According to the last report just published by Mainstreet Partners, a provider data specialized in ESG, sustainable and impact investments since 2008, another significant year has ended for the market of Green, Social and Sustainability (GSS) Bondin which just under 1,000 billion dollars For a cumulative volume that exceeded 5,500 billion dollars. 2024 was a particularly important year for Green Bondwith emissions that have reached the second Best quarterly result from their introduction on the market –561 billion dollars – and the best first quarter ever, which represented 58% of emissions overall of the year. In parallel, the Transition Bonds have experienced a new phase of growth, driven in part by the impulse provided by the Japanese government.
Eurocentric market
About the 60% of the total of the volumes issued derive from European subjects and 56% from bonds called in euros. Asia, where there have been rapid progress in regulation, maintains a significant presence in the social market and sustainability bond.
New guidelines
The report also examines the effects of the new ESMA guidelines on “Paris Aligned Benchmarks (PAB)” and the “Climate Transition Benchmarks (CTB)”. According to the new indications, the management of Green Bond requires an analysis of adequacy of the use of the proceeds (EG, Projects financed) rather than the broadcaster itself. Observing closely, the projects financed by each of the 5,000 bonds present in the database, Mainstreet Partners found that this new information is decidedly relevant for the managers of the Article 9 funds which, to continue to maintain the name of the funds linked to terminology such as “Esg, Sustainability, transition “, they should review their wallets, making changes to their investments in green bonds. About the 10% of GSS Bond It could be excluded due to the new information on PAB, while almost 20% of the volume risks exclusion based on the most stringent criteria of the CTB.
A resilient market
“2024 showed an incredible resilience of the GSS Bond market – explained Pietro Sette, Research Director of Mainstreet Partners -. The continuous leadership of European broadcasters underlines the relevance of a strong regulatory context for market growth. Although on the regulatory front we have observed only positive developments in this market, the ESMA information on PAB and CTB ask several questions to the funds managers – especially to those who have an “issuers based” approach rather than the use of the proceeds of a Green Bond. The next few weeks will certainly be very interesting-we will probably see strong efforts of investor-elevating engagement on this front “.
