DATE PUBLISHED: January 15, 2025
January 2025 | Sustainable Finance Market Highlights
MARKET AND REGULATORY HIGHLIGHTS
- 2024 ended with a registered total of $1,457.53 billion in green, social and sustainability (GSS+) bond and loan issuances according to Environmental Finance (EF data), coming in short of 2023’s recorded $1,767 billion.
- Rising interest rates and economic uncertainty in some regions posed challenges, though the sustainable finance market generally remained resilient with many issuers adapting to changing conditions.
- Transition bonds in particular saw significant growth as companies in high-carbon sectors, particularly in industries like energy, manufacturing, and transportation, sought to finance their journey toward more sustainable operations. ISS-Corporate produced a dedicated webinar on these developments which is available to watch here.
- The end of the year finally saw the entry into force of the European Union’s Green Bond Standard (EU GBS), marking a significant milestone in the EU’s efforts to standardize and enhance the credibility of the green bond market.
- While the EU GBS will certainly elevate the credibility and scale of the green bond market by providing a robust framework for both issuers and investors, there have been calls for the standard to become easier, especially regarding compliance with the ‘do no significant harm’ (DNSH) and ‘minimum safeguard’ (MS) requirements for full EU Taxonomy alignment (ING via Environmental Finance).
- While it is difficult to predict the rate of adherence to the standard, it will certainly be a year of further regulatory development, considering the Sustainable Finance Disclosure Regulation is also undergoing review (Responsible Investor).
- On a macroeconomic level, the prospect of lower rates in Europe and stronger growth in the U.S. will likely be major positives for euro and sterling bond markets over the next two years (AllianceBernstein).
