Green, Social and Sustainability bonds: the European market is preparing for a boom

PwC publishes ESG – Transformation of the Fixed Income Market

(Sustainabilityenvironment.com) – The European financial market is ready to give more space to the ecological transition. Over the next four years, green, social and Sustainability bonds will grow to account for almost half of all bonds issued in the Old Continent. This is reported by the new report by PwC Luxembourg, entitled ESG – Transformation of the Fixed Income Market. The study provides an in-depth overview of the evolution of sustainability in fixed income markets in Europe and finds its roots in a detailed survey of 100 investors and 100 issuers.

The data start from 2021, the year in which the new issues of Green, Social and Sustainability bonds (GSS) in Europe reached the record of 500 billion euros. Accounting for 13.7% of the global green bond market. A satisfactory result that will not abandon, at least for the coming years, the trend of rapid growth. According to PwC, the 2026 GSS bond issues will reach 1,600 billion euros in a best-case scenario. In other words, they could account for almost half of the European bond market. But, even in the basic scenario, the sector would reach 1,400 billion euros in a few years.

Green, social and Sustainability bonds: what to expect from the future?

The report estimates that green bonds will reach €691.2 billion in new issues by 2026 in the base scenario, followed by sustainable bonds (€391.8 billion) and social bonds (€317.1 billion). According to the survey, 82% of issuers selected green bonds as the best GSS to bet on over the next 24 months. And 84% of the sample intends to increase its offer in the short term in the sector.

Overall, PwC expects the public sector’s green, social and Sustainability bonds (sovereign and supranational) to reach €712 billion by 2026, up from €266 billion in 2021. This is partly due to the European Commission’s green bond issuance programme to finance the NextGeneration plan.

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