July 2025 | Sustainable Finance Market Highlights

Market and Regulatory Highlights

• The second quarter of the year registered a total of $183 billion in green, social and sustainability (GSS+) bond issuances according to Environmental Finance, a 17% decrease from Q1 2025.
• The second quarter of the year has seen the continued growth of green bonds while social bonds remained flat, and sustainability-linked bonds (SLBs) continued their declining trend (Environmental Finance).
• The market is awaiting clarity on regulatory and taxonomy frameworks—especially in Europe—to drive a renewed upswing.
• The quarter ended with a flurry of updates from the International Capital Market Association’s (ICMA) with the release of several guidance documents and updates to existing publications. The main updates include:
  • An update of the Green Bond Principles, which now includes a clear reference to the Green Enabling Projects Guidance and expands the definition of Green Projects to encompass “activities”—a change that is also reflected in the updated Social Bond Principles.
  • To support users in demonstrating alignment with the Green Enabling Projects Guidance, a new Example Checklist has been released.
  • A consolidated Guidance on Allocation Reporting has been published, bringing together all relevant guidance to simplify understanding and implementation, while on the impact side, a new annex regarding Potential Environmental and/or Social Risks Associated with Eligible Project Categories was included in the Harmonised Framework for Impact Reporting for Social Bonds.
  • Dedicated FAQs have been added as annexes to both the Guidelines for Sustainability-Linked Loans financing Bonds (SLLBs) and the Guidance for Green Enabling Projects, originally published in June 2024.
  • The SLB Illustrative KPIs Registry has been expanded to include additional environmental and social themes, new KPIs for sovereign issuers, and a revised definition of secondary KPIs.
  • Finally, the Executive Committee of the Principles updated its Guidance Handbook (Q&A) confirming the likely ineligibility of defence projects.