European Green Bonds Issuance Hits Record

ESG bond and loan issuance decelerates during Q2’24 after record first quarter:

• • ESG bond and loan issuance totalled €158bn, a 14% decrease from Q2 2023 (YoY) and a 31% decrease from Q1 2024 (QoQ)
  • With the exception of ESG securitisation, all other sustainable instruments covered in this report exhibited a quarterly issuance decline
  • Sustainability-linked bonds continued a further decline on a quarterly and Year-to-date basis. The cumulative amount issued the first half of the year is the lowest observed since 2020.
  • German issuers led in Q1 2024 by total ESG bond and loan issuance, closely followed by French issuers. Notably, c. 50% of sustainability-linked bonds was originated in Italy and a half of ESG bonds were issued in France or Germany.

The share of ESG bonds in total bond issuance in Europe has plateaued, or even decreased since 2021:

• ESG bond issuance, including ESG-labelled, sustainability-linked and transition bonds, represented 13% of total European bond issuance during 2024 YtD, a lower proportion from 14% in 2023 and 18% in 2022.
• On a year-to-date basis, European green bonds reached the highest H1 issued amount on records. However, relative to the total European bond issued amount, its proportion has continued at c10% since 2021.

Declining pool of ESG Assets Under Management (AuM) notwithstanding net quarterly inflows:

• • Lower asset prices led to a 1.7% decrease (QoQ) in global ESG funds, reaching a total amount of $USD 9.7tn despite quarterly net inflows for $USD 37.5 bn.

Source: AFME