Global green bond issuance exceeds US$1 trillion for the first time, and sustainable finance enters a "high-speed expansion zone"

Contributor

Evelyn Carter , Lead Correspondent, Sustainable Finance

1. The trillion-dollar milestone: What kind of market signal does it send?

According to statistics from the International Capital Market Association, the cumulative issuance of green bonds globally between 2013 and 2024 was only about US$680 billion, while the new issuance in the first six months of 2025 alone accounted for 82% of the total issuance in the previous decade. Among them, the three major economies of the European Union, the United States, and China contributed a total of 72% of the incremental issuance; the Latin American and Southeast Asian markets followed closely with a year-on-year growth rate of more than 30%.

“The trillion-dollar mark is not just a numerical symbol, but also shows that green bonds have become the core of institutional investors’ allocation.” - Lina Powell, Director of Sustainable Finance at ICMA

2. The dual resonance of policy drive and market pull

1. Favorable policies : The EU's "Green New Deal" incorporates green bonds into its 2030 carbon neutrality framework, and the US "Clean Energy Acceleration Act" provides a total of US$370 billion in tax credits for renewable energy projects; China is accelerating the formulation of version 2.0 of the "Green Bond Principles" to strengthen disclosure and third-party certification.

2. Investment demand : Institutions such as BlackRock, Bain Capital, and the Norwegian Sovereign Fund collectively raised the ESG fixed income weight from an average of 7% to 11% in Q2 2025. Moody's predicts that if interest rates remain high but downward expectations continue, the scale of green bonds in 2025 may reach US$1.4 trillion.

3. Structural changes in the industry: both the financing side and the asset side are upgraded

• Financing : European and American investment-grade corporate and sovereign issuances still dominate, but high-yield green bonds grew 65% year-on-year, indicating that capital is flowing into clean transportation, waste recycling, and new energy microgrids that are more "difficult to finance."

• Asset side : The product structure of green bond funds has shifted to "Green & Transition". According to Refinitiv data, the proportion of transition bonds has increased from 12% at the end of 2024 to 19%, meeting the transition needs of high-carbon industries.

4. Questions and risks: regulatory arbitrage, greenwashing and liquidity

Despite the hot issuance, three major risks still need to be paid attention to:

1. Greenwashing : Some companies package conventional bonds as "green" and fill in vague usage information in the prospectus.

2. Inconsistent supervision : The United States and Europe have serious differences on whether nuclear energy and natural gas can be included in the definition of "green", resulting in inconsistent ratings of cross-border funds.

3. Market liquidity : Secondary trading of emerging market green bonds remains thin; when the price gap with traditional bonds is large, institutional redemptions may amplify volatility.

5. Technology empowerment: blockchain and carbon data API

Several custodian banks have attempted to use blockchain's "multi-signature + traceability" to track the flow of funds; British fintech company ClimeTech has launched a "carbon data API" that uses IoT devices to collect project emission reductions in real time and synchronizes them to the chain.

“The technical foundation of transparency determines whether green bonds can truly change the flow of capital.” - Daniel Hughes, CEO of ClimeTech

VI. Outlook: Diversification, Institutionalization, and Globalization

• Diversification : Derivatives such as green convertible bonds, mortgaged green bonds, and short-term green notes will emerge rapidly.

• Institutionalization : Before 2026, ISO and IOSCO are expected to launch a unified green classification standard; the US SEC is also promoting the draft "ESG Disclosure Guidelines".

• Globalization : Africa and South America have great potential in climate adaptation and forest carbon sink projects, and may become the "incremental depression" of funds in the next stage.

Conclusion
Green bonds have exceeded one trillion yuan, marking a milestone in the sustainable transformation of the global capital market. Evelyn Carter pointed out: "Driven by policy incentives and technological progress, green bonds are rapidly leaping from an emerging concept to the main channel of asset allocation. However, to maintain long-term healthy growth, transparency, unified standards and real carbon emission reduction effects are the decisive factors."

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