S&P Global Ratings provides independent, transparent opinions on a company's financing or framework, grounded in its award-winning Shades of Green approach, which assess the extent of contribution to a sustainable future.
Despite stagnating global bond issuance, S&P Global Ratings' research anticipates that GSSSB (green, social, sustainable, and sustainability-linked bonds) issuance should be in line with our forecast of $900 billion to $1 trillion, or 14% to 16% of total issuance, in 2023.
We anticipate issuance of sustainability-linked bonds will decline in 2023 as questions regarding the credibility of targets persist, while green bonds will continue to dominate the GSSSB market, building on a record level of issuance in the first half of the year. Europe will remain the leading region for GSSSBs, while North American issuance may be hampered by lower supply and demand for the remainder of the year. Emerging markets may see increased issuance in the coming year.
GSSSB issuance totals are forecast to increase by 5%-17% in 2023 versus 2022
Green bonds remain the leading GSSSB category, at 59% of issuance in H1 2023. Green bonds are likely to continue to dominate, as sustainability-linked bonds falter. Green bond issuance during the first half of 2023 reached $310 billion, marking the highest half-year total since the inception of the green bond market. Green bonds have comprised 59% of the GSSSB market in 2023 so far. We predict they will remain prevalent through the rest of the year. Nonfinancial corporates are currently the largest issuers of green bonds, despite issuance contracting 6% compared with the first half of 2022.
Sustainability-linked bond (SLB) issuance continues to lag other bond types and will likely not reach 2022 levels. Issuance for the year is likely to be $33 billion, accounting for 6% of all GSSSB issuance, down from a high of 9% in 2021. Notably, more than 99% of SLB issuance this year was from nonfinancial corporates, compared with 88% in 2022. SLB issuance from other types of entities has all but disappeared. Financial services, sovereign, and US and international public finance entities issued less than $200 million (0.4%) of SLBs in the first half of 2023.
Questions persist about whether SLBs motivate issuers to set ambitious sustainability targets. These concerns have persisted for more than a year, as stakeholders have expressed doubts about whether the structural and financial features associated with missing targets give issuers sufficient incentive to achieve them. For example, there is increasing sensitivity from stakeholders on targets related to Scope 3 greenhouse gas emissions. These emissions are indirect and can originate in companies' value chains or during the end-use of their products.
Read the full report for other key trends in GSSSB issuance here.
Second Party Opinions, featuring Shades of Green
An S&P Global Ratings Second Party Opinion (SPO) is an independent, point-in-time analysis of a sustainable finance instrument, programme, or framework.
One feature that sets apart an S&P Global Ratings Second Party Opinion (SPO) is that, we apply our award-winning Shades of Green approach to give an opinion of how consistent green financing activities are with a low-carbon climate resilient future. Our SPOs assess the financing's contribution to transitioning to a more sustainable future through our shading scale, which includes assigning Dark, Medium or Light shading as appropriate. Thus, Light Green may motivate early movers and helps to recognize transition steps in the near-term, while Dark Green acknowledges those closer to the end of their transition journey.
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Channels:Green Bonds
Companies:S&P Global Ratings
