Sustainability

Sustainable Finance Year in Review and 2025 Outlook

Mar. 27, 2025 - 5 minutes

Aerial view of a mountainous landscape with green forests and a river.

Overview:

A rising tide lifts all boats: bumper bond market leads to record green bond issuance, the second busiest year for sustainable bonds.
Sustainable fixed income funds notch record inflows but did not result in material 'greenium' for issuers.
Sovereign, Supranational, and Agency ("SSA") issuance continues to dominate the sustainable bond market, but corporate issuers in key sustainability-focused sectors (Digital Infrastructure, Utilities, Chemicals) saw notable growth.
Politicization dragged on sustainable debt in certain markets (U.S., Canada); partially offset by growth markets (Australia, Japan, EMEA).
ESG regulations are top of mind for both issuers and investors, namely the U.S Securities and Exchange Commission (SEC) Climate Disclosure Rule, California's Climate Disclosure Laws, and the EU's Corporate Sustainability Reporting Directive.

It was a dynamic year for sustainable finance as a dichotomous landscape emerged globally for climate policy and sustainability strategy.

Europe surged ahead with its leading regulatory agenda. Meanwhile, North America faced a more bifurcated backdrop as the U.S. became a hotbed of environmental, social, and governance (ESG) politicization despite policy support successfully mobilizing trillions of public and private sector climate investments.

Against this backdrop, the global sustainable finance market reached its second busiest year on record with US$1.6 trillion in supply and global sustainable assets under management growing to US$3.2 trillion, indicating the staying power of sustainability in financial markets.

Key takeaways and learnings from 2024 will likely continue to shape the remainder of the year.

Global Sustainable Finance Market in Review

The global sustainable debt market exceeded US$1.6 trillion of supply in 2024, up 8% from 2023. Both sustainable bond and loan volumes grew while market shares held steady as the overall bond and loan markets saw record supply in 2024 – a rising tide lifts all boats.

Global Sustainable Debt Issuance¹

Global Sustainable Loan Market Snapshot^1,2

Global Sustainable Bond Market Snapshot^1,2

Sector Spotlights

Corporate

Global corporate borrowers remained active in 2024, demonstrating resilience to the ESG headwinds.
While North America issuance remained relatively flat from 2023, Europe saw growth with SFDR funds being a key driver of labeled sustainable debt issuance.
Global government incentives including the IRA, Canada Growth Fund and the EU Green Deal Industrial Plan invigorated corporate climate capital plans and contributed to green capex underpinning sustainable bond programs.
AI-driven digital infrastructure demand coupled with ambitious sustainability commitments from data center operators and tech-sector tenants fueled a flurry of issuance in the sustainable finance markets across bonds, loans and securitized products
Greenwashing measures globally, notably Bill C-59 in Canada and the EU fund labeling regulations, will impact both issuers and investors.

SSAs

SSA issuers remained the cornerstone of the market with US$530 billion issued. Supply jumped 11% to record levels in 2024 driven by Supranationals.
Continued growth of MDB funding programs drove larger volumes of sustainable debt issuance. COP29 saw MDBs collectively commit to increasing annual climate financing to US$120 billion by 2030 and US$300 billion by 2035.
Increasingly stringent green financing criteria from the EU are tightening eligible asset pools and impacting certain borrowers' issuance frequency.

Annual SSA Issuance by Product¹:

Financials

2024 Review:

Sustainable debt issuance from Financials fell by 6% in 2024 led largely by a 19% drop in activity from banks.
Banks remain committed to achieving sustainable finance targets and the regulatory requirement to report Green Asset Ratios in the EU will keep climate financing a priority for banks' strategies.
With ambitious climate financing goals, banks are eager to expand sustainable finance programs to new products like SLLBs, repo, and deposits.

Abbreviations:	Definition:
SLL	Sustainability linked-loan
SLB	Sustainability linked-bond
SLLB	Sustainability linked-loan bond
IRA	Inflation Reduction Act
SFDR	Sustainable Finance Disclosure Regulation
MDB	Multilateral Development Bank

Bloomberg, 2024
“Sustainable” and “ESG” bonds are used interchangeable to refer to primary issuance of green, social, sustainability, and sustainability-linked bonds

Subscribing clients can obtain the full report from their TD Securities contact. Learn more about the Environmental, Social and Governance advisory services we provide to our worldwide client base through our Sustainable Finance & Advisory group

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