The market for green bonds issued in emerging markets and developing economies rebounded strongly in 2021, propelled by demand from both domestic and international investors and by expanded issuance by new and existing issuers. The volume of issuance more than doubled to a record US$95 billion from US$41 billion in 2020. In all, 35 emerging markets and developing economies (EMDEs) issued green bonds in 2021, including seven new entrants. Alongside this strong interest in green bonds, which are earmarked for environmental projects, 2021 also saw momentum for other types of bonds linked to social and sustainability investments in these countries. The interest in such financial instruments highlights their growing role as a significant source of funding for many emerging markets.
EMDEs need considerable investment to meet development goals and transition to low-carbon economies. Maintaining the growth momentum achieved in 2021 could be challenging, in the face of a changing economic and geopolitical context, with existing inflation pressures and supply chain disruptions exacerbated by war in Ukraine. Nonetheless, the report sees the potential for issuance in EMDE green bonds to rise to US$150 billion by 2023, with Chinese issuers contributing the largest share.