EU Green Bond Standard Sees Strong 2025 Momentum
Energy firms are leading the charge in EU Green Bond adoption, with investor demand far outpacing supply.
In November 2024, we asked prospective issuers of European Green Bonds and underwriters with experience in the Green, Social, and Sustainability (GSS) bonds market about their appetite for early voluntary alignment with the EU’s Green Bond Standard. Respondents gave mixed feedback – some indicated having concrete plans for adopting the new standard, while others were skeptical about the applicability to their business model and the benefits compared to other market standards. One year on, based on the first EU Green Bond (EuGB) issuances, we find that corporate issuers in the energy sector are the most frequent first-movers and that investors are eager to add such labelled instruments to their portfolios.
Early Signals from the EU Green Bond Market
Last year, 15 GSS+ issuers[1] responded to our survey invitation. 40% of the respondents (mostly commercial banks headquartered in Western Europe) indicated that their institutions were planning to issue EU Green Bonds. The most frequent reasons invoked were attracting new investors or consolidating the existing investor base in EU/EEA and increasing credibility of their green bonds.
We also surveyed 9 underwriters[2] in November 2024, whose expectations were for corporate issuers and particularly utility firms and carbon-intensive sectors to be first movers for European Green Bonds, followed by municipalities and sovereigns. Were these expectations met?
As of 18 October 2025, 25 institutions published European Green Bond factsheets. 18 of them already issued EU Green Bonds in value of approx. EUR 15.5 billion. Issuances so far are dominated by corporate issuers. Our main observations so far are the following:
- A third (and the most frequent type) of the issuers are producers and distributors of energy
- Only 2 financial institutions issued EU Green Bonds (ABN AMRO and Banco BPM)[3] and only 1 sovereign (Kingdom of Denmark)
- No use of the flexibility pocket (Article 5) or of CapEx plans for activities not yet aligned with the EU Taxonomy (Article 7)
- Half of the published factsheets mention alignment with ICMA Green Bond Principles[4]
- ISS-Corporate is the lead External Reviewer in this space, having provided Pre-Issuance reviews for 9 out of the 25 factsheets published
What Drives Early Adoption?
We find that the early adoption of the EU Green Bond label is driven by institutions that already have a large share of their turnover and Capex aligned with the EU Taxonomy. All but 5 of the 25 factsheets published belong to entities that disclose key performance indicators (KPIs) for taxonomy-aligned turnover, Capex and Opex (as required by Article 8 of Regulation (EU) 2020/852). 15 out of the 20 entities who report this information reported Taxonomy-aligned turnover or Capex of over 30%; 9 of these reported KPI levels above 90% as of 2024. There is a very clear link between the composition of the reported taxonomy-aligned Capex and the activities chosen to be financed. Furthermore, almost all the entities that published factsheets report having a climate transition strategy and targets to which the proceeds are expected to contribute. This makes the climate mitigation objective by far the most widely mentioned.
On the side of the investor demand, all deals (where such data was made public) were many times oversubscribed, with order books exceeding the offer up to 5-6 times (and exceptionally 13 times in the case of EIB) and tight spreads. It remains to be seen if this is a consequence of the novelty and the scarcity of this label or it is a trend that will stay among sustainability-focused investors.
Looking Ahead: Will Broader Adoption Follow?
In conclusion, we note that expectations of the underwriters and prospective issuers we surveyed last year have largely been met – energy utilities lead the pack of early adopters and institutions whose compliance systems are ready for the rigors of the EU Taxonomy are met with high enthusiasm by investors. Whether investor appetite will be enough to encourage a broader range of EU Green Bond issuers — including those aiming to fund activities not yet aligned with the EU Taxonomy — remains to be seen.
Footnotes
[1] The characteristics of the respondents are as follows: twelve respondents from Europe/EEA, one from Switzerland, one from Africa, one from Asia. Eight of the European respondents, as well as the African and Asian respondent are banks and other financial services providers. One respondent represents the transportation sector, one energy utility, another one represents consumer services (hotels, restaurants and leisure) and one respondent answered on behalf of a municipality.
[2] of these based in Europe and one in Asia.
[3] Both financial institutions received a Pre-Issuance review of their factsheets from ISS-Corporate.
[4] ISS-Corporate also offers verification of alignment with ICMA’s Green Bond Principles as part of Pre-issuance reviews (for example ASN Bank Pre-Issuance Review)