Intercontinental Exchange (ICE) reported that said sustainable or impact bond issuance fell 13 percent in 2022 to $771 billion after reaching an all-time high in 2021.
The decrease in impact bonds was less than that of overall bond issuance in 2022, which fell 61 percent compared to the previous year. The smaller decrease in the issuance of sustainability bonds signals a relatively buoyant continuation in impact bond issuance, especially with green bonds, which had only a 1 percent year-on-year decline.
“As higher rates and volatility have put pressure on overall bond issuance, impact bonds have remained resilient, demonstrating the importance of the sector and the confidence that third-party certification provides to investors,” Anthony Belcher, head of sustainable finance at ICE, said. “Our second annual full-year report analyzes the data and trends we’ve seen throughout 2022 and provides a transparent foundation for trends we expect to continue in the year ahead.”
The report also showed that third-party certification, which provides assurance that funds are being used for green, sustainability, or social purposes, was employed on 88 percent of all impact bonds issued during the year, up from 84 percent the previous year. In the United States, third-party certification jumped from 59 percent in 2021 to 83 percent in 2022. In China, it jumped to 83 percent from 71 percent the previous year.
Among other key findings, the report said that EMEA remains the largest issuing region, totaling $405 billion of impact bonds issued. That makes up more than half of global issuance. Germany surpassed France as the largest issuing country in the EU, while APAC is the only region that saw year-over-year growth in issuance, led by China, which became the largest country issuer globally in 2022.
“Impact bonds are a critical source of funding for businesses and governments around the world, and ICE’s data and associated analytics provide insight into this growing asset class,” Elizabeth King, president of Sustainable Finance and Chief Regulatory Officer at ICE, said. “ICE’s impact bond data includes use of proceeds information to inform our customers’ investments and maximize their impact.”