Green Bond Sales Boomed in First Half of 2024

For all the talk about ESG and sustainable investing falling out of favor with some market participants, there’s ample evidence to the contrary. Some of that evidence comes courtesy of the global bond market.

Specifically, issuance of green bonds surged in the first half of 2024. That could put more eyeballs on the VanEck Green Bond ETF (GRNB). That is the original exchange traded fund dedicated to this corner of the bond market. To its credit, GRNB is sporting a modest YTD gain. That's more than can be said for some popular aggregate global bond funds.

As noted by Jonathan Gardiner, sustainable indices product manager at Bloomberg, green bonds reached $356 billion in the first half of the year. That's after total annual sales set a new record in 2023. Increased issuance of green debt in January through June was facilitated by both corporate and sovereign issuers. GRNB is reflective of that proposition as it holds both corporate and government bonds.

Green Space for Green Bond Growth

Put simply, green bonds are debt issued to finance environmentally friendly and sustainable projects. It’s a relatively small and young corner of the global bond market. But GRNB has been around for more than seven years.

Regarding GRNB and the broader green bond space, age isn’t material, but embrace of these bonds is. At that sovereign level, that was in display in the first half, with governments selling $140 billion worth of green debt, according to Bloomberg. Japan and Italy combined for more than $22 billion of that figure. Japan accounts for 3.83% of GRNB’s geographic exposure.

Sovereign issuance represented 18% of green bond sales in the first quarter, with government issuers displaying significant commitment to green bonds.