Sustainable Bond Market Foreseen to Grow Exponentially by 2033

According to the Market Statsville Group (MSG), the Global Sustainable Bond Market size is expected to project a considerable CAGR of 15.8% from 2024 to 2033. 

The sustainable bond market has grown substantially because the investors largely focus on the ESG factors. These bonds which are green, social, and sustainability-linked bonds are intended for financing projects that have sustainable impacts on the society and the environment. There is increasing awareness of the challenges that the society is facing including climate change, and social inequalities amongst others, this has led to an expansion of the market. Such bonds are being floated out by governments, corporations, and financial institutions to finance renewable energy projects, affordable housing, and infrastructure programs among others. Reliable regulations and the investors’ increasing focus on transparency and impact investment also support the market. In 2023, sustainable bond markets surged to new heights with the increase in awareness and obligations towards sustainable goals. Thus, the market of sustainable bonds also promised further growth with more and more organizations joining the ranks of ESG principles to achieve sustainable development goals that investors can find appealing in terms of investment portfolios. 

Definition of the Sustainable Bond

A sustainable bond is a bond fixed income product created for funding projects that an independent body has deemed to have a positive effect on the environment, society as well as governance structures. It comprises Green Bonds, which finance environment-friendly schemes; Social Bonds that sponsor development causes such as affordable homes and education; and Sustainability-Linked Bonds that are linked to an issuer’s ESG performance goals. Sustainable bonds can be defined as liabilities that allow issuers to attract funds for their business while at the same time pushing for sustainability objectives that would attract sustainable investors.  

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Scope of the Global Sustainable Bond Market 

The study categorizes the Sustainable Bond market based on bond type issuers, and maturity at the regional and global levels.

By Bond Type Outlook (Sales, USD Million, 2019-2033)

• Green Bonds
• Social Bonds
• Sustainability-Linked Bonds
• Sustainability Bonds 

By Maturity Outlook (Sales, USD Million, 2019-2033)

• Short-Term
• Medium-Term
• Long-Term

By Issuers Outlook (Sales, USD Million, 2019-2033)

• Government Bonds
• Corporate Bonds
• Financial Institutions Bonds 

By Region Outlook (Sales, USD Million, 2019-2033)

• North America 
  • US
  • Canada
  • Mexico
• Europe 
  • Germany
  • Italy
  • France
  • UK
  • Spain
  • Poland
  • Russia
  • The Netherlands
  • Norway
  • Czech Republic
  • Rest of Europe
• Asia Pacific 
  • China
  • Japan
  • India
  • South Korea
  • Indonesia
  • Malaysia
  • Thailand
  • Singapore
  • Australia & New Zealand
  • Rest of Asia Pacific
• South America
  • Brazil
  • Argentina
  • Colombia
  • Rest of South America
• The Middle East & Africa
  • Saudi Arabia
  • UAE
  • South Africa
  • Northern Africa
  • Rest of MEA

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Green bonds segment accounts for the largest market share by bond type

Based on the bond type, the market is divided into Green Bonds, Social Bonds, Sustainability-Linked Bonds, and Sustainability Bonds. The green bonds segment accounted for the largest market share in the global Sustainable Bond market. This has been occasioned by an exceptionally great emphasis on mitigating climate change and promoting environmental sustainability, which characterizes the world at large. Green bonds are funds that enable projects with clear environmental benefits linked to renewable energy, energy efficiency, and control of pollution, targeting international climate objectives and regulatory reporting. Because there is a clear, quantifiable impact, that green bonds are having, they prove to be an ever-attractive way for investors to participate in environmental projects. 
Moreover, the very market infrastructure that has been put in place—most importantly, with standards and certification processes for the green bond market—has allowed for its wide adoption. The segment has already held considerable policy support and demand from investors; therefore, a large volume of issuance has been seen. Although social, sustainability-linked, and sustainability bonds are growing, green bonds remain the primary choice for financing projects focused on the environment, reflecting their central role in the global landscape of sustainable finance. 

Europe accounted for the largest market share by Region.

Based on the regions, the global market of Sustainable Bonds has been segmented across North America, Europe, the Middle East & Africa, South America, and Asia-Pacific. The European region holds the largest share of the Sustainable Bond market. This dominance is mainly due to the EU’s mature and stable legal environment and highly developed focus on sustainable development. It can be stated that the European Green Deal together with other actions such as the EU Taxonomy for Sustainable Activities lays out a clear path forward for green finance. Moreover, the EU’s financial markets are considered to be rather advanced and the politique of this region actively promotes both state and private segments to invest money into sustainable finance. There is high awareness of ESG criteria among the region’s investors, leading to increasing demand for sustainable bonds. Notably, European countries remain at the forefront of climate change initiatives and sustainability standards thus exerting pressure on other parts of the world. The favorable legal environment, increased investor interest, and the already highly developed EU financial infrastructure puts the EU on the cutting edge for the burgeoning ESG bond market, while encouraging further innovation in sustainable finance. 

Competitive Landscape: Global Sustainable Bond Market 

The competitive landscape in the global sustainable bond market includes a diversified pool of issuers: governments, corporations, and financial institutions. Although Europe has maintained its lead with strong regulatory frameworks and high investor demand, the North American and Asia-Pacific regions have grown rapidly in terms of market presence. Large multinational banks, green investment funds, and corporations committed to ESG goals would, therefore, be the major players. What drives competition and hence growth of the market is innovation in green finance products and rigorous reporting standards.

Major players in the global Sustainable Bond market are: 

• European Investment Bank (EIB)
• Apple Inc
• World Bank
• Microsoft Corporation
• Goldman Sachs
• JPMorgan Chase
• HSBC
• BlackRock
• Deutsche Bank
• Barclays
• Other Major Players

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Recent Development 

• In January 2024, The African Development Bank issued a US$750 million global benchmark perpetual sustainable hybrid bond, the first hybrid capital trade by any multilateral development bank.
• In April 2023, The New Development Bank priced a USD 1.25 bln 3-year benchmark Green Bond under the Bank's 50 bln Euro Medium Term Note Programme. The issuance marks NDB's return to international capital markets and is also the first USD Green Bond issued by the Bank, thus clearly putting it on the path of sustainable capital markets.