• $1 Trillion in Sustainable Bonds: Global issuance expected to match 2024 levels, driven by climate mitigation and adaptation financing.
• Greenwashing Scrutiny Rises: Market standards, regulations, and political headwinds could slow growth.
• ESG Risks in Focus: Supply chain disruptions, climate volatility, and policy shifts will challenge businesses and governments.

Global sustainable bond issuance is projected to hit $1 trillion in 2025, sustaining the momentum from 2024.

• Climate mitigation remains a priority, but adaptation financing and nature-based investments are gaining traction.
• Social bond issuance will be limited by a lack of large-scale projects.
• Transition-labeled bonds and sustainability-linked bonds (SLBs) will remain niche markets, navigating shifting investor sentiment.

ESG Challenges Deepen

Big picture:

The gap between decarbonization goals and real-world implementation is widening.

• Companies will struggle with supply chain environmental and social risks.
• Emerging tech, climate instability, and demographic shifts will create policy and social challenges for governments.
• Political opposition in some countries could complicate ESG market growth.

Related Article: JSE Seeks Climate, Sustainable Bonds as ESG Investment Jumps

Greenwashing & Regulation

Why it matters:

Heightened scrutiny of greenwashing and evolving market standards will shape sustainable finance.

• Regulatory changes and stricter verification requirements could deter some issuers.
• Investors will demand greater transparency and accountability.
• “The contrast between fresh pledges and increasingly destructive climate events will bring gaps in decarbonization efforts into focus.”

Bottom line:

ESG finance is evolving, but scrutiny, policy shifts, and market complexities could redefine its trajectory in 2025.

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