AFME has published its European ESG Finance quarterly data report for the first quarter of 2023, providing up-to-date trends for the European Sustainable Finance market as at 31 March 2023, as well as a high-level regulatory and supervisory snapshot.

Key highlights:

European ESG bond and loan issuance accumulated €156bn in proceeds during Q1’23, a 10.7% quarterly increase. The increase was predominantly driven by ESG-labelled bonds which accumulated €116bn in proceeds, the second largest quarterly issued amount on records.

• • Green bond issuance grew 69.6% year-on-year (63.9% QoQ). The increase was driven by the corporate and supranational sectors.
  • Social bond issuance increased 8.2% YoY (23.5% QoQ). We continue to see a strong participation of the French agency CADES as it consolidates as a market leader for social bonds.
  • Sustainable bond issuance increased 47.6% YoY (97.4% QoQ). France and Spain were the top issuer of sustainable bonds in the Europe in Q1’23.
  • Sustainable-linked bond issuance declined 40.1% from the previous year but increased 26.0% QoQ.
  • ESG securitisation issuance accumulated €1.1tn in proceeds, an increase of 103.3% compared to the first quarter of 2022.
  • Sustainability-linked and green-linked loans decreased 56.4% YoY and 49.7% QoQ.

Carbon prices: the European Union Allowance (EuA) price per metric tonne finalised Q1’23 at €89.2/Tn, from €83.3/Tn at the end of 2022. During the first weeks of Q2’23, EuA spot prices have marginally increased to €92.8/Tn.

Global ESG Funds rose marginally during Q1’23.

• • Funds with an ESG mandate (including Mutual Funds and ETFs) totalled $7.9tn as of Q1’23 a 0.11% increase from Q4’22 but a 10.7% decrease from Q1’22.
  • The marginal quarterly increase was driven by higher asset valuations partially offset by outflows which accumulated $27.1bn during Q1’23.

ESG price premia: spreads of corporate ESG bonds against non-sustainable benchmarks have tightened in the first quarter of the year from c2.5bps at the start of the year to c0bps in April 2023.

Regulatory update: We present a selective list of upcoming European initiatives for 2023. For a more comprehensive update please see AFME and Linklaters report Sustainable Finance in Europe: Regulatory State of Play (2023 updated edition)

Source: AFME