The Rise of Green Bonds

Global Context and European Insights

Abstract

This paper analyzes the global and European green bond markets from different perspectives. The paper uses data on green bond issues on the global and European green bond market, in the period from 2013 to 2023. Research results show that the issuance of green and other sustainability-related revenue use bonds has increased in recent years. Europe remains the largest issuance region, accounting for more than half of global issuance. Green bond issuance globally and in Europe has experienced a tumultuous couple of years after reaching record highs of USD 575 billion and USD 326 billion in 2021, respectively. In 2023, Europe's green bond issuance recovered 11% year on year to USD 341 billion. It slightly outperformed the global markets, which recorded 10% growth to reach USD 581 billion. In line with 2022, the corporate sector fueled 2023 green volume, contributing 57% of issuance. Corporate issuers in Europe are mostly dominated by the energy, utilities, automotive, transport, and building sectors, all of which have hystorically been dependent on fossil fuels. Analysis of the capital markets in Bosnia and Herzegovina (BiH) indicates that the green bond market exists, and it started in 2023 when the first issue of green bonds was announced by a commercial bank on the local capital market (Banja Luka Stock Exchange). The key barriers to the development of the green bond market are the lack of appropriate institutional arrangements for green bond management, the issue of minimum size, and the high transaction costs associated with issuing green bonds.