New research has found that firms in “sustainable” spheres such as renewable energy managed to raise record-breaking levels of equity through 2021.
The data, put together by experts from financial analysis platform, Refinitiv Eikon, showed that the surge was down to huge growth in demand for investments that tackle environmental, social, and governance (ESG) issues.
According to the information, sustainable corporates borrowed $47.6 billion through equity issuance through 2021, far exceeding the record set in 2020 - $33.7 billion.
Renewable energy tools and services, biodiesel, solar electric utilities, wind-power systems, electric vehicles, and solar energy were among the sectors noted as “sustainable”, Refinitiv said.
Looking at the key global regions, companies in the US put together the largest part of the overall equity total, with $26.6 billion raised. In Europe, the sum came to $12.3 billion, while in the Asia-Pacific region, the figure stood at $7.9 billion.
Speaking to Reuters, Arthur Krebbers, head of sustainable finance, corporates at NatWest Markets, said:
“The rise we saw in ESG labelled equity in 2021 is expected to continue – as it is for other higher risk ESG labelled asset classes, such as high yield and subordinated debt.
“Green equity can be an effective tool for companies to make the necessary early stage investments in new and still unproven environmental technologies,” Krebbers added.
It also signals an ongoing, effectively perpetual, commitment to green investments – i.e. that a company’s business strategy is intertwined with having a positive environmental impact,” Krebbers continued.