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Global issuance of labelled sustainable bonds – including green, social, sustainability, sustainability-linked, and transition bonds – declined sharply in the second quarter of 2024, as fewer new issuers entered the market and issuers contend with regulatory scrutiny, according to a new report released by Moody’s Ratings.
Investor demand for green, social, sustainability, sustainability-linked and transition bonds (GSS+) has surged in H1 2023, with regulatory developments bringing greater transparency and confidence to the market. Linklaters forecasts record year for green bonds, while SLB issuance suffers Q2 slowdown.
Issuance volumes of green, social, sustainability and sustainability-linked (GSSS) bonds rebounded strongly in Q1 2023, resuming double-digit growth trends after falling 18% in 2022, according to a new report from Moody’s Investors Service.
In North America, however, volumes fell to $25 billion in the quarter, the lowest since Q2 2020, with share declining to only 4% of the overall bond market in the region. Market share rose as well to 12% in Asia Pacific, 29% in Middle East and Africa and 32% in Latin America and Caribbean.
The increase in the size of the Australian responsible investment market in 2021 – which now accounts for 43% of the country’s total AUM, up from 40% in 2020 – was supported by strong returns to customers. The report also recorded a 54% rise in the amount of assets being managed in strategies prioritising corporate engagement.
The market has been maturing rapidly since then, with the development of social and sustainable bond issuance and then sustainability-linked bonds (SLB) more recently. Labelled bonds can stand accused of ‘greenwashing’ if a robust sustainable framework is not in place. We expect more countries to follow.
A recent report by Pictet Asset Management and the Institute of International Finance said “a fully-fledged sustainable debt market” would go a long way to filling the SDG financing gap, predicting sustainable bond issuance in emerging markets would grow from US$50 billion per year in 2020 to US$360 billion by 2023.
In recent weeks, Bloomberg has announced the launch of the Bloomberg Global Aggregate Green, Social, Sustainability Bond Indices , while MSCI unveiled a suite of indices under the Climate Action banner. Concerns have been raised that sustainability-branded passive investment vehicles can be too broad-based to eliminate ESG risks. “For
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