A combination of supportive regulation, evolving market dynamics and rising investor demand for credible environmental, social and governance-aligned investments is underpinning the growth trajectory of the green bond market, according to the investment manager.
Given the sector broke a record US$447 billion ($696 billion) in issuance last year, AXA predicts this figure could rise up to US$600 billion ($935 billion) in 2025 across the globe.
Johann Plé, fixed income portfolio manager at AXA Investment Managers, said the spike in green bond issuance worldwide is an important commitment to improved efforts in striving for sustainable public and private practices.
“The unprecedented growth in green bond issuance is a testament to the collective commitment of global markets towards a sustainable future. The current trajectory reflects a growing emphasis on transparency as well as the drive to direct capital towards the net-zero transition,” he said.
“The green bond market has shown increasing momentum in recent years, breaking new records with US$447 billion in issuance in 2024. This dynamic has propelled the green, social and sustainability bond market to surpass 2023 by 17 per cent.”
Looking at Australia in particular, Plé said the country is making “significant strides” in the green bond market.
“Australian issuers are becoming more active, using sustainability and green bonds, with a steadily growing number of issuers and an increasing AUD to Australian issuances ratio,” he said.
This development, the portfolio manager added, is projected to attract more green capital to Australia and support the government’s 2050 net zero commitment.
Last year, the Australian government issued $7 billion of its inaugural green bond, which was heavily oversubscribed, with more than $22 billion in bids from 105 investor institutions across Australia, Asia, Europe, and North America.
This enthusiastic response seen at the time, according to Treasurer Jim Chalmers, “confirms Australia is a go‑to destination for international green capital”, adding that the issuance remains a “major milestone” for Australia’s sustainable finance market.
A more recent development in the green bond space was the launch of China’s first sovereign green bond this year, marking the beginning of a broader surge in Asian issuance, according to AXA.
“As sustainable finance continues to mature, especially with strengthening regulatory frameworks and government support across Asia, we expect the region to become a key engine of growth following Europe,” Plé added.
