3 key takeaways on sustainable bond issuance in 2021 so far

The sustainable bond market is showing no signs of slowing down, with supply for the first quarter of 2021 more than doubling that for the same period in 2020. Here are the main takeaways from the Q1 figures.

Sustainable bond issuance has kicked off to a dynamic start in 2021. The market continues to show impressive growth both in terms of the amount issued and the number of issuances, while sectoral diversity has also increased. Nordea’s Sustainable Finance Advisory team shares their three key takeaways on the overall sustainable bond supply for 2021 Q1.

Key Takeaway 1 –  Supply more than doubled versus 2020 Q1

The sustainable bond sphere’s solid growth trajectory from 2020 Q4 continued in 2021 Q1. The amount issued in dollar terms more than doubled versus comparable figures from the year before. The lion’s share of the market is still fed by SSA’s (sovereigns, supranationals and agencies). In particular, the European Commission in January placed an EUR 14 billion social bond under the EU SURE instrument, and in March Italy issued the world’s largest sovereign green bond to date (EUR 8.5 billion) to support the target of climate neutrality by 2050. If the market continues its growth trajectory in terms of the number of bonds issued, the sustainable bond market could yet again hit new records.

Chart showing: Green, Social and Sustainability bond supply by quarter
Chart showing: Breakdown of European supply by issuer type

Key Takeaway 2 – Social and sustainability bonds now represent half of the market

In terms of bond type, green bonds dominated the sustainable bond market up until 2020, when social issues gained momentum. Social and sustainability bonds have grown from representing 8% of the market in 2016 to half of the market in the first quarter of 2021.

Specifically, SSAs have been feeding the social market, while FIGs (financial institutions groups) and corporates have remained shy. Corporates, on the other hand, have increased their activity both in the green and sustainability bond sphere.

Chart showing: Share of global sustainability bond supply by bond type
Chart showing: Breakdown of global supply

Key Takeaway 3 – Sectoral diversity and market complexity on the rise

In the global corporate space, sectoral diversity has continued to flourish. For the first time during the observation period, utilities are no longer the market leader in the global arena of green, social and sustainability bonds. Real estate has stolen the spotlight with a market share of 28%, followed by utilities at 24%. Consumer discretionary alongside other sectors[1] have continued to grow, further challenging the dominance of utilities.

Chart showing: Global Green, Social and Sustainable bond supply by sector

In addition, sustainability-linked bonds (SLBs) have continued to gain popularity in 2021 after entering the market with a bang in 2020. We have seen issuances from a wide variety of sectors, ranging from shipping to fashion. Verbund entered the sustainable bond market with a new framework, combining the complementary elements of a green bond and a sustainability-linked bond. The framework was aligned separately with the Green Bond Principles and Sustainability-linked Bond Principles, further emphasizing the possibilities and complexity the sustainable bond market has to offer.

Chart showing: Sustainability-linked bond issuances to date

For a look at what to expect going forward, don’t miss our list of top predictions for sustainable finance in 2021.

[1] Other sectors include energy (7%), Technology (4%), materials (7%), health care (1%) and consumer staples (2%)


About the authors:

Jacob Michaelsen, Head of Nordea Sustainable Finance Advisory


Jacob Michaelsen, Head of Nordea Sustainable Finance Advisory



Stella Maria Mylläri


Stella Maria Mylläri, Nordea Sustainable Finance Advisory

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