GREEN FINANCE: Global green bond issuance reaches record high of $351bn in first few months of 2023

Global green bond issuances raised a record capital from investors in the first half of 2023, whilst Sustainability-link bond issuances have slowed down 

There were a total of 1758 sustainable bond products issued in the first six months of 2023 raising $568bn, according to analysis by global law firm Linklaters, with most sustainable bond categories other than SLBs seeing an increase against H1 2022. 

Green bonds continued to dominate the sustainable bond market with 935 green bonds issued, raising $351bn and making H1 2023 a record six months in terms of the value of capital raised from investors.  

This also puts 2023 on course to be a record year for green bond issuances. 

Green bond issuance by banks accounted for the majority of capital raised in H1 at $123bn and was much higher than previous years, as the global banking sector continues to finance an increasing number of green projects. 

While Asia Pacific saw significant growth, Europe continues to be the largest green bond market with 448 green bonds issued so far this year, raising a total of $190bn. 

The market growth comes against the backdrop of a continually evolving regulatory landscape in Europe, with the EU Green Bond Standard expected to be adopted in the autumn.  

As the green finance momentum continues, issuers will need expert legal advice to help them navigate the fast-moving regulatory shifts and ensure their products comply with applicable standards. 

In contrast, SLBs, which have seen rapid year-on-year growth since the first half of 2021, seeing reduced issuance in H1 2023. SLBs go beyond the traditional use of proceeds model and link ESG performance to financial performance through KPIs and associated targets. The downtrend came during keen investor focus on the selection of KPIs and the ambitiousness of targets, as well as the robustness of the terms of the product. A key focus remains on ensuring SLBs are structured carefully to avoid greenwashing concerns. 

Ben Dulieu, Capital Markets Partner, commented: 

“As the urgency of the climate transition intensifies, so too will scrutiny of sustainable finance products. Greenwashing is at the top of the agenda for regulators across the world and recent developments such as the political agreement on the EU’s Green Bond Standard will aim to bring increased transparency and confidence to the market.