Global sustainable bonds reached a historic US$1 trillion in 2024, narrowly eclipsing the 2021 record by US$2 billion, according to the United Nations.
The milestone illustrates sustained investor interest in ESG-aligned financial instruments. Market participants cited growing government and corporate commitments to sustainable development as key drivers.
Sustainable Bonds Maintain Over 10% Share of Global Market
“Annual issuance has grown at an average rate of 19 per cent since 2019, as the market continues to mature and investors align their strategies with sustainable outcomes,” the UN report stated. Sustainable bonds have held a consistent share of over 10% of the global bond market, accounting for 11% in 2024.
Two-thirds of issuance came from green bonds, with the remainder linked to social or UN sustainability targets.
Greenium Effect Nearly Disappears
The UN also noted that the so-called “greenium” – the premium investors once paid for green bonds – has almost vanished. In Europe, spreads between sustainable and conventional bonds narrowed to just 1 basis point. “This suggests that as sustainable bond markets mature and supply increases, price differences between green and conventional bonds are narrowing,” the report said.
Alan Papier, institutional product specialist for Nuveen, echoed the findings: “We’re not seeing any greenium.”
Nuveen Expands Sustainable Bond Strategy to New Markets
Nuveen, the investment arm of US pension giant TIAA, has expanded into New Zealand following a global bond mandate with Trust Investments. It recently launched the Nuveen Global Sustainable Bond fund as a PIE, hosted by FundRock NZ.
Portfolio Focus on ESG Leaders and Impact Bonds
Papier said the portfolio balances ESG leaders with impact bonds, including the World Bank’s Amazon Reforestation-Linked Outcome Bond. “We don’t think [ICMA’s allocation-based reporting] is sufficient,” he said, stressing the importance of outcome-based disclosure.
Papier noted strong demand in fixed income despite an ESG backlash in US equity markets: “We’re seeing lots of high-quality [green bond] deals coming through.”