As some US companies embraced “greenhushing” in 2025, global green bond markets kept expanding, showing the importance of careful credit research to find real impact.
Earlier this year, “greenhushing” joined the sustainable finance lexicon.
Following President Trump’s inauguration in January 2025, US companies became far less willing to publicly discuss their environmental and sustainable business plans. For example, while the underlying strategy to transition their generation fleet to be more reliant on renewable energy remained unchanged, utility companies that had previously issued labelled green bonds opted against it.
In addition, with Elon Musk in peak DOGE cost-cutting mode, social and sustainable programs were under heavy scrutiny and U.S. corporate bond issuers wanted to avoid attracting attention from the new administration.
As a result, some issuers pivoted to general corporate debt and remained as vague as possible about their capital expenditure (capex) plans.
Thankfully, the greenhushers were a small subset of issuers in the global fixed income market. According to data from Citi, through September 30, 2025, labelled green bond issuance was down around 10 per cent from the same period in 2024, primarily due to US corporations; other issuer cohorts were either flat or running ahead of their prior year pace.
While US corporations borrowing in US dollars retreated, companies based outside of the United States across the financial, industrial and utility sectors were conducting business as usual.
Supranational issuers continued to access capital in US dollars, euros and various other developed and emerging market currencies. Affordable housing programs supported by banks, municipalities, government agencies and community development finance institutions (CDFIs) were borrowing.
Highlighting the importance of a multi-sector approach, these developments allowed successful, market return focused impact investors – like Nuveen – to continue deploying capital in attractive, liquid credit instruments and diversified portfolios, despite the slowdown in US corporate labelled issuance. Also, as 2025 progressed, we saw US corporate issuance of labelled bonds slowly restarting.
As dictated by Nuveen’s investment process, our team scrutinised the greenhushers to determine the intent of their spending plans and the consistency and coherence of their operating models. Would their capex decisions help improve or stabilise free cash flow, derisk their operations or mitigate material event risk, or increase transparency and accountability throughout the enterprise? If we determined the decision-making was financially sound while also supportive of well-defined green, social or sustainable outcomes, we would consider investing in the credit.
We’d prefer to see public conviction in an issuer’s strategy combined with labelled issuance that is clearly aligned with the International Capital Market Association’s Green or Social Bond Principles. But in practice, unlabelled deals can also represent compelling impact opportunities when we have sufficient clarity about the use of proceeds and outcomes-based reporting.
Evaluating intent and strategic fit is fundamental
The investment process applied the same diligence when “greenwashing” was the market’s focus. Occasionally, we’ve seen green bonds issued as public relations tactics without material free cash flow benefits associated with the transaction. In these instances, our team was not immediately swayed by the label. We sought to determine whether an issuer was embellishing their green credentials with half-hearted or immaterial labelled issuance. We asked the tough questions about the use of proceeds: would they materially reduce carbon emissions, improve margins through cheaper and more predictable energy generation, generate stronger free cash flow via energy-efficient buildings, reduce safety incidents, or better educate workforces to improve standards of living? If not, we chose not to allocate client capital to these issuers.
The moral of the story is that there is no substitute for fundamental credit research.
Investors have to know what they’re investing in on behalf of clients. It’s not possible to do that by checking if a bond or issuer is included in an index, or has a symbol attached to it on Bloomberg or some other vendor’s dataset.
Instead, investors need to dive deep with issuers and their bankers on capex needs, spending plans and intended outcomes. They need to consider the stability of cash flows, resilience of balance sheets, relative value compared with peers and the broader sector, and the risks to forward-looking issuer and industry trends. If a bond doesn’t offer a potential alpha opportunity or a specific risk management purpose, it should not be added to client portfolios.
The public fixed income market is constantly evolving, innovating and becoming more complex. Issuance spans the corporate, supranational, government-related, municipal, hybrid/preferred, broadly syndicated loan, residential mortgage-backed, commercial mortgage-backed and asset-backed sectors, as well as newer structures such as outcome bonds and debt conversions.
Investment teams – like Nuveen’s – need to continually evaluate how to model these different structures and their cash flows, determine their risks and price the compensation required to bear those risks.
A celebration of impact outcomes
The proliferation of bonds help finance the obvious: renewables, batteries, affordable housing, better schools and safer drinking water. But the market also provides ample opportunities to support marine and terrestrial conservation, protect wildlife, improve the quality of health care and access to vaccinations in developing countries, teach sustainable farming and financial literacy to small women-owned businesses, and generate high-quality, verifiable carbon credits.
Backed by an investment team with deep credit capabilities, an effective investment process and experienced analysts and traders, investors can make a range of positive impacts within alpha-seeking, diversified core and high-grade credit portfolios that represent meaningful strategic allocations.
Stephen M. Liberatore, CFA, Head of ESG/Impact – Global Fixed Income, Nuveen
