Global sustainable finance market: changing for the better
The global sustainable finance market continues to see decent levels of issuance and new areas of growth in 2024. Green bonds are experiencing strong momentum while KPI-linked debt has embraced innovation and quality improvement. Europe still dominates the market. Meanwhile, elections around the world add to the risk of policy disruption
Global sustainable finance issuance volumes have retreated from the peak in 2021, which at the time was driven by a flurry of company sustainability targets, a Covid 19-induced surge in social debt, and an Environmental, Social and Governance (ESG) market where enthusiasm trumped scrutiny. Issuance then declined in 2022 and 2023. Policy disruption has curbed the confidence of some issuers, and increased ESG controversy and scrutiny over green credibility have led to stricter issuance standards and a preference for quality over quantity.
Looking forward, we argue that we could see a decent issuance level in 2024 as companies need to demonstrate on-schedule progress towards sustainability targets as well as an increase in green capex, and sustainable finance remains a key tool to help achieve that. Meanwhile, the emergence of innovative products can help to keep the sustainable finance market attractive.
Source: think.ing.com
