JPMorgan expects ESG bond issuance in Asia to nearly double in 2022 amid investor demand and climate change efforts

The US dollar-denominated ESG bond supply in Asia, excluding Japan, has already reached a record high of US$58.6 billion year-to-date

Investor demand, greater adoption of ESG strategies by issuers, government policy and regulatory requirements are all expected to boost ESG bonds

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The issuance of green bonds amounted to US$354 billion for the first three quarters of 2021, already surpassing the record high of US$297 billion issued last year. Photo: Dreamstime/TNS

Published: 12:30pm, 31 Oct 2021Updated: 9:32pm, 31 Oct 2021

US investment bank JPMorgan expects the volume of bonds linked to environmental, social and governance (ESG) factors in Asia to nearly double to as much as US$100 billion in 2022, spurred by increased investor demand as well as the need for issuers to meet their decarbonisation targets amid global efforts to combat climate change.

The US dollar-denominated ESG bond supply in Asia, excluding Japan, has already reached a record high of US$58.6 billion year-to-date, and could continue to rise, according to the investment bank.

“There are a number of factors that will drive growth of ESG bonds from increasing investor demand, greater adoption of ESG strategies by issuers and the need to finance them, to government policy and regulatory requirements,” said Jessica Chen, co-head of ESG financing for Asia ex-Japan at JPMorgan, in an emailed interview last week.

“We expect to see more harmonisation of local and global standards, greater alignment of ESG financing with issuers’ decarbonisation targets, and more focus on disclosure and transparency from both issuers and investors.”

Earlier this month, the Task Force on Climate-Related Financial Disclosures (TCFD), an international organisation of 32 members set up by the Basel-based Financial Stability Board in 2015, updated its implementation guidance for the first time since the recommendations were launched four years ago.

In the revised guidelines, the task force asks that companies disclose their carbon emissions independently of a “materiality assessment”.