Global sustainable bond issuance is expected to reach $1 trillion in 2025, maintaining 2024 levels as climate mitigation and adaptation financing drive demand. However, heightened greenwashing scrutiny, regulatory changes, and political resistance could slow market growth.
Shifting ESG Priorities
- Climate adaptation and nature-based investments are gaining traction alongside mitigation efforts.
- Social bond issuance may remain limited due to a lack of large-scale projects.
- Transition-labeled and sustainability-linked bonds (SLBs) will stay niche, navigating evolving investor sentiment.
Growing ESG Risks
The gap between decarbonization goals and real-world action is widening. Businesses and governments face rising challenges, including:
- Supply chain disruptions impacting sustainability efforts.
- Climate volatility and policy shifts creating economic uncertainty.
- Political opposition in some countries complicating ESG market expansion.
Regulation & Greenwashing Scrutiny
With stricter market standards and verification requirements, issuers will face greater pressure for transparency. Investors are demanding stronger accountability, pushing ESG finance toward higher integrity.
Bottom line: ESG finance is evolving, but regulatory scrutiny, policy shifts, and market complexities will redefine its trajectory in 2025.
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