ESG bond market stuck
The ESG bond market is in a holding pattern—issuance and innovation have stalled because standards, data and impact metrics remain fragmented. That stasis is creating a consulting opportunity for firms that can help issuers standardise frameworks, harmonise data and prepare for eventual regulatory clarity. (omfif.org)
OMFIF’s survey of sovereign, sub‑sovereign, supranational and agency issuers reports ESG-labelled issuance at $1.5tn in 2025, down from a $1.9tn peak in 2021. (omfif.org) ICE’s full‑year 2025 sustainable bonds report records approximately $1.1tn of labelled sustainable bond issuance globally, and Climate Bonds reported a cumulative aligned GSS+ volume near $5.9tn by Q1 2025—illustrating definitional divergence between trackers. (ice.com) Survey respondents report a waning greenium—only half of issuers believe a greenium exists, with estimates clustering below 3 basis points and some under 1bp—and the Bundesbank says 2025 was the weakest year for ESG bonds since 2019 with green bonds making up nearly 70% of ESG issuance. (omfif.org) Issuers continue to favour use‑of‑proceeds bonds over sustainability‑linked bonds, while ICE flags SLBs as entering a fourth consecutive year of declining issuance and OMFIF highlights SLB payoff profiles as non‑standard and difficult to model for secondary‑market liquidity. (ice.com) Regulatory pluralism persists: the EU’s European Green Bond Regulation (EuGB) became applicable on 21 December 2024, IFRS S2 for climate disclosures is effective for annual periods beginning 1 January 2024, and as of 31 March 2025 fifteen jurisdictions had adopted or aligned with the ISSB baseline. (eur-lex.europa.eu) Market‑facing demand is quantifiable: the sustainable‑consulting sector was estimated at about $18.8bn in 2024 with a projected 13.5% CAGR to 2033, and academic and industry research points to semantic models, data automation and interoperability guidance as specific technical solutions buyers are seeking. (datastringconsulting.com) Moody’s forecasts transition‑labelled bond issuance to expand rapidly in 2026, suggesting an upcoming shift in issuance mix that will create additional advisory demand for transition‑eligibility frameworks and independent verification services. (esgtoday.com)
