Asian ESG Bond Issuance More Than Doubles... China and Korea Lead Issuance

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Park Byung-hee] ESG bond issuance in the Asia-Pacific region is surging this year.

According to financial information firm Refinitiv, 234 ESG bonds worth $69.1 billion were issued in the Asia-Pacific region this year. Compared to the same period last year, the number of issuances nearly tripled, and the issuance amount more than doubled. This year is likely to see a record high issuance.

ESG bond issuance in the Asia-Pacific region has surpassed the scale of issuance in the United States again after two years. In the U.S., 86 ESG bonds worth $53.1 billion were issued this year. Europe, which has traditionally led the ESG market, issued ESG bonds worth $248.1 billion. Europe also saw issuance amounts increase more than threefold compared to last year.

China and Korea are leading ESG bond issuance in the Asia-Pacific region this year. Of the newly issued ESG bonds this year, 51.3% were issued in China and 21.2% in Korea. In China, the Asian Infrastructure Investment Bank (AIIB) led the trend by issuing $2.9 billion worth of ESG bonds in January, and the China Development Bank issued $3.0 billion worth of ESG bonds in March.

Environmental issues are driving the increase in ESG bond issuance. Among the 12 seats on the board of directors of ExxonMobil, the world's largest oil company, three are held by Engine No. 1, an environmental activist investment fund, reflecting the growing number of shareholders demanding expanded corporate environmental investments. Authorities in Singapore and Hong Kong have recently urged companies to expand disclosure of information related to environmental investments. Seventy percent of ESG bonds issued in Asia this year were counted as funds related to environmental concerns.

Experts expect ESG bond issuance to continue as the importance of green investment is highlighted.

Karam Rizvi, head of Asia-Pacific corporate finance at Citigroup, said, "Demand for green finance is at an all-time high, and conditions are being created for continued growth in demand."

Global major banks aiming to expand in the Asian market are actively targeting the ESG market. Citigroup's ESG-related financial transactions in the Asia-Pacific region this year are approaching $25 billion, an amount more than six times that of last year.

Rizvi said, "More customers want ESG strategies," adding, "There is an increasing number of investors and shareholders who do not want to fall behind the trend of growing green investments."