The Association for Financial Markets in Europe (AFME) has published its ESG Finance Report for the first quarter of 2025. The report highlights the first issuance of bonds compliant with the EU Green Bond Standard (EU GBS) during this period.
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ESG bond and loan issuance accumulated €169bn in proceeds in Q1 2025, a 27% decline from Q1 2024 and the lowest Q1 issuance since 2022.
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Sustainability linked and Green Loans led the decline, with issuance volumes nearly halved compared to Q1 2024.
- Italian issuers led in total loan and bond origination YtD (€29bn), closely followed by French issuers. Notably, around 54% of sustainability-linked bonds were originated in Italy.
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- Green bond issuance declined by 19% compared to Q1 2024, although remaining the largest category by volume, and generating €82bn in proceeds. Among sustainable finance instruments, only sustainable bonds recorded year-on-year growth (24%), while both social and sustainability-linked bond issuances fell compared to the previous year.
- The share of ESG bonds in total bond issuance in Europe has decreased since 2022: ESG-labelled, sustainability-linked and transition bonds, represented 12.5% of total European bond issuance in Q1 2025, a lower proportion from 17% in 2022.
- The first EU Green Bond Standard (EU GBS)-compliant bonds were issued in Q1 2025 by Île-de-France Mobilités (€1bn), ABN AMRO (€750mn), and A2A SpA (€500mn). The standard, effective since December 2024, enhanced transparency and review requirements. By May 2025, the European Investment Bank and Iberdrola had also issued EU GBS-aligned bonds.
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Global ESG Funds reached USD 10.5tn in Q1 2025, representing a 4% Year-on-Year growth which was primarily driven by increased allocations to bonds and money market funds.
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Global funds with an ESG mandate saw inflows reaching USD 80bn in the first quarter of 2025, driven primarily by European funds.
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- Moderate tightening in ESG premia in the first quarter of 2025, from 0.42 bps in early January to 0.32 bps in March.
Source: AFME
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