The Sustainable Bonds: Trends and Policy Recommendations report explores key issues and trends in sustainable bond markets. It aims to inform policy discussions on the goals of investors when acquiring sustainable bonds, how these instruments may influence corporate and official sector issuers’ decisions, and what can be done to develop the market for sustainable bonds further.
Sustainable bonds have grown significantly in the past decade and have become an important financing instrument in the transition to a more sustainable economy. By investing in projects with positive environmental and social impacts, and by linking financial performance to sustainability, sustainable bonds can encourage issuers to adopt sustainable practices and expand their investor base.
The development of new classification systems underscores the need for enhanced interoperability among taxonomies and standards both regionally and globally, to ensure holders of sustainable bonds have access to credible, consistent and comparable information.
The ability of investors to assess the sustainability performance of these financial instruments may depend on the transparency of sustainability-related disclosures and the level of ambition of sustainable objectives. The use of second party providers to verify sustainable bonds has increased significantly in recent years, suggesting the possible need to pay greater attention to this market segment. In parallel, the ambition of sustainability performance targets for sustainability-linked bonds could be enhanced by corporate governance tools, such as stewardship codes.
Chapter 1 presents policy recommendations to inform discussions among policymakers and regulators on further developing sustainable bond markets and safeguarding the interests of investors in sustainable bonds. Chapter 2 analyses the sharp rise in sustainable bond issuance, the dominance of green bonds, the widespread adoption of international standards and taxonomies and the common use of proceeds and sustainable key performance indicators. Lastly, Chapter 3 examines the primary reasons investors allocate capital to sustainable bonds, the dynamics that drive issuers to use sustainable bonds, and key elements that may impact investor protection.
This report has been developed by the Capital Markets and Financial Institutions Division of the OECD Directorate for Financial and Enterprise Affairs. It was prepared by Valentina Cociancich, with the support of Adriana De La Cruz, under the supervision of Caio de Oliveira, Head of the Sustainable Finance and Corporate Governance Team, and Serdar Çelik, Head of Division. This report is an updated and expanded version of Chapter 3 of the OECD Global Debt Report 2024: Bond Markets in a High‑Debt Environment, published in March 2024. This report was prepared for discussion by the Working Party on Sustainable Finance of the OECD Committee on Financial Markets.