Transporte Ferroviario SA

5. Railway-passenger

<1bn

2

Taiwan High Speed Rail Corp, BTS Group Holdings PCL

6. Railway-services

<1bn

1

Eastcomtrans LLP

7. Bicycle

<1bn

1

Ideal Bike Corp

8. EV charging stations

<1bn

1

Signet EV Inc

9. EVs<1bn

1Hankook Technology Inc

EM: Water and Land use &agriculture analysis
Water and Land use & agriculture rank third andfourth, respectively, by share of climate-aligned
outstanding volume in EM.
The debt outstanding in the Water theme is
USD13.3bn. More than 90% of the volume
relates to water treatment and supply, while theremaining portion comes from other activities.
The top three issuers account for 85% of theclimate-aligned outstanding volume. Theseare Korea Water Resources Corp (70%), Cia deSaneamento Basico do Estado de Sao Paulo(10%) and AEGEA Saneamento e Participaco(5%). The remaining 15% comes from 15 otherissuers.
The Land use & agriculture theme consistsof USD1.5bn outstanding and eight issuers,
operating entirely in the paper business. The top
three issuers are Suzano SA (representing 83%
of the climate sub-theme), Moorim Paper Co Ltd(4%) and Pabrik Kertas Tjiwi Kimia Tbk (4%).

change, this is expected to result in even greaterpressure on land and natural resources, and tocontinue to push agriculture operations beyond
environmental limits. Cutting GHG emissions
and increased climate-aligned investments arenecessary to support sustainable economic
growth in EM.

Demand for food in EM is projected to increase
dramatically, supported by a fast-growing
population and a growing middle class. Coupledwith the physical disruptions from climate

EM Water Sub-Themes
Climate sub-theme/
Rank

Amount(USD)

Numberof issuers

Top issuers

1. Water treatment & supply

12

10

Korea Water Resources Corp, Cia de Saneamento Basico do Estado de
Sao Paulo, AEGEA Saneamento e Participaco

2. Water supply<1

5

WHA Utilities and Power PCL, SmVAK, TTW PCL

3. Water / Waste<1

1

Cia de Saneamento do Parana

4. Water treatment & supply /Waste management<1

1

IGUA SA

5. Infrastructure<1

1

Kuo Toong International Co Ltd

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative20

7. Spotlight on Transport
Globally, the transport
sector is responsiblefor 24% of direct CO2
emissions from fuelcombustion, of whichapproximately threequarters are attributed
to road transport (45% from passenger vehicles
and 29% from freight).50 Emissions from transport
continued to grow in 2019 as the sector isfundamentally reliant on internal combustion
technologies, which are based on oil and gas.
2020 witnessed a substantial decrease in carbon
emissions from transport due to the COVID-19
pandemic, which caused an unprecedented
decrease in mobility in the first half of the year.51,52
A switch to more sustainable technologies in thetransport sector is imperative to meet net-zerotargets and to guarantee a sustainable recovery
from the COVID-19 economic downturn.
As the world transitions to low-carbon powersystems, EVs offer a viable alternative toconventionally fuelled rivals. Scaling up othermajor technological innovations, such ashydrogen, can accelerate the phase-out ofemissions from certain transport categories.
Rail transport has long been recognised as oneof the most energy-efficient modes of transport
since energy intensity and greenhouse gas
emissions per passenger kilometre are relatively
low. Fully decarbonising rail transport, however,requires a major shift from diesel traction toelectrified railway systems in tandem with a rapid
decarbonisation of the electricity grid.

Low-carbon road transport:
EVs and hydrogen vehicles
Long-term reductionof carbon emissions
requires considerable
investments in lowcarbon technologies.
Recovery programmes
post COVID-19 present
viable opportunities toalign public policies with climate objectives
and take credible steps towards the lowcarbon transition. EVs, which play a key role indecarbonisation, are gaining ground due to amore favourable regulatory landscape and moreadvanced technological development acrossthe globe. While only a few auto manufacturers
had sufficient revenues from low-carbon
vehicles to be classified as climate-aligned forthis research, numerous developments both ata country and company level are indicating that
this may not be far off.

In China, government intervention has shaped
a successful EV market through subsidies,support for technological innovation and energy
performance.53 Non-monetary incentives, such as
mandatory requirements for car manufacturers,
reserved license plates and parking space for EVs,
have also proved effective.
In Europe, both France and Germany’s ambitious
policy commitments are crucial to support the
low-carbon transition for the transport sector:• In December 2019, France was the first
country to legislate on phasing out thesale of new fossil fuel vehicles by 2040.
In 2020, the country announced a multibillion stimulus plan to restart the local auto
industry. It will include a major boost for EVs,
as France aims to take a leading role in theEuropean EV market.54• Germany has committed to a green recovery
post COVID-19. To stimulate demand, in Q2 thecountry has increased the EV subsidy scheme
for a total discount of EUR9k (USD10.6k) for
EVs whose market price amounts to less than
EUR40k (USD47k).
In addition, in 2020 the UK committed to ban
the sale of new petrol and diesel-powered carsand vans in 2030, with the objective of phasingout fossil fuel vehicles. This positions the UK
robustly as the first G7 country to decarboniseroad vehicles. Substantial action is still neededfrom other countries: the US for instance islosing ground to Europe, as its EV market
decelerates due to loosened regulations andlower oil prices.
Volvo AB launched a range of electric trucks
in 2020, which have also been funded withlabelled bonds. The electric trucks will beavailable in Europe in 2021. This is in line withthe company’s objective to make Volvo Truck’s
entire product base fossil fuel-free by 2040.
Electric trucks have become an increasinglycompelling option as the transport and logistics
sectors begin to push towards transitioning
heavy-duty vehicles to green alternatives. We
hope to see more companies join Volvo in theeffort to decarbonise the heavy transportationindustry, as well as to see increased public
and private investments channelled towards
charging infrastructure and energy supply.

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative

Getlink SE operates international transport
networks; the company is a leader in mobility
infrastructures and energy-efficient transport
in Europe. Getlink’s Eurotunnel holds theChannel Tunnel Concession until 2086, offeringa railway network to operators while managing
the circulation of high-speed passenger
trains (i.e., Eurostar) and freight trains. It
also operates piggyback transport services
through the Tunnel. Getlink’s Eurotunnelcommercial brand has been dedicated to energy
consumption optimisation and carbon footprint
minimisation since inception and plays a keyrole in the development of Europe’s low-carbon
transportation. Journeys from London to Parisby train are estimated to save more than 90% of
the carbon emissions per passenger comparedto air travel.55
Future developments of the US EV market
will likely depend significantly on the numberof states joining the Zero Emission Vehicle
Programme, which to date hosts only 12 states.
In January 2021, President Joe Biden announced
that the entire gasoline-powered fleet ofgovernment vehicles will be replaced by EVs
made in America with union labour, a move that
could substantially boost the US EV industry.
The climate-aligned research shows that theshare of revenues generated by auto companies
from EV business operations are unfortunately
still too small. For this reason, it is crucial for autocompanies to increase their investments towards
low-carbon vehicles if net-zero targets are to be
met by 2050. In addition, increasing investment
toward low-carbon vehicle-related infrastructure
would also facilitate the penetration of EV
technologies in the market. For instance, cleaner
and more efficient batteries, improved range,storage and extended charging networks are allareas which still need to be developed further.

HydrogenWith declining costs for renewable electricity,
green hydrogen has gained unprecedented
levels of interest and is currently enjoying strong
momentum as policies and projects continue toexpand worldwide.
Hydrogen vehicles represent a key enabler for the
decarbonisation of the transport sector. However,more efforts are needed to scale up andcommercialise hydrogen vehicle technologies
in order to benefit from such an increasing
momentum. We refer to clean hydrogen in moredetail in our Energy spotlight section on page 22.

21

Railway electrification is key todecarbonise transport

Examples of climate-aligned issuersin transport

The COVID-19 pandemic requires a rethinkingof public transportation.56 Although ridershipdecreased over the last year due to confinement
and social distancing measures, public transport
will continue to play a crucial role in reducing
transport-related emissions, even with acontinued decrease in commuter traffic.

Tesla Inc continues to be the market leader inelectric and hydrogen vehicle manufacturing,and has positioned itself uniquely as the world’s
first fully integrated sustainable energy company.
Tesla’s current products include various EV
models and related parts, battery energy storage,
solar panels and solar roofs.

Electrification of rail transport systems cancontribute substantially to the low-carbon
transition, while also offering opportunities fora sustainable post COVID-19 green recovery.
The need for electrification of rail networks (e.g.,converting urban diesel services into electricones) is extremely relevant as many rail lines
are still powered by conventional combustion
technologies. According to the International
Energy Agency (IEA), Europe, Japan and Russia
have the largest share of electric rail transport
activity, while North and South America continue
to rely heavily on diesel; in nearly all regions,passenger rail is more widely electrified thanfreight rail.57 Conventional electric rail networks
seem to be dominant in most regions, whilesubstantial development of high-speed rail has
occurred in China in the last decade. Investments
need to focus more heavily on expanding thehigh-speed rail network, which offers a viable
alternative to short-haul flights. Unfortunately,
many companies considered as part of theclimate-aligned research do not disclose theshare of electrified versus non-electrified railin their reporting. This level of disclosure isimportant to enhance transparency and allow
targeted investments to be made.

SNCF SA is an important player in European
low-carbon mobility, committed to continuous
improvements in its carbon performance. The
company has set ambitious targets: phaseout of diesel power by 2035, and deploymentof hydrogen-powered trains in 2022. SNCF
has signed power purchase agreements withrenewable energy suppliers and has beendeveloping solar energy programmes to generate
its own power.
Despite the growth of investments in low-carbon
mobility in recent years, substantial emissions
reductions in the transport sector are stillnecessary to meet the 1.5°C climate ambition.
There is urgent need to scale up investment in
low-carbon technologies and infrastructure,transitioning away from fossil fuels. Increased
investments from and into climate-aligned
entities can help bridge the funding gap at
the scale and pace required to meet stringent
climate targets.

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative22

8. Spotlight on green and low-carbon hydrogen
Green and low-carbon hydrogen
Hydrogen today
Hydrogen is the lightest
and most abundantelement in the universe.
On earth, it is present
mainly in water andhydrocarbons and isused predominantly to produce fertiliser and in
oil refinery processes. Hydrogen production iscarbon intensive, and the preferred process is
usually steam methane reforming (SMR), which
results in the production of ‘grey’ hydrogen. CO2
emissions from grey hydrogen production alone
are estimated to be equivalent to the combined
emissions of the UK and Indonesia.58

Hydrogen tomorrow
If the production of hydrogen molecules can bedecarbonised cost-effectively, hydrogen can playa substantial role across the energy system. It
can be a versatile solution to decarbonisation
across many sectors. Existing industrial processes
are obvious candidates, but hydrogen can play asignificant role in transport (including shipping
and aviation), and domestic and industrial
heating too. Furthermore, by offering energy
storage solutions, it can facilitate variable
renewable energy (VRE) penetration.
The cleanest way to produce hydrogen is via
electrolysis of water using renewable energy –resulting in ‘green’ hydrogen. While electrolysis
is currently much more expensive, the rapid
cost reductions already seen in renewableenergy are increasing the viability of thisroute. The other cost barrier, historically, isthe cost of electrolysers, which is high due tothe low installed capacity and size of current
electrolysers (in 2019 just 25MW of electrolyser
capacity was installed).59
The alternative production method is to combine
SMR with carbon capture and storage (CCS)
to generate ‘blue’ hydrogen. The current low

cost of gas, when compared to green hydrogencosts, makes this an attractive option if CCS wasrealised at scale. This approach can speed up thetransition and is recognised as a key mechanismin the EU Taxonomy.

Hydrogen investment – public sector
To reach widespread adoption of green/low-carbonhydrogen, public sector investment is required toprovide the necessary infrastructure, attract private
investment and drive down costs. The table below
summarises current public policy and, whilst
not exhaustive, indicates a new commitment tohydrogen as a pathway to meet net-zero targets.

Hydrogen investment – private sector
Iberdrola, in partnership with Fertiberia, isconstructing Europe’s largest electrolysis plant at
20MW in Southern Spain in 2021. Dedicated solar
energy will produce hydrogen which will thenfeed an ammonia plant. This project is part of awider partnership to invest EUR1.7bn to develop
800MW of green hydrogen capacity by 2027.60
In a similar partnership, offshore wind producedby Ørsted will feed a 50MW electrolyser to produce
green hydrogen, replacing grey hydrogen at BPs
Lingen refinery in Germany in 2024. 61

Hydrogen and the climate-aligned
universe
In a world where just 25MW of electrolyser
capacity was installed in 2019, hydrogen does
not appear significantly in our analysis, but iscertainly a technology to watch over the next
decade. Plug Power Inc based in the UnitedStates is the only company specifically focusing
on hydrogen in the fuel cell supply chain toappear in the analysis. However, most hydrogen
investments would be contained under the
climate-sub-theme ‘Renewable Energy Mix’and not in significant enough quantities to be
categorised under the Hydrogen climate subtheme. Thus, the total amount of investment tofacilitate hydrogen production and application
across sectors may be larger.

Green and low-carbon hydrogen capacity
NationCapacity target

Funding

European Union63

40GW by 2030 (Electrolyser)

EUR26–44bn

Germany64

5GW by 2030 (Electrolyser)

EUR7bn + EUR2bn in FDI

United Kingdom 65

5GW by 2030 (Low- carbon)

GBP240m

Netherlands

3–4GW by 2030 (Electrolyser)

EUR35m per annum

Portugal67

Not strict – target to reduce natural gas
imports by EUR300-600m

EUR7bnSpain68

4GW by 2030 (Electrolyser)

EUR9bn66

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative

Tracking the hydrogen economy
Climate Bonds’ climate-aligned analysis (as wellas labelled bond reports) are one way to track
growth in hydrogen investments, but there areother signals and indicators which will provide
insight into the development of this technology
as a bridge to net zero.
i. Public sector investments:• Market-based instruments aimed at delivering
cheaper low-carbon generation by lowering
the cost of financing projects. To this end, theUK established a Contracts for Difference (CfD)
scheme, which could support deployment ofgreen hydrogen technologies.
• De-risking new green hydrogen projects withthe support of public capital. This could beachieved via credit enhancement mechanisms,
guarantees and other tools to help attract
private investments towards green hydrogen.
ii. Hydrogen competitiveness withalternatives:• Suggestions are that green hydrogenproduction costs could fall to USD0.7-1.6/
kg before 2050, making it competitive withnatural gas. 62• In the transport sector, with accelerating
focus on EVs (rapidly falling costs, fastrollout, improved efficiency, existing grid
infrastructure), hydrogen may be more suitablefor heavy goods vehicles (HGVs) and is also
being considered as a potential low-carbon
fuel alternative in aviation and shipping.
iii. Trade and distribution of hydrogen:• Deployment of ammonia as hydrogen carrier,facilitating transportation and energy storageat times when supply exceeds demand, andenabling hydrogen to be traded between
resource-rich countries and countries withlimited production potential.
• The emergence of hydrogen as a potential
new energy vector in North Africa, which
could substantially contribute to the hydrogen
supply of the EU. Transcontinental pipeline
connections, through the conversion of theexisting natural gas grid, could transport
renewable energy to Europe.

23

9. Spotlight on real estate companies
Introduction
Many property
companies, real estate
investment trusts (REITs),
construction companies
and funds own certified
green buildings, develop
energy efficient buildings,
and/or have invested in energy efficiency
upgrades. More and more property companies
also recognise the urgency for a shift towards
low-carbon buildings. However, information on
the green credentials of their building portfolios
is rarely clearly delineated in corporate reporting.
Moreover, the real estate sector poses
unique challenges for evaluation because
properties have many different uses,
requirements, and external inputs resulting invastly different environmental performance. It is
not feasible to define a single metric that captures
the multi-faceted nature of what
would define a ‘green’ property company. Instead,

we considered a variety of metrics to form abroad view (refer to methodology below). For thisexercise, we have sought to use metrics which
could be used across the wider realestate sector: if a company were to meet thesevarious criteria it would signify a stronger
predisposition towards developing green projects.
According to the International Energy Agency,
the buildings and buildings construction sectors
together account for over a third of the world’s total
final energy consumption and almost 40% of total
direct and indirect CO2 emissions.69 We believe that
this snapshot of the real estate sector will provide
insight into the measures that are being taken
within the industry to help mitigate against climatechange and develop green and resilient assets.

Findings
25 of the 100 companies evaluated haveissued green bonds or loans and 15 of thesehave issued more than one green bond/loan.
This suggests that there is considerable scope

to use green bonds to finance low-carbon green
buildings, particularly as governments introduce
new policies to incentivise the development of
low-carbon buildings.
Almost half of the companies have set someform of environmental performance target
to reach in the coming years. These targets vary
in ambition and the timescale. Science-basedtargets are emissions reduction targets thatare in line with climate science. Only ten of thecompanies reviewed in this exercise had suchtargets in place and tended to score higher inour rankings as they have clear environmental
performance criteria they must meet. In
addition, we investigated whether companies
had clearly signposted their journey to reduce
emissions and lower their environmental
footprint. This could be achieved in a variety
of different ways, such as interim targets andinvestment plans, however relatively few
companies had done this.

Real estate analysis methodology
Real estate companies and REITs have beentreated separately from the rest of the climatealigned analysis as these companies are often
difficult to classify. Generally, it is challenging
to identify the share of revenue streams
associated with highly energy efficient green
buildings. Industry certification schemes andmetrics to quantify energy efficiency and/or improvements vary substantially acrossbuilding types (new or existing) and acrosscountries, which makes it difficult to compare
and evaluate the climate-alignment of thesecompanies. The assumptions underpinningthese are also often not made available.

Indicators
To try to simplify this, a different analyticalframework has been used to indicate how
well property companies are reportingon their environmental impacts. A range
of indicators categorised under Issuer
information, Targets, and Environmental
performance were used to approximate
how property companies are responding toenvironmental and climate issues. These
criteria were chosen following a review of‘best-in-class’ real estate companies and themetrics they use in their reporting.

Our analytical framework is based on a mix ofcriteria, which include both technical parameterson the buildings’ performance as well as a binary
type of assessment which relates to transparency,
disclosure, decarbonisation strategies andtargets. The companies which ‘ticked most boxes’
according to our framework represent the best
performing property companies. Our criteria
include:Scope• Total GHG emissions

This research is based on publicly available
resources such as companies’ websites,
annual reports, corporate sustainability
reports, CDP, GRESB, as well as Climate Bonds’
own databases. Using a variety of metrics
provides a more comprehensive overview of
how companies are incorporating and setting
environmental and climate metrics.

• GHG emission intensity• Total energy consumption• Energy intensity• Total water consumption• Water consumption intensity• GRESB participation• CDP A-list inclusion• Green bond/loan issuance• Company level, science-based climate targets• Company level transition pathway defined

The companies analysed are the top 100 realestate companies in the world ranked by debt
outstanding as of June 2020. Companies
which solely operate communications realestate, such as communications towers, havebeen excluded.

Data sources and scoring

Companies were evaluated using a scoring
system: meeting each criterion earns acompany a set of points, with each criterion
being weighted according to its relevance. The
best performing companies were those thatscored the highest overall. Refer to Annex I fortables indicating the list of criteria and theirassociated weighted points.

• The percentage of portfolio undermanagement with one of the top two building
certification standards

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative24

Some countries have introduced policies to
set targets for businesses. For instance, aspart of their 2019 Climate Action Programme,
the German government set out an ambitious
vision for the country’s real estate sector, aiming
to reduce annual CO2 emissions from 120
million tonnes CO2/annum (as of 2019) to 72
million tonnes CO2/annum by 2030. Other policy
developments include the European Energy
Performance of Buildings Directive (EPBD) whichsets out the legislative framework to meet thebroader objectives of the European Union Green
Deal. The EPBD seeks to improve the energy
performance of the existing building stock, whilesince December 2020, all new buildings must be‘nearly zero-energy buildings’ (NZEB). The EPBD
will also strengthen the effort to climate-proof
EU members’ building stock, with the goal of fulldecarbonisation by 2050.70,71

Top 20 best performing
property companies:
1. Boston Properties Inc
2. Alexandria Real Estate Equities
3. CPI Property Group SA
4. ICADE
5. Digital Realty Trust Inc
6. Iron Mountain Inc
7. Swire Pacific Ltd
8. Unibail-Rodamco-Westfield
9. Frasers Property Ltd
10. Simon Property Group Inc
11. CapitaLand Ltd
12. Regency Centers Corp
13. Hysan Development Co Ltd
14. Brixmor Property Group Inc
15. Fastighets AB Balder
16. Vonovia SE
17. Samhallsbyggnadsbolaget i Nord
18. Norstar Holdings Inc
19. Welltower Inc
20. Klepierre SA

Real estate companies are increasingly
looking to achieve the highest building
certification levels, and properties meetingthese standards can qualify for green bondfinancing. These certification schemes include
standards like BREEAM, LEED, NABERS, andmany others used by developers around theglobe. What the research does highlight thoughis the inaccessibility of this data at the company
level. Over half of the companies analysed reportthat green buildings make up a portion of theirportfolio. While this is valuable information, thereporting is often not granular enough to makethese statements useful. Metrics describing
the percentage of a portfolio or assets undermanagement that are covered by the highest
standards/levels of certification would makeit easier to identify the companies with thestrongest environmental credentials.
Of the criteria we set, only 17 of the 100
companies meet two-thirds of the requirements.
This suggests that there is still great potential to
improve environmental performance.

Considerations
There is considerable scope for real estatecompanies to use green finance tools tofund low-carbon real estate projects. Greenbonds can demonstrate that an entity isdeveloping a green building portfolio to limit its
environmental footprint.
Reporting on the proportion of buildings meetingthe highest levels of certification such as LEEDGold of BREEAM Excellent is minimal. This typeof information is very often provided within the
documents accompanying green bond issuance,such as the framework and Second Party Opinion(SPO), and the entities that are already doing this
could easily share the percentage of their certified
building in their annual reports. This information
is especially useful in identifying entities which
are likely to have the better performing portfolios
from an environmental standpoint. Ideally, thiswould be reported as a percentage of area undermanagement or gross lettable area.

MSCI estimated the professionally managed
global real estate market to be worth USD9.6tn
in 2019.72 As a large consumer of energy,
with a high environmental footprint, swift
transformation is required to decarbonise
the sector. It is incumbent upon developers,
managers, and investors to demand greater
environmental standards in this area. A shift
towards more sustainable building portfolios
is underway. Some entities only have green
buildings as part of their portfolios, whileothers have made commitments that all new
developments will be in line with the highest
levels of building certification schemes. With theright tools and policy incentives, there is alreadya solid foundation on which the real estate sector
can develop climate-friendly portfolios.
A recent development from the sector camefrom French Real Estate Gecina: in May 2021, thecompany reclassified its debt portfolio under thegreen theme. Gecina labelled its 15 outstanding
bonds worth a combined EUR5.6bn as green
and committed to issue all future bonds under
the green label.73 The ambitious framework
was published in April 2021 and reviewed by
Sustainalytics. Gecina does not appear amongst
the best performing companies as its relabelling
exercise took place almost a year after thisresearch was carried out. However, Gecina may
be eligible to become the first climate-aligned
real estate company as it has committed toachieve carbon neutrality in its portfolio ofbuildings in operation, as well as at a company
level, by 2030.

While beneficial, standardised reporting suchas the GRI protocols do not help to distinguishbetween the companies in terms of best
environmental performance. Roughly half ofthe companies evaluated in this exercise havereported on their energy usage and water
usage, and about 60 of the 100 companies havereported on their GHG emissions. There are still a
considerable number of companies that have not
adopted these reporting techniques. In addition,common reporting metrics would be extremely
beneficial in comparing companies. For
example, the most used metric for greenhousegas emissions intensity is kgCO2e/m2 but othermetrics do exist which complicate comparisons.

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative25

10. Conclusion
Transforming the global economy is crucial
to reaching carbon neutrality by 2050 andavoiding catastrophic climate impacts. The Paris
Agreement and, more recently, the US-hosted
Leaders Summit on Climate, show increased
global momentum to shift to a green economy.
Sizing the relevant market segments is a key
step in helping companies and financial market
stakeholders take advantage of the opportunities
presented by the low-carbon transition.
In addition to the USD1.7tn labelled GSS bonduniverse, this research has identified USD913.2bnof outstanding unlabelled bonds from climatealigned issuers, with a focus on corporates.
The flow of capital into climate-aligned assets
and activities is therefore more significant
than the financing available via the GSS bondmarket only. However, the identification of such
instruments presents several challenges. Despite
the increased efforts to define appropriate andstandardised climate and broader sustainability
reporting practices including initiatives from
CDP, GRI, TCFD and SASB, as well as the recent
support for mandatory disclosure on climaterelated risks by the G7, corporate reporting
often omits information that is most important
to investors and other financial market players(FMPs).74 For instance, it is difficult to evaluate
corporate revenues that are specifically linked
to green business lines for companies withdiversified business activities. Further, thedefinition of ‘green’ assets and activities still
varies across countries and entities, and thelack of clear and consistent metrics to define theassociated sustainability impacts exacerbates thedifficulties in evaluating the green exposure of anasset portfolio or indeed an entire entity.
The EU’s Taxonomy Regulation which
entered into force in July 2020 provides anambitious framework to overcome some of theshortcomings related to green definitions andcorporate reporting. The EU Taxonomy Delegated
Act sets out a list of environmentally sustainableeconomic activities that make a significant
contribution to climate change mitigation andadaptation, hence creating a common language
for investors and other FMPs.75 Moreover, theTaxonomy Regulation creates additional legal
disclosure obligations that will enter into force
in January 2022. The EU Sustainability ReportingStandards include the Non-Financial Reporting
Directive (NFRD) which requires ‘public interest
companies’ to report sustainability information
annually, and the Corporate Sustainability
Reporting Directive (CSRD) proposes theintroduction of more detailed reporting
requirements as well as extending the scopeof the NFRD to all large companies and someSMEs. The harmonisation of the EU Sustainability
Reporting Standards with the Sustainable
Finance Disclosure Regulation (SFDR), which

requires mandatory ESG disclosure for assets
managers and other FMPs, will enable moreconsistent and transparent disclosure, thereby
facilitating the identification of climate-aligned
investments.
The climate-aligned universe shows that green
investment opportunities exist beyond thethematic bond market. Climate-aligned issuers
could refinance their business operations
with labelled bonds. This could enable themto kickstart the process of green tagging
their assets and activities, hence becoming
more familiar with green definitions, impact
reporting practices, and broader best practicesustainability disclosure. The labelling exercise
can also contribute towards defining corporate
sustainability strategies backed by science-basedtargets, thus helping deliver credible corporatetransitions to net zero. French Real Estatecompany Gecina has set a precedent for this: thecompany recently reclassified its debt portfolio
under the green label and committed to reachingcarbon neutrality across its buildings portfolio
by 2030. As highlighted in the Climate Bonds
2020 Green Bond Treasurer Survey, additional
benefits from labelling bonds come in the formof a broader and stickier investor base and newengagement opportunities, enhanced reputationand visibility, as well as strengthened internal
integration between company departments.

the EU Taxonomy represent a starting point tocreate common green definitions globally, as wellas to implement policy incentives for companies
and other entities to properly report on theirenvironmental impacts. EM issuers could also
rely on reporting best practice and labelling debt
to raise their profile and attract more institutional
investment – especially from DM.

Growth in the climate-aligned universe is mostly
expected from Europe, where the favourable
regulatory regime is poised to enable andfacilitate the identification of climate-aligned
investments. European climate-aligned issuers
could also help scale up the GSS bond market,
in which demand already outstrips supply. This
will be further exacerbated by the ECB, which has
said that under its EUR7tn APP it already buys
around 20% of European green bonds, and plansto ramp this up and expand into other GSS labelsin the future.
The German Bundesbank President Jens
Weidmann also recently commented on theimportance of central banks incorporatingclimate-related financial risks into their risk
management framework, suggesting that theEurosystem should only consider purchasing
bonds or accepting them as collateral formonetary policy purposes if their issuers meetcertain climate-related reporting requirements.76
Climate-aligned investment opportunities
arise from other regions too: China and North
America are home to considerable outstanding
volume and number of issuers, however thelack of harmonisation of green definitions andreporting standards across countries and regions
can cause an underestimation of the actual
climate-aligned investment opportunities inthose regions. The Climate Bonds Taxonomy andClimate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative26

Annex I
Companies were evaluated using a scoring
system: meeting each criterion earns a company
a set of points, with each criterion being
weighted according to its relevance. The best
performing companies were those that scoredthe highest overall. The tables below indicate
each criterion and its associated weighted points.

Binary criteria
Criteria

Technical parameters
Scoring points
Yes

Criteria

Scoring pointsNo

Yes – as per
defined metrics

Yes – othermetrics

No

Total GHG emissions(scope 1 &2) TCO2e

2

1

0

GHG emission intensity(kg/CO2)

2

1

0

2

1

0

GRESB participation

1

0

CDP A-list inclusion

1

0

Green bond/loan issuance

20Multiple green bond issuance20Company level, science-based
climate targets

20

Total energy consumption(MWh)Company level transition
pathway defined

10Energy intensity (MWh/sqm)

2

1

0

3

Total water consumption (m )

2

1

0

Water consumption intensity(m3/m2)2

1

0

The percentage of portfolio
under management with
one of the top two building
certification standards (%)

2

1

0

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative27

Annex II
ENERGY
Eligibility
Always included

General proxy 1

Electricity generation (GWh/a) from eligible generation as a % of total
generation in the company portfolio (GWh/a) is assigned to the revenue fromelectricity generation.

General proxy 2

Installed climate-aligned generation capacity (GW) as a portion of
total installed generation capacity in the company portfolio (GW) is assigned
to the revenue from electricity generation.		

Assumption 1

Unclear amount of revenue from fossil fuels (gas/coal/oil) leads
to exclusion.		

Assumption 2

Lack of descriptive information on certain activities, e.g. “recovered energy”, 				“thermal energy”, or “district heating”, leads to exclusion.

Assumption 3

If the portfolio of assets of an issuer span across multiple eligible businessactivities and in significant quantities then they are assigned under “RE 				Mix”, i.e. Renewable Energy Mix.

Included if screening condition is met
Excluded
Screening condition - Conditions which need
to be met for activity to be climate-aligned

Types of assets/activities
Sub-sectorbusiness activity

Activity Type

Utilites

Energy generation

Transmission/distribution

Eligibility

Screening condition
i. Included if vertically integrated (i.e. has generation assets as well astransmission and distribution)
ii. Alignment is calculated from % generation from eligible energy
sources and applied to total company revenue using the generalproxiesiii. Exclude if solely transmission and distribution

Grid

Solar

Wind

Geothermal

Bioenergy

Hydropower

Infrastructurei. Infrastructure supports the integration of renewable energy orenergy efficiency systems and their load-balancing

Distributed assets

ii. If purpose to reduce renewable energy curtailment

ICT/smart grid applications

N/A

Energy generation

N/A

Manufacturing/supply chain

N/A

Infrastructure

N/A

Energy generation

N/A

Manufacturing/supply chain

N/A

Infrastructure

N/A

Power generation

N/A

Manufacturing/supply chain

N/A

Infrastructure

N/A

Biofuel/biomass/ biogas
production

i. Biofuel sourced from sustainable feedstock

Generation

i. Biofuel sourced from sustainable feedstock

Supply chain facilities

N/A

Infrastructure

N/A

Power generation

N/A

Manufacturing/supply chain

N/A

Infrastructure

N/A

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative28

(Continued)
Types of assets/activities
Sub-sectorbusiness activity

Activity type

Marinerenewables

Power generation

N/A

Manufacturing/supply chain

N/A

Infrastructure

N/A

Energy generation

N/A

Mining facilities

N/A

NuclearEligibility

Battery & Energy
Storage

HydrogenFossil Fuels

Screening condition

i. Revenues from the manufacturing of battery components (e.g.
lithium materials) or other climate-aligned assets (such as battery
storage applications associated with solar photovoltaic (PV) energy
generation).
Power generation

N/A

Storage

N/A

Manufacturing/supply chain

N/A

Oil, gas, coal

Automatically excluded

WASTE
Eligibility
Always included
Included if screening condition is met
Excluded
Screening condition - Conditions which need
to be met for activity to be climate-aligned

		Types of assets/activities
Sub-sectorbusiness_activity

Activity typeEligibility

Screening condition

Hazardous waste
management

Appropriate hazardous
waste disposal.

N/A

Waste
management

Processes/activities tomanage waste from its
inception to its final
disposal.

N/A

Waste Treatment

Processes/activities toensure that waste has waste
has limited impact on theenvironment.

N/A

Waste to energy

Waste to energy plants (e.g.
incineration, gasification,
pyrolysis and plasma).

Not linked to oil & gas

Circular economy

Waste elimination andcontinual use of resources.

N/A

Recycling

Reuse materials for new
products.

N/A

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative

29

TRANSPORT
Assumption 1

For railway and metro companies, revenues from advertisement, shops
instations or other railway or railway station linked assets are climatealigned if the total revenue streams from these sectors account for lessthan 10% of the total.

Assumption 2

Buses and coaches are automatically included as, generally, they are more
efficient in terms of CO2/passenger than cars.

General proxy 1

Freight rail alignment may require analysis on a pro-rata basis (i.e. number/volume of products related to fossil fuel out of the total number/volume of
product categories), should more detailed information not be available.

General proxy 2

Manufacturing of both passenger and freight equipment, rolling stock, etc.
is included.

General proxy 3

Manufacturing of buses/coaches is included.

General proxy 4

Products from plastic materials for the automotive market are not eligible.

Eligibility
Always included
Included if screening condition is met
Excluded
Screening condition - Conditions which need
to be met for activity to be climate-aligned

Types of assets/activities
Sub-sectorbusiness activity

Activity type

BicyclesBicyclesN/A

Operating (e.g. rental fleet)

N/A

Screening condition

N/A

Storage (EVbattery, energy
storage)
EV & Hybrid
vehiclesEligibility

Manufacture, distribution

N/A

Operating (e.g. rental fleet)

N/A

Charging stations

N/A

HydrogenvehiclesManufacture, distribution

N/A

Operating (e.g. rental fleet)

N/A

Conventional
buses/coaches

Manufacture, distribution

N/A

Operating

N/A

EV & Hybrid
buses/coaches

Manufacture, distribution

N/A

Operating

N/A

Charging stations

N/A

Hydrogen buses/
coaches

Manufacture, distribution

N/A

Operating

N/A

Metro/lightrailway

Manufacture, distribution

N/A

Operating

N/A

Passenger
Railway

Manufacture (rolling stock)

N/A

Operating

N/A

Infrastructure

N/A

Services

N/A

Manufacture (rolling stock)

N/A

OperatingTransporting goods other than coal, oil, petroleum products, natural
gas and other similar goods

OperatingPassenger-related

Freight Railway

Marine vessels

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative30

(Continued)
Types of assets/activities
Sub-sectorbusiness activity

Activity Type

Eligibility

ICE passenger
vehiclesManufacture, distribution

ExcludedOperating (e.g. rental fleet)

ExcludedLead-acidbatteries

Screening condition

Excluded

WATER
Assumption 1

Assumption 2

Most of the activities related to the water sector are considered “climatealigned” as water is essential for survival. United Nations General Assembly
explicitly recognized the human right to water and sanitation andacknowledged that clean drinking water and sanitation are essential to therealisation of all human rights.
For water management companies, revenues from other relevant assets (e.g.
water meters and water pipeline installations) are eligible for inclusion in thatthey are necessary components of a well-functioning, sustainable water
infrastructure system.		

Eligibility
Always included
Included if screening condition is met
Excluded
Screening condition - Conditions which need
to be met for activity to be climate-aligned

Types of assets/activities
Sub-sectorbusiness activity

Activity typeEligibility

Screening condition

Infrastructure

Infrastructure which allows
for regular functioning of thewater supply system.

N/A

Water / Waste

Activities related to bothwater management/
supply and waste water
management.

N/A

Water
management

General water distribution
activities.

N/A

Water supply

Rainwater harvesting
systems, gravity fed canalsystems, pumped canal orwater distribution systems,
terracing systems, drip, floodand pivot irrigation systems.

N/A

Water treatment

Drinking water treatment,
desalination plants,
water recycling systems,
wastewater treatment
facilities, manure andslurry treatment facilities
Ecological retention system,
current force reduction
mechanisms.

N/A

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative

31

LAND USE & AGRICULTURE
General proxy 1

Revenues from land use and agricultural products are aligned only when the
products or processes are certified against the FSC Standard or equivalentinternationally recognised schemes.		

Eligibility
Always included
Included if screening condition is met

				

Excluded
Screening condition - Conditions which need
to be met for activity to be climate-aligned

Types of assets/activities
Certified products

Business activity

Products with a 2BSvs (Biomass Biofuels Sustainability
voluntary scheme) certification

Bioenergy

N/A

Crop

N/A

Products with an ASC (Aquaculture Stewardship Council)
certification

Fisheries

N/A

Products with a Bonsucro certification

Crop (sugarcane)

N/A

Products with a Fairtrade certification

Crop

N/A

Products with a FSC (Forest Stewardship Council)
certification

Paper & Pulp

N/A

Products with an International Sustainability & Carbon
Certification (ISCC)

Supply chains

N/A

Biobased feedstocks

N/A

Renewables

N/A

Products with a Marine Stewardship Council Certification(MSC)

Fisheries

N/A

Products with a PEFC (Programme for the Endorsement ofForest Certification)

Forestry

N/A

Products that are Rainforest Alliance Certified

Forestry

N/A

Crop

N/A

Biomass

N/A

Biofuels

N/A

Bioliquids

N/A

Biobased feedstocks

N/A

Biomass

N/A

Biofuels

N/A

Biomaterials

N/A

Products with a RSPO (Roundtable on Sustainable Palm Oil)certification

Crop (palm oil)

N/A

Products with a RTRS or the Round Table on Responsible Soy

Crop (soy)N/AProducts with a SFI (Sustainable Forest Initiative)
certification

Forestry

N/A

Forest products

N/A

Products with a FSA certification

Crop

N/A

Products with a RedCert certification

Products with a Roundtable on Sustainable Biomaterials(RSB) certification

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative

Eligibility

Screening condition/
Assumption

32

ICT
Assumption 1

Activities related to Broadband networks, Connectivity, and Power
management are considered climate aligned.		

Assumption 2

Infrastructure related to some IT solutions (i.e. cloud, telecom, broadcasting)is considered climate aligned.

Assumption 3

Production of electronic devices is considered not aligned.

Eligibility
Always included
Included if screening condition is met
Excluded
Screening condition - Conditions which need
to be met for activity to be climate-aligned

Types of assets/activities
Sub-sector_
business_activity

Activity Type

Broadband
networks

Fibre optic and cable
networks

N/A

Supporting infrastructure(e.g. internet exchange
points)N/A

Connectivity

Infrastructure and network
management

N/A

IT solutions

Cloud

N/A

Telecom infrastructure

N/A

Broadcasting infrastructure

N/A

Infrastructure, software andhardware for remote power
management

N/A

In situ power management

N/A

Electronic devices

For mobile devices and automotive other than EV/HybridPowermanagement

Electronics

Eligibility

Screening condition

Climate Investment Opportunities: Climate-Aligned Bonds & Issuers Climate Bonds Initiative33

Endnotes
1. MSCI, Market Classification, 2021.
2. Climate Bonds Initiative, Green Bond European Investor Survey,
2019.
3. See ‘Research methodology’ section for more details.
4. A range of assumptions and proxies are used should the revenue
breakdown by business line/segment be insufficient to determine
climate-alignment; proxies and assumptions are listed in the ‘climatealigned activities’ table.
5. All unlabelled climate-aligned data as of 31 September 2020.
6. All figures are converted to USD; the exchange rate is as of ‘issue
date’ of the climate-aligned bonds.
7. Climate Bonds Initiative, Sustainable Debt Global State of theMarket 2020, 2021.
8. OECD, Financing Climate Futures: Rethinking Infrastructure, 2018.
9. Climate Policy Initiative, Global Landscape of Climate Finance2019, 2019.
10. Climate Policy Initiative, Global Landscape of Climate Finance2019, 2019.
11. Includes green, social and sustainability labelled bonds.
12. Climate Bonds Initiative, Sustainable Debt Global State of theMarket 2020, 2021.
13. For more details on the Chinese climate-aligned bond market,
please see its dedicated section on p.13-14
14. Climate Bonds collects ratings from both international and local
rating agencies; entity-level ratings are used when bonds are nonrated. Consolidated ratings are used for the chart below.
15. Please note that REITs and Real Estate Companies are notincluded under Buildings. See section 9 on p.24-25
16. Climate Bonds Initiative, Green Bond Treasurer Survey, 2020.
17. Financial Stability Board, Proposal for a disclosure task force on
climate-related risks, 2015.
18. Climate Disclosure Standard Board, The state of EU
environmental disclosure in 2020, 2020.
19. UNFCC, The Paris Agreement, no date.
20. European Commission, EU climate action and the European
Green Deal, no date.
21. European Commission, EU taxonomy for sustainable activities,
no date.
22. European Commission, Questions and Answers: Taxonomy
Climate Delegated Act and Amendments to Delegated Acts on
fiduciary duties, investment and insurance advice, 2021.
23. European Commission, Sustainable finance package, 2021.
24. Reuters, Takeaways: Key takeaways from the Biden Earth Day
summit, 2021.
25. The White House, Executive Summary: U.S. International Climate
Finance Plan, 2021.
26. US Securities and Exchange Commission, SEC Division of
Examinations Announces 2021 Examination Priorities, 2021.

27. US Securities and Exchange Commission, SEC Announces
Enforcement Task Force Focused on Climate and ESG Issues, 2021.
28. European Commission, Sustainable finance taxonomy Regulation (EU) 2020/852, 2020.
29. Please refer to the research methodology on p.3 for more details
on the research scope.
30. USD242bn as of 30 April 2021.
31. For more detailed analysis on the Japanese unlabelled climatealigned universe, please see the ‘Japan Green Finance State of theMarket 2020’ available at: https://www.climatebonds.net/resources/
reports/japan-green-finance-state-market-2020.
32. For additional insights, please see the ‘Spotlight: Low-carbon
transport’ section on p.21-22
33. Climate Bonds collects ratings from both international and local
rating agencies; entity-level ratings are used when bonds are nonrated. Consolidated ratings are used for the chart below
34. If the portfolio of assets of an issuer spans multiple eligible
business activities and in significant quantities, they are assigned
under ‘Renewable Energy Mix’
35. International Energy Agency, The Future of Rail, 2019.
36. The Chinese Central Government, China’s high-speed rail lines
top 37,900 km at end of 2020, 2021.
37. Shan, Y., Huang, Q., Guan, D., Hubacek, K., China CO2 emission
accounts 2016–2017, 2020.
38. Reuters, Takeaways: Key takeaways from the Biden Earth Day
summit, 2021.
39. Reuters, China’s 2060 carbon neutral goal bill could hit
over $5 trillion, 2020
40. Climate Bonds Initiative, Certification, no date.
41. Bhattacharya, A., Calland, R., Averchenkova, A., Gonzalez, L.,
Martinez-Diaz, L., Van Rooij, J., Delivering on the $100 billion climate
finance commitment and transforming climate finance, 2020.
42. S&P Global, Feature: South Korea’s Green New Deal faces cost,
political hurdles, 2020.
43. Carbon Brief, Coronavirus: Tracking how the world’s ‘green
recovery’ plans aim to cut emissions, 2020.
44. Lee, J-H., Woo, J., Green New Deal Policy of South Korea: Policy
Innovation for a Sustainability Transition, 2020.
45. International Hydropower Association, Colombia
Country Profile, 2018.
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Prepared by Climate Bonds Initiative.

Sponsored by DBS Bank.

Author: Amanda Giorgi

We want to thank the following for the valuablecomments and support: Krista Tukiainen, Caroline Harrisonand Bridget Boulle

Co-author: Carlotta Michetti
Contributors: Tom Baldwin, Rory McAvinue, Ryan Leung, Tejasvini Viraj
Suggested citation: Giorgi, A. & Michetti, C., 2021. Climate Investment
Opportunities: Climate-Aligned Bonds & Issuers 2020, Climate
Bonds Initiative.
Design: Godfrey Design© Published by Climate Bonds Initiative, July 2021
www.climatebonds.net

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