July 2024 | Sustainable Finance Market Highlights

The first half of 2024 registered a total volume of $768bn in green, social, and sustainability (GSS+) bond and loan issuances, with bonds making up almost two thirds of that figure, according to Environmental Finance (EF data).

Within the bond market, green deals still account for the vast majority of issuance (more than 70%), followed by social and sustainability issuances, as highlighted by the Climate Bond Initiative (CBI).

The sustainability-linked bond market, on the other hand, is not showing signs of recovery, as 2024 issuance to date is just $18bn, compared to $34bn raised during the same period in 2023 (Environmental Finance).

To help with the development of sustainability-linked instruments, the International Capital Market Association (ICMA) working group on sustainability-linked bonds has announced its intention to publish a paper on “best practices” in the market to give clearer guidance on how to improve the instrument (ICMA).

This follows the release by ICMA and the Loan Market Association of guidelines for the issuance of bonds dedicated to financing sustainability-linked loans (SLLfB), designed to help the development of new sustainable finance products. This approach was launched by Nordea in 2022, with an External Review from ISS-Corporate, while Bank of China also followed in its steps (External Review here). Credit Agricole has just issued its own framework, implementing the Approach #1 described in the guidelines (External Review here).

On the topic of new instruments, blue bonds seem to keep gaining traction, at least in the narrative, with a new report published by Systemic Earth and HSBC containing an in-depth analysis of the blue bonds market and highlighting critical conditions enabling its development (Systemic).