Global Sustainable Bond Issuance to Reach US$1 Trillion in 2025

Global issuance of sustainable bonds, including green, social, sustainability, sustainability-linked, and transition bonds, is projected to reach approximately US$1 trillion in 2025, according to a new forecast from Moody’s Ratings. This would mark the fifth consecutive year of issuance around this level, despite challenges posed by political changes, particularly in the United States.

While 2024 issuance remained stable at US$1 trillion, sustainable bonds underperformed compared to the overall bond market, with their share declining to 11% from 15% in 2023. Despite this, the continued global focus on sustainable development, especially in clean energy, climate adaptation, and nature-related projects, is expected to support the market in 2025. Green bonds are expected to continue to dominate, with Moody’s forecasting record issuance of US$620 billion, driven by climate mitigation projects. These investments will benefit from policy support, private sector commitments, and decreasing clean energy costs. 

Moody’s also expects that United States sustainable bond issuance will not experience a significant decline in 2025. The reduced federal investment in sustainable projects will be offset by private sector contributions and investments from state and local governments. However, North America’s share of the global sustainable bond market has seen a significant decline, falling by nearly 30% from 2021 to 2024.

Key trends in the green bond market include growing demand for investments in energy and water-efficient data centers, nuclear energy projects, and emerging green technologies aimed at decarbonizing hard-to-abate industrial sectors. Additionally, the market for bonds financing adaptation and resilience projects is expected to expand as the impacts of extreme weather events continue to increase, alongside rising attention to nature-related initiatives focused on conservation and biodiversity.

Moody’s projects a decline in social bond issuance by 9% in 2025, falling to US$150 billion, due to a lack of large-scale projects. Meanwhile, sustainability bonds, which combine green and social projects, are expected to remain steady at US$175 billion. Transition bonds, which gained traction in 2024 with the Japanese government’s US$11 billion issuance, are projected to hold steady at US$20 billion. The market for sustainability-linked bonds, however, is expected to grow by 14% to US$35 billion, despite ongoing scrutiny of the credibility of sustainability targets tied to these bonds.

Moody’s Ratings emphasized that, while the global focus on sustainable development will continue to drive the market, challenges such as heightened scrutiny over greenwashing, evolving market standards, and political headwinds in some regions will likely temper growth in the sustainable bond sector.