Key Impact Points
- $5 Trillion Milestone: The global sustainable debt market reached a cumulative volume of USD 5.1 trillion in green, social, sustainability, and transition bonds by June 2024.
- France Leads in Social Bonds: France stands as the third-largest source of GSS+ volume globally, driven by USD 216.2 billion in aligned social deals.
- Sector Growth: Aligned steel green bond issuance surged by 166%, with credible transition plans in place for most issuers.
Overview
The global sustainable debt market has hit an impressive USD 5.1 trillion in cumulative volume, marking a significant milestone as detailed in the Sustainable Debt Market Summary H1 2024 by Climate Bonds Initiative. This volume includes green, social, sustainability-linked bonds (SLBs), and transition bonds (collectively referred to as GSS+). As the market thrives, new issuers are progressively entering the space, with USD 554 billion in aligned volume recorded during the first half of 2024, up 7% year-on-year from H1 2023.
While global interest rates remained higher than anticipated, overall debt issuance surged to USD 13.2 trillion in H1 2024, reflecting a 35% increase compared to the previous year. This underscores the robust growth and demand for sustainable financing solutions.
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France: Leading the Charge in Sustainable Finance
In its Olympic year, France has emerged as a leader in sustainable finance. With cumulative aligned GSS+ volume reaching USD 542.9 billion by H1 2024, France is the third-largest contributor, following supranational issuers and the USA. France’s strong presence in the market is further highlighted by its dominance in aligned social bonds, with USD 216.2 billion issued, driven largely by Caisse d’amortissement de la Dette Sociale (CADES), the largest issuer in this category.
France’s momentum in sustainable finance is reflective of its long-standing commitment to green policy, dating back to its hosting of COP21 in 2015. The country continues to break new ground, including the issuance of green bonds to fund key projects such as the Grand Paris Express, a major 200-km rapid transport project in Paris funded through a EUR 1 billion green bond.
Steel Sector: A Surge in Green Bond Issuance
Climate Bonds Initiative’s review of the steel and cement sectors revealed two key developments: a 166% surge in aligned green bond volumes from steel and cement issuers and credible transition plans in place for 57% of the companies assessed. This growth reflects increasing efforts to decarbonize hard-to-abate sectors.
To facilitate these decarbonization efforts, Climate Bonds has introduced tools like sector-specific criteria, transition plan guidance, and the inclusion of activities in its Certification programme. Furthermore, the launch of the Transition Plan Monitor (TPM) will allow for in-depth assessments of the quality of transition plans, with steel and cement being the first sectors analyzed.
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A New Era in Data Management
As part of its ongoing efforts to enhance data management and improve the quality of market data, Climate Bonds has partnered with Montrose Software to deliver a new Market Information Portal (MIP). This collaboration will streamline data workflows and enable more responsive feature updates, ensuring that Climate Bonds’ data offerings are scalable and optimized for future demands.
The MIP project, which began months ago, is expected to allow Climate Bonds to leverage AI for future insights without compromising data quality or workflow efficiency. By improving data consistency and accuracy, Climate Bonds aims to further strengthen its market research and support the growth of the sustainable debt market.
Conclusion
With the sustainable debt market surpassing USD 5 trillion, the global push for green finance is gaining momentum. France’s leadership in social bonds, the growth in hard-to-abate sectors, and innovative approaches to data management reflect a market poised for continued growth. As the world progresses towards a more sustainable future, the sustainable finance sector is set for another record-breaking year.
