Sustainable Debt EMEA 2025 conference round-up

By Ahren Lester

Live from London:

As the curtain falls on the 13th annual Environmental Finance Sustainable Debt EMEA event, Ahren Lester looks back on another successful event where market participants again revealed the ambition of the market and the innovative actions being taken to deliver on its promise

Around 70 expert panellists and more than 500 attendees joined us in London, providing a wide-array of fascinating discussions both during the panels and during the networking breaks.

As I mentioned in my opening remarks to the event, the EMEA region has been key contributor to the sustainable debt market as it has grown.

Just taking labelled bonds and loans, 2024 saw more than $1.8 trillion raised through green, social, sustainability, sustainability-linked and transition bonds and loans – up around 6% on the year prior. And EMEA – led by Europe – continued to lead the way, with around half of this global sustainable debt volumes coming from this region.

And Europe continues to lead the way in many regards around sustainable debt. This has again been demonstrated with the EU Green Bond Standard (EU GBS) coming into force in December. It is clear that this ground-breaking, 'gold standard' has the potential to have a dramatic impact – both directly and indirectly – on the sustainable bond and broader debt markets.

We heard the experience of two of the four issuers who have already come to market with an ‘EU Green Bond’ (EuGB) using this standard – A2A and the European Investment Bank (EIB) – who explained the challenges and opportunities they observed from the new label.

Amundi fixed income SRI processes and credit portfolio head Alban de Faÿ said he was “very surprised” the EU did not explicitly align its EU GBS with the widely used ICMA Green Bond Principles.

Despite this, EIB sustainable finance head Aldo Romani explained that the EU GBS was not a huge departure from the existing, best practice market guidance. This was also emphasised by BNP Paribas sustainable capital markets head Agnes Gourc.

“When we do an EU GBS transaction, we focus a lot on the details,” Gourc said. “But, fundamentally, it really replicates the ICMA Green Bond Principles. That has been the starting point, and the gap [between them] is not wide – it just needs to be properly addressed.”

Nonetheless, A2A finance and insurance head Patricia Gentile said that “90%” of the benefits of the EuGB are for the benefit of investors not issuers. This highlighted what Mirova lead impact and ESG specialist Felipe Gordillo describes as an ongoing “market imperfection” for green bonds more generally – that green bond issuers are faced with higher costs, while investors were often not incentivised to buy green bonds.

A highlight in sustainable debt markets in recent years has been the growing prominence that sovereigns are building. A critical part of the global fixed income investment universe, sovereign sustainable bond issuance hit a record $164 billion in 2024 with a rapidly expanding list of governments entering the market each year.

During the event, we got the opportunity to hear from one of the more experienced sovereign sustainable bond issuers: Slovenia.

Hot on the heels of announcing its plan to issue a landmark sovereign SLB, Slovenia Treasury director general Marjan Divjak outlined some of the highlights of its consistently innovative approach to this market.

Slovenia is set to become the first European sovereign to utilise the SLB format, including a still rare coupon step-down structure which will be applied if they achieve “stretch” targets. Divjak said this bi-directional step-up and -down structure was “essential” for

“My boss might legitimately ask if [an SLB] makes sense,” he said. “If we have [potential] upside [through a coupon reduction], I believe it makes a lot of sense. The possibility for a step-down is really important.

“What matters is the credibility of the targets, and the possibility of meeting or not meeting the targets is fairly evenly distributed. Investors need to take this risk, even if it is not particularly convenient for them.”

The planned sovereign SLB from Slovenia provided a strong example of the ongoing potential of the performance-based instrument for issuers and investors. Nonetheless, a recurring theme for the day was around how to overcome the challenges facing sustainability-linked instruments. This was an innovation that as recently as 2021 seemed on a trajectory to dominate sustainable finance markets, but has had a torrid time since.

Yet this event it clear that these target-based instruments still have broad support in the market.

“Frankly speaking, [SLBs] are very useful internally to really drive the business towards becoming a sustainable business,” said Nicole Della Vedova, finance executive director at Snam – a major issuer of sustainability-linked instruments.

But what remained equally clear is that for them to have a deep presence in sustainable debt markets needs strong action from all to develop, deliver and demonstrate that they can be coherent and credible both at market and issuer level.

Meanwhile, the appetite for specific themes within sustainable debt continues to grow – including climate adaptation and transition. Environmental Finance knows only too well from market discussions over the last year that these themes have generated a great deal of interest in recent years, but turning that interest into sustainable debt opportunities remains a challenge.

For example, Nomura Asset Management sustainable fixed income investment head Jason Mortimer said issuers must “be brave” on transition.

“Talk to your regulators. Talk to your investors,” he said. “Convince them why transition finance is important. We have got to make it happen.

“And it may take a bit of a mind-set shift among investors to get over this green-brown binary approach. But the world is not so simple.”

Nonetheless, he emphasised that this did not mean we need to push for dedicated transition labels.

“Don’t invest in labels. Invest in projects. Invest in impact.”

And, of course, the work of sustainable debt markets does not end when a bond is issued or loan originated. As a result, we were also treated to some fantastic insights on how investors are integrating sustainability into their fixed income strategies and engaging issuers as well as the challenging but invaluable process of identifying and reporting impact from these investments.

The next few years are liable to throw up another bumper crop of surprises for sustainable debt markets. But sustainable bond issuers were encouraged to “hope for the best” amid more difficult geopolitical circumstances.

Yet as this event highlighted, the sustainable debt market enters this uncertain new world with a healthy confidence about its potential as a tool to support solutions to global problems as well as its core role in global debt markets. This is a confidence well-earned through many years of experience and expansion which was on strong display today, with an exciting splash of colour from the further innovative and iterative changes about to arrive in the market.