A new record high of global green bond issuance was achieved in the first six months of 2023, reaching $351bn.

Legal company Linklaters, using Bloomberg data, has revealed that a total of 1758 sustainable bond products were issued in the first six months of this year raising $568bn, with most sustainable bond categories other than sustainability-linked bonds (SLBs) seeing an increase against H1 2022.

Green bonds continued to dominate the sustainable bond market with 935 green bonds issued, raising $351bn and making H1 2023 a record six months in terms of the value of capital raised from investors. This also puts 2023 on course to be a record year for green bond issuances.

Green bond issuance by banks accounted for the majority of capital raised in H1 at $123bn and was much higher than previous years, as the global banking sector continues to finance an increasing number of green projects.

While Asia Pacific saw significant growth, Europe continues to be the largest green bond market with 448 green bonds issued so far this year, raising a total of $190bn.

In contrast, SLBs, which have seen rapid year-on-year growth since the first half of 2021, saw reduced issuance in H1 2023. SLBs go beyond the traditional use of proceeds model and link ESG performance to financial performance through KPIs and associated targets. The downtrend comes amid keen investor focus on the selection of KPIs and ambitiousness of targets, as well as the robustness of the terms of the product. A key focus remains on ensuring SLBs are structured carefully to avoid greenwashing concerns.

Amelia Rice, Capital Markets managing associate, commented: “Despite the continued uncertainty posed by the macroeconomic backdrop, the first two quarters have been strong and consistent for sustainable bonds generally and green bonds in particular. It will be interesting to see whether the pace of issuance accelerates further throughout the course of this year as governments, financials and corporates look to finance a growing number of green projects.”

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