Despite the changing landscape, sustainable bond issuance remains underpinned by strong fundamentals, innovative financing structures, and a growing base of dedicated investors.
BNP Paribas experts share their insights on the forces driving sustainable bonds in 2025 and what lies ahead for issuers and investors.
Regulation and Market Maturity Support Growth
Regulation remains a key driver of sustainable bond issuance, particularly in Europe. The EU Green Bond Standard (EU GBS) is enhancing transparency and comparability, reinforcing investor confidence in the asset class.
❝ With EU GBS aligning with the ICMA Green Bond Principles, we expect issuers to adopt both frameworks, ensuring consistency and credibility. ❞
Beyond regulation, the market is also being shaped by a ‘maturity wall’—a wave of maturing green bonds from 2025 to 2026, creating a natural push for reinvestment.
“We’ve never seen a maturity wall like this before,” says Trevor Allen, Head of Sustainability Research at BNP Paribas Markets 360. “The volume of maturing bonds is equivalent to the total issuance of 2023, meaning both issuers and investors will be looking to roll over their commitments, driving further growth.”
Corporate Issuers Embrace Sustainability
Corporates are playing an increasingly active role in sustainable finance. In 2024, nearly one in four investment-grade corporate bonds in EMEA were issued in sustainable format, reflecting a shift from compliance-driven issuance to strategic financial planning.
“We’re seeing a significant shift in how companies approach sustainable finance,” says Gourc. “It’s no longer just about decarbonisation—companies are using sustainable bonds to fund biodiversity projects, water management, and climate adaptation.”
Utilities and technology firms are at the forefront of this trend. One in three bonds issued by European utilities in 2024 was a green bond, supporting the expansion of onshore wind, solar, and clean energy projects.
“Increasingly, companies are using green bonds as a stakeholder engagement tool,” adds Allen.
❝ Investors want to see clear transition strategies, and sustainable finance is helping corporates demonstrate how they are adapting their business models. ❞
Investor Sentiment: ESG is Business as Usual
Investor demand for sustainable finance remains robust. While political shifts may influence short-term sentiment, long-term commitment to ESG integration remains intact.
“In Europe, every investor mandate now references ESG,” says Franck Rizzoli, Head of ESG Financing Advisory at BNP Paribas.
❝ Sustainability assessments are no longer seen as a niche focus but as a core risk-management tool. ❞
Even in the U.S., asset managers continue to assess ESG risks as part of their standard investment processes. “While ESG discussions are more politicised in certain markets, the reality is that assessing sustainability risks is simply part of sound investment management,” adds Rizzoli.
Meanwhile, pricing dynamics continue to evolve.
“The greenium still exists, but its impact fluctuates with market conditions,” explains Allen. “As rates decline, we expect the greenium to shift towards longer-dated bonds, as investors look to lock in sustainable assets at attractive rates.”
Transition Finance: The Next Growth Area?
Transition bonds remain an emerging asset class, with Asia leading issuance—particularly in Japan, China, and South Korea. Regulators in the region are working to provide clearer taxonomies and standards to increase investor confidence.
“Given Asia’s carbon-intensive economy, it’s natural for the region to drive transition finance forward,” explains Chaoni Huang, Head of Sustainable Capital Markets, APAC, at BNP Paribas.
❝ We expect further adoption as global investors become more comfortable with these instruments. ❞
Blended finance solutions—where multilateral banks and development finance institutions help de-risk investments—are also gaining traction, particularly for financing in emerging markets.
“Blended finance, or development finance, is where I expect the most innovation in 2025,” says Gourc. “There’s a real need to develop structures that make sustainable investments in the Global South more attractive to institutional investors.”
With COP30 taking place in Brazil, emerging markets could play a pivotal role in shaping the next phase of sustainable finance.
“In regions like Latin America, we expect to see more sovereign issuance and private sector participation,” adds Huang. “These markets have strong sustainability ambitions, and innovative financing structures can help unlock further capital.”
A Market with Strong Fundamentals
Looking ahead, sustainable finance will continue to evolve, with new financing models, deepening investor sophistication, and a focus on thematic bonds such as climate adaptation and biodiversity finance.
“As the market matures, regulation, investor engagement, and issuer commitments will ensure that sustainable finance remains a core component of capital markets,” says Frederic Zorzi, Global Head of Primary Markets at BNP Paribas.
❝ Sustainable bonds are not just a niche product—they are a fundamental tool for financing the transition to a more sustainable economy. ❞
BNP Paribas continues to be at the forefront of sustainable finance, working with issuers and investors to drive innovation and impact in global capital markets.
Read here the full feature in Enivronmental Finance
