Outlook for the year ahead

2024 will be a pivotal year for our collective response to climate change, including:

Moody’s released its sustainable bond forecast for 2024, expecting issuance to remain flat with growth in green and sustainability bonds expected to be offset by weaknesses in social and sustainability-linked bonds.
Accelerating renewables development – 130 national governments agreed to collectively triple the world’s installed renewable energy capacity by 2030 at COP28. The IEA predicts more renewable capacity will be added in the next five years than has been installed in the last 100 years.
Increasing sustainability disclosures and transition planning – Deloitte expects corporates will prioritise sustainability reporting requirements such as standards based on the ISSB and transition planning guidance. The Australian Government’s focus on implementing mandatory climate disclosures will hasten this process, with proposals for some of Australia’s largest emitters and financial institutions to begin disclosing ISSB-aligned standards as early as 1 July 2024.
Increasing capital flows to climate change adaptation, nature-based solutions and promoting biodiversity.
Interim targets check in – 2024 will be the last year before many institutions report against interim 2025 greenhouse gas emissions reduction targets. Tracking target performance helps to inform the market of the likelihood of meeting longer term 2030 and 2050 emissions reduction and net zero targets.

Sustainable debt market update

Australian and New Zealand Sustainable Finance volumes totalled US$34.44bn in 2023, down 21% from 2022, although in line with the global trend. The drop was partially offset by record issuance of Green Bonds, which contributed US$12.07bn, or 35%, of the total issuance, surpassing its previous high of US$10.78bn. The slide in issuances may have been caused by borrowers reviewing the robustness of their ESG commitments and processes amid a heightened focus on greenwashing. Moody’s outlook for 2024, however, expects Asia-Pacific issuance to continue “grow[ing] steadily” as focus grows on transition finance in the region.

Key transactions for the Australia – New Zealand market

Housing Australia (Sustainability Bond), Humm Group (Climate Bond), Manawa Energy (Green Bonds Reclassification), Mansons (Green Loan), Downer (Sustainability-Linked Loan).

Hannah Paterson

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