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Big swings in 2023, but global sustainable finance remains in rude health

Sustainable finance has seen some remarkable trends so far in 2023 – exceptional growth in green issuance, contrasting with big falls in US and Asian issuance, for example. We think there are many reasons to be more upbeat about the months ahead, including a bounce in US issuance.

Global sustainable finance in rude health in 2023

In this article:

  • Global issuance volume of 2023 could exceed that of 2022
  • EMEA remains the most resilient while Americas face headwinds
  • Green bonds have been the driving force for growth
  • Stronger government issuance growth, but corporate ESG bond shows resilience
  • Policy is still pointing at greater disclosure transparency and standardisation despite turbulence
  • What does this mean for investors and issuers?

This year has been one of change for the global sustainable finance market. After several years of rapid growth fuelled by the first waves of net-zero announcements and Covid-related sustainability financing, the market was disrupted in 2022 on the back of geopolitical tensions, uncertain economic outlooks, and higher financing costs. From that re-basing, 2023 has been a testing year for sustainable finance, partly due to caution from regional anti-Environmental, Social, and Governance (ESG) movements and greater scrutiny.

Looking ahead, we expect investors to continue to demand higher-quality issuance, with policies mandating sustainability data disclosure serving as an important tool to benchmark against. Despite these headwinds, issuance volumes through 2023 have been decent, and there have in fact been some quite dramatic changes within the breakdown.

Global issuance volume of 2023 could exceed that of 2022

Global sustainable finance product issuance totalled $717bn in the first half of 2023. Although this volume registered a 7% year-on-year decrease, it is higher than the second half of 2022 and the whole year’s volume for 2023 still has the potential to exceed 2022’s volume. The cautious optimism is caused by multiple factors. A higher ESG data disclosure outlook can create a more easily workable environment for issuance, clean energy policies such as the US Inflation Reduction Act can continue to spur sustainability efforts, increasingly extreme weather events could motivate issuers to finance long-term climate mitigation, and sustained government efforts can increase the issuance of sovereign ESG debt.

Catch up on all global sustainable finance developments we expect for 2023 on Think.