ESG Bond Market Could Reach $1.8 Trillion – ETF Trends

ESG Bond Market Could Reach $1.8 Trillion ETF TrendsESG Bond Market Could Reach $1.8 Trillion ETF TrendsESG Bond Market Could Reach $1.8 Trillion ETF Trends

ESG bonds, which are based on environmental, social and governance (ESG), are becoming a global phenomenon. Estimates show that this space could reach $1.8 billion by the end of 2012. ESG bonds will continue to grow in emerging markets to help fund green projects. Advisor Perspectives notes that emerging governments sold bonds geared towards environmental, social, and governance issues at twice the rate of mature economies in 2021 compared to the previous year. The data shows that ESG bonds sales increased by 97% in mature markets, while it rose to 227% in emerging countries. The article states that total ESG issuance in frontier and developing markets was $230 billion in 2021. This is an increase of $75 billion from a year ago, according to the IIF. The Washington-based organization recently wrote that socially responsible capital-raising worldwide is expected to reach $1.8 trillion by 2022. The Vanguard ESG U.S. Corporation Bond ETF (VCEB) allows bond investors to get in on the action as the trend towards green bonds continues to rise. Fixed income investors can enjoy the benefits of higher yields as well as ESG principles by investing in VCEB. According to its fund description, VCEB tracks the performance of Bloomberg MSCI US Corporate SRI Select Index. The index excludes bonds with a maturity of less than one year and less than $750m outstanding. It is screened by an index provider independent of Vanguard for certain ESG criteria. VCEB highlights:Provides screened debt issues.
Excluded are bonds of companies that, according to the index sponsor, are involved in or derive threshold amounts from certain activities or business segments. These activities include: alcohol, gambling and tobacco, nuclear weapons, controversial weapon, conventional weapons, conventional weapons, civilian firearms or nuclear power.
Excludes bonds of companies which, according to the index sponsor, fail to meet certain standards as defined by the ESG controversies assessment framework. Also excluded are firms that do not have at least one woman on the boards.
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