Beyond the labelled bond market - redirecting capital flows towards climate-aligned activities

THE ESG-themed bond market continues to rapidly evolve, develop and grow across the world, with the pace of change picking up in Asia in recent years. Assessing bonds and issuers along climate-aligned business activities and assets can serve to further this growth, with banks such as DBS focused on working with issuers and investors to accelerate the development of the market and bring about real change in promoting climate and societal well-being.

As testament to the fast-developing landscape, more than US$1.7 trillion of green, social and sustainability bonds have been issued globally as at end-2020, according to the Climate Bonds Initiative (CBI). Green bonds alone surpassed US$1 trillion in issuance in November 2020. Many corporate issuers are also actively seeking the help of sustainability specialists to evaluate the opportunity of raising financing with strong environmental, social and governance (ESG) credentials.

In the traditional bond market some investment opportunities already exist that can redirect capital flows towards ''climate-aligned'' activities, even though they do not carry an explicit label. Many companies are operating in attractive sectors, which investors would find readily investable.