Man Group: Analysis of Corporate Green Bonds
Man Group PLC has analyzed the differences between corporate green bonds and conventional bonds. The issuance of green bonds has increased significantly in recent years.
Investment firm Man Group PLC has published an analysis examining the distinctions between corporate green bonds and their conventional counterparts. The study specifically looks at bonds adhering to the principles of the International Capital Market Association (ICMA) and the European Union Green Bond Standard (EU GBS).
The company notes that the issuance of green bonds has seen substantial growth over the past five years. In the second half of 2023, issuance reached $2.5 trillion, with 51% of these being investment grade corporate bonds. Despite this rapid expansion, green bonds still represent less than 5% of the total investment grade corporate debt market.
Europe is a dominant region in the green bond market, accounting for 60% of issuance compared to 30% in the conventional bond index. The United States, conversely, leads the market for conventional bonds.
Man Group's analysis suggests that investors may accept a slightly lower yield, a phenomenon known as the 'greenium,' for green bonds in return for aligning their investments with environmental goals. However, issuing green bonds can also involve additional costs for structuring and ongoing reporting.