Investible climate bond indices will not come about for several more years, despite the universe now exceeding $0.5trn (€369bn), according to a report by the Climate Bond Initiative.

The report, ‘Bonds and climate change: The state of the market in 2014’, found that the majority of existing issuances stemmed from the transport sector, accounting for close to $359bn globally.

Climate and green bonds linked to energy issuances accounted for a further $74bn, while financing deals exceeded $50bn.

The report also found that issuances would double over the course of 2014, exceeding $20bn compared with $11bn in paper in 2013.

Sean Kidney, one of the report’s authors and chief executive of the Initiative, said the paper showed how investors could invest in climate bonds without risk.

“The investment opportunities we find are safe and secure investment-grade bonds,” he said. “This is a Dull Green Market – just how pension funds and insurance funds like it.”

Bridget Boulle, report co-author, highlighted there would be significant growth in the market in the coming years as municipalities, cities and corporates become more interested in the market.

However, she told IPE there were still issues surrounding the discoverability of the climate and green bond market for institutional investors.

“There is still certainly work to do on discoverability and identification of product, and then packaging it in a way that is exciting for investors – especially institutions,” she said.

“Indexes will be a part of that, although, at the moment, they are mostly used for discovering rather than as a benchmark for investing in the index.”

Boulle added that investable indices were “not quite there yet”.

“I’m not sure there is enough large and liquid products around to be a really viable investment, but when we are there it will be even easer for institutions,” she said. “That’s the next step in a few years’ time.”

According to the report, China remains the largest market for carbon bonds, with $140bn of its $164bn in issuances coming from the state-backed railway company.

The UK is distant second, with a market of $58bn, $7bn larger than the US market, and France close behind the US with $49bn.

Standards for property-backed climate bonds were recently put out to consultation.

The standards suggested that any unit used for a climate bond should be in the top 15% of its regional market in cutting carbon emissions.

There has been some activity in the green bond market in recent weeks, with the German development bank (KfW) announcing its first dedicated issuance to fund renewable energy projects.

While initially targeting a €1bn raise, KfW confirmed earlier this week that it had enjoyed a “huge success” and issued €1.5bn in paper with a five-year maturity, paying an annual coupon of 0.375%.

Insurer Zurich has confirmed its interest in the nascent market, doubling its commitment to $2bn, of which it has invested $400m so far.