S&P Global Ratings expects global sustainable bond issuance to remain solid in 2025 (see chart 1). We estimate total issuance will reach $1 trillion. There are several key drivers we anticipate will affect issuance throughout 2025. The data below provides a more in-depth look into our sustainable bond outlook forecast. For more of our analysis, see "Global Sustainable Bond Issuance To Hold Steady At $1 Trillion In 2025", published Feb. 5, 2025.

Key Drivers For 2025

Diversification

• Supranational and lower-income country issuers will make efforts to address the climate finance gap through tools such as blended finance.
• The emergence of a wider range of sustainable bonds, including nature financing, green sukuk, blue bonds, and a pickup in sustainability-linked bonds may support issuance.

Macroeconomic and political trends

• Rising upcoming maturities will test the strength of the sustainable bond market.
• Financial sector issuers' commitment to facilitating decarbonization objectives is uncertain.

Transparency and disclosure

• Issuers and standard-setters may provide more clarity on the different types and applications of transition finance.
• We expect more robust and transparent allocation and impact reporting may help demonstrate the effectiveness of past issuance.

Chart 1

We expect the share of sustainable bonds will remain stable above 10% in 2025. 

• Global conventional bond issuance rose 21% in 2024, while sustainable bond issuance remained broadly flat.
• We anticipate sustainable bond issuance growth will match traditional bond growth in 2025, growing by about 3%.
• Falling interest rates may boost both sustainable and conventional bond issuance, while rising investment targets for climate change and sustainable development could enhance sustainable bond issuance.
• We see potential hurdles to issuances in 2025, including uncertainty about political support and the financial sector's commitment to helping advance decarbonization objectives.

Chart 2

Europe and Asia-Pacific maintain their dominance 

• In Europe, decarbonization efforts by the largest sovereigns and utilities are likely to continue underpinning overall issuance volumes.
• The EU Taxonomy's efforts to delineate "green-enabling" activities from transitional activities are noteworthy. These definitions can serve as valuable guidance for issuers looking to finance transition projects.
• In Asia-Pacific, governments and their related entities may support issuance in China, South Korea, and Japan. Favorable interest rates, alongside national economic and sustainability agendas, may fuel issuance growth in the region.
• Japan has shown itself to be the global leader for transition bonds and we expect other issuers in the region may follow suit as they look to decarbonize their economies.

Chart 3

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Sovereigns and public finance issuers continue to increase their share. 

• Issuance by public finance entities, nonfinancial corporates, and sovereigns remained stable in 2024 and we don't expect significant increases in 2025.
• We anticipate limited growth in the financial services sector's sustainable bond issuance in 2025 after a 6% drop in 2024. However, regulatory developments and new sustainability frameworks may encourage some financial institutions to issue more sustainable bonds.
• We expect sovereign sustainable issuance to remain steady or decrease slightly, despite favorable conditions.

Chart 5

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Supranational issuance grows, while high-income countries continue to represent 75% of total sustainable issuance. 

• Supranational issuance grew nearly 40%, with support from record totals of green and sustainability bonds.
• Issuance from lower-middle income (LMI) countries soared in 2024, nearly doubling to $17 billion, but still constituting only 1.7% of total volumes.
• Issuance from emerging market nations fell 2% in 2024, and issuers from low-income countries account for less than $1 billion in total value.
• Financial institutions issue a higher proportion of bonds in LMI and low-income (LI) countries than in upper-middle income (UMI) and high-income (HI) countries, perhaps due to their important role of financing the entire economy.

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Green Bonds

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Social Bonds

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Sustainability Bonds

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SLBs

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Transition Bonds

Japanese issuers accounted for 98% of total value 

• Transition bond issuance increased more than 500%, reaching a record $20 billion in 2024, on the back of the Government of Japan's multiple issuances.
• Only a single transition bond was issued outside Japan, and the Japanese government accounted for more than 85% of all global transition bond issuance by value.
• Strong issuance totals may continue in 2025 as the private sector begins participating in the market, aligning with published transition pathways for hard-to-abate industries

Chart 24

Nine countries saw debut issuances in 2024 

• Most debut issuances came from financial institutions, with a diversity of green, social, and sustainability bonds.
• The Government of the Republic of Honduras issued the country's first sustainable bond, in line with the Latin American trend of sovereigns setting the tone for the market.
• Debut issuances from entities in LI countries accounted for more than 95% of total issuance from those countries.

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Sustainable Bonds Defined

Sustainable bonds fall into two main categories:

Sustainability-linked bonds (SLBs):   Any type of instrument for which the financial or structural characteristics can vary depending on whether the issuer achieves predefined sustainability objectives.

Use-of-proceeds bonds:   Any type of instrument where the net proceeds (or an equivalent amount to the net proceeds) are exclusively used to finance or refinance, in part or in full, new and/or existing eligible green and/or social projects.

There are three subcategories of use of proceeds instruments, green, social, and sustainability.

• Green bonds: Instruments that raise funds for projects with environmental benefits including renewable energy, green buildings, and sustainable agriculture. This includes blue bonds, which are instruments that raise funds to support the sustainable use of maritime resources and promote related sustainable economic activities.
• Social bonds: Instruments that raise funds for projects that address or mitigate a specific social issue and/or seek to achieve positive social outcomes, such as improving food security and access to education, health care, and financing, especially but not exclusively for target populations.
• Sustainability bonds: Instruments that raise funds for projects with both environmental and social benefits.

Transition bonds can be either sustainability-linked or use-of-proceeds bonds issued specifically to support climate transition goals, geared toward issuers in hard-to-abate sectors. Projects those bonds support may not always be "green" but still aim at supporting climate transition.