Exhibit: Total ESG Bonds Issuance by Type, US$B, 1Q21 – 2Q22

Source: Environmental Finance

Key Points: Headlines noting large declines in ESG bond issuance in 1H22 vs. 1H21 obscure that environmentally-targeted issuance was resilient. Total ESG bond issuance in 1H22 fell 22% yr./yr. vs. a 13% decline for all bonds, but Green bonds + Sustainability-Linked bonds (2/3 of which have carbon emissions targets) fell only 6%, helped by 2Q22’s sequential bounce.

ESG bond issuance in 1H22 declines 22% yr./yr. to $441B on large declines in Social and Sustainability bonds. According to the Environmental Finance (E-F) database, Social bond issuance fell by 45% yr./yr. in 1H22 to US$81 Billion (B), Sustainability (defined as a combination of Green and Social activities) issuance fell 31% to $74B, Green issuance fell 10% to $239B and Sustainability-Linked issuance rose 22% to $46B (see Exhibit; some numbers may not match due to rounding).

Total ESG bond issuance in 1Q22 of $192B marked a low point vs. any quarter in 2021; 2Q22’s total of $249B reflected recovery in every sector except Sustainability-Linked.

Social bonds appear to have normalized following a Covid-19-driven spike in 1Q21 that had been driven largely from Supranational organizations. Supranational issuance declined 53% yr./yr. in 1H22 to $55B, followed by (government) agency issuance down 26% to $70B and Corporate issuance down 18% to $158B.

And Sustainability-Linked bond (SLB) issuance was just beginning to accelerate in 1Q21, making for an easier comparison for 1H22. Growth in SLBs in 2022 has also included sovereign issuance and some “relaxation” of the Key Performance Indicator (KPIs or targets) requirements.

Note, we are unsure the degree to which currency exchange rates affect reporting (e.g. we are unsure how much issuance is done in local currencies). To illustrate, Europe has dominated ESG bond issuance (was 46% of issuance in 1H22). The US Dollar (USD) vs. the Euro is 9% stronger thus far in 2022 than in 2021 and so currency translation into the stronger USD in 2022 lowers USD-stated values (i.e. further support the idea that there has been resiliency).

Data available upon request.