Credit Suisse is co-partnering to lay the groundwork for a "transition bond market" as demand spikes for a wider range of green issuances.

Climate transition and how to get there has been the talk of the town, permeating corridors at both the UN General Assembly and the Climate Summit in New York this week. Many see green bonds as a way to speed up at least part of this transition. In pursuit of that, Credit Suisse and the Climate Bonds Initiative (CBI) has announced a partnership to develop a sustainable transition bond market.

Appetite for green bonds has been growing at a clip for several years as investors and issuers have stepped up their sustainable investment approaches. Currently, the market stands at around $600 billion globally. But it has remained a relatively curtailed universe populated by “investment grade issuers, primarily from government-related entities, utilities, and financials,” the Swiss bank noted. It said that it is seeing pent up demand for new products from new types of investors, something the partnership wants to address.

Marisa Drew, who leads on impact advisory and finance at Credit Suisse, said that the CBI has been a standard bearer for the green bond market since its inception and is an ideal partner to grow green finance. The London-based not-for-profit that provides a green bond certification programme has made channelling the $100 trillion bond market into greener pastures its main focus.

Drew said the partners' aim "is to support a transparent, defensible and scrupulous transition market at scale that will be adopted by the financial community with participation from a wide range of legitimate issuers."

It intends to build on the European Union’s work on a sustainable taxonomy, and other standards coming forward that are bringing more consistency and standardised disclosures to sustainable finance. It also wants to bolster the purpose of the UN Sustainable Development Goals, which many investors are already using as a loose guide to more thematic asset allocation.

The first task will be laying groundwork for what a sustainable transition bond market looks like. The venture's success will rest on how well it can accommodate prospective issuers and investors who want to future-proof their business models.

“Every major industry sector and corporation faces the challenge of transition, addressing climate change, zero carbon targets and sustainability," CBI chief executive, Sean Kidney, said. "This partnership is about opening further pathways for corporations and investors to accelerate the structural shift in business models and capital markets towards meeting these critical global goals.”

Across all sectors, businesses are looking for ways to build sustainability into their core operations, both in their value and supply chains. This includes packaging, waste and biodiversity loss, the partners said.

It is a message that has been hammered home controversially, some critics would say, under Mark Carney's watch at the Bank of England. The governor has been vocal in the role warning companies and investors that they need to reshape their entire way of doing business to take climate risk into account in "eat lunch or be lunch" terms.

This mainstreaming of climate financial disclosure has been seen in actions by the Task Force on Climate-related Financial Disclosures set up by the Financial Stability Board in 2015 and that Carney chairs.

Sarah Breeden, head of UK banks supervision at the BoE, said that to reach a carbon neutral economy, “all companies in all sectors will need to transition, requiring financing well beyond existing green products.”

A sustainable transition bond market will be “key” to ensuring that capital can flow towards this wider range of firms preparing to transition, she said.