The global sustainable finance market is showing signs of improvement in 2024, with stable issuance levels and emerging areas of growth, according to research from ING, a global financial institution of Dutch origin.
According to the research, green bonds are seeing strong momentum, and there are notable innovations and quality improvements in KPI-linked debt. Europe continues to lead in sustainable finance, but the upcoming elections worldwide could disrupt policies.
According to the findings, government agencies, municipalities, sovereigns, and supranational entities have driven the growth of global sustainable finance, increasing their market share from 29% in late 2022 to 44% in early 2024. According to the researchers, this growth is due to heightened government awareness and action on managing sustainability risks and improving climate resilience.
Only 23% of EU green bonds to meet December ‘gold standard’
Sustainable debt issuance reached $800 billion in the first half of 2024, nearly matching the levels from 2023. Emea, especially Europe, remains the dominant region for sustainable finance issuance, shared the researchers.
Green bonds, in particular, saw a substantial increase in issuance volume during the first half of 2024 compared to the latter half of 2023. This surge was driven by several large issuances, ranging from $6.6 billion to $9.7 billion, including major contributions from the governments of Italy, France and the EU. While the number of issuances was similar to the second half of 2023, the overall volume increased significantly due to these sizable transactions.
Transition bonds also experienced remarkable growth, with an almost eightfold increase in issuance during the same period. However, the research notes that further constructive changes are needed in the sustainability-linked bonds and loans market to maintain the quality and effectiveness of these financial tools.
Overall, while the sustainable finance market is no longer at its peak, it remains strong, driven by corporate commitments to sustainability and net-zero emissions. As these commitments require sustainable debt as a financing tool, the market is expected to maintain a decent level of issuance going forward.
Access the full report here.
