Zooming in on the persistence: what factors underlie the durability of green bonds?
In the first quarter of 2025, the green, social, and sustainable (GSS) debt market demonstrated resilience, with the euro accounting for a greater share of Global Sustainable Securities Plus (GSS+) deals at 39%. This resilience can be attributed to several key factors, as highlighted by the Climate Bonds Initiative (CBI) and MainStreet Partners.
Firstly, the GSS debt market maintains its resilience due to strong adherence to science-based methodologies and climate goals. By screening bonds against robust, practical standards ensuring environmental impact and minimum safeguards, green bonds retain credibility and market integrity. This methodological rigor supports steady growth in aligned issuance, which reached USD 670.9 billion in 2024 globally, strengthening investor confidence.
Secondly, the market's structural foundations remain robust despite macroeconomic challenges. Although global GSS bond issuance declined by 13% in the first half of 2025 due to inflationary pressures, trade uncertainty, and geopolitical tensions, certain regions, such as the UK, have seen green bond issuance rise by 10% year-on-year. The stable supply of social and sustainability bonds also demonstrates resilience amid tougher macroeconomic conditions.
A third factor contributing to the resilience of the GSS debt market is the increased role of financial institutions. In the UK, for example, banks and insurers accounted for 64% of green bond issuance, nearly doubling the global average. This trend suggests a similar possible effect in the US, where large financial institutions play a vital role in sustaining demand for GSS debt.
The overall world GSS debt market size is substantial and expanding. With more than USD 6 trillion outstanding, the market has grown rapidly (+USD 1 trillion added in the past year alone), illustrating accelerating momentum and deepening integration of climate and sustainability considerations into capital markets.
Regulatory and taxonomy alignment also play a significant role in the market's resilience. MainStreet Partners found stronger alignment of GSS issuers with frameworks like the EU Taxonomy, which promotes credibility, transparency, and investor trust, creating a more stable market environment.
Over $262 billion worth of GSS+ bonds were issued in Q1 2025 across 107 countries. At the end of Q1 2025, aligned cumulative GSS+ (GSS and sustainability-linked bonds combined) volume stood at $5.9 trillion. The US is the world's largest source of GSS+ debt, with $827bn of GSS+ volume in Q1 2025 coming from American issuers.
Sean Kidney, CEO and co-founder of CBI, states that the US market's resilience is indicative of the power of green bond markets. Kidney's message to the market is "The bond market intimidates, so let's make it work for the planet". NZI Spark! Fixed Income is mentioned as a powerful lever in the context of the green bond market.
The Agricultural Bank of China follows the European Investment Bank as the second top non-sovereign green bond issuer. Government-backed issuers lead the GSS market with $1.6 trillion of issuance, while financial institutions and corporates follow closely behind.
Mainstreet Partners' analysis shows a rise in average taxonomy alignment and eligibility among over 1,100 companies in 2024. The bond market's pressure, sourced from issuers and investors behind the $6tn cumulative GSS+ volume, bodes well for the green bond market. Regulatory tailwinds, particularly the European taxonomy, have helped European issuers.
CBI's figures suggest that the US market's resilience played a role in the US government rolling back tariffs earlier this year. The green, social, and sustainable debt market has reached a milestone of $6 trillion, demonstrating its growing influence on global finance and its potential to drive sustainable development.
- The resilience of the green, social, and sustainable (GSS) debt market is attributed to a strong adherence to science-based methodologies and climate goals, as demonstrated by the increased use of environmental science and the screening of bonds against robust, practical standards.
- In terms of business and finance, the market's resilience can be seen in the increased role of financial institutions, such as banks and insurers, who have started playing a vital role in sustaining demand for GSS debt, as evidenced by their growing involvement in green bond issuance.
