Westpac’s Q2 FY2024–25 sustainable finance market update has revealed a moderate increase in the issuance rate for global sustainable debt for the first half of this year – with total issuance reaching US$843 billion.
This marks a 6 per cent increase from the US$799 billion reported in the latter half of 2024, but an 8 per cent decrease compared to the same period last year (US$915 billion), according to Bloomberg data.
With Q2 FY24–25 volumes at US$398 billion, it was the lowest second quarter since 2020.
However, at a rate approximately 1.9 times that of Q2 2020, issuance still remains robust, highlighting the maturity of sustainable finance markets which have grown considerably over the past decade.
Sustainable bonds, which encompass both green and social use of proceeds, continue to dominate the market, accounting for 75 per cent of sustainable debt issuance.
Westpac noted that there was some divergence between global and domestic results.
Globally, sustainability bonds had their fastest start to the year ever, with issuance reaching US$139 billion.
At the same time, issuance in Australia was shown to be relatively flat, up only 1 per cent from the first half of 2024.
At a global level, sustainable loan issuance has continued to face headwinds from macroeconomic pressures and regulatory shifts.
Compared to the same time last year, sustainable loan issuance recorded a 21 per cent decline worldwide.
Meanwhile, in a deviation from global trends, the domestic market has shown remarkable resilience. It experienced an overwhelming increase of 122 per cent so far this year, compared with the first half of 2024.
Westpac said this relative stability reflects “continued interest in performance-based structures among Australian borrowers, despite broader market challenges.”
The major bank said the release of the long-awaited taxonomy by the Australian Sustainable Finance Institute (ASFI) in June was a major milestone for the sustainable finance sector.
Described as a voluntary, Paris-aligned framework, the taxonomy is a key component of the government’s Sustainable Finance Roadmap.
It outlines criteria for evaluating green and transitional activities across essential sectors, including energy, transportation, minerals and manufacturing.
Currently, ASFI is conducting an implementation pilot with major financial institutions to test the practical application of the taxonomy and expects to release specific guidance for using the framework in labelled sustainable bond transactions by early next year.
Looking forward, Westpac said it expects future iterations of the taxonomy to expand into additional sectors.
Westpac also highlighted the release of the 2025 State of Net Zero report by the Investor Group on Climate Change, which detailed the climate action progress of Australian institutional investors.
It found that over 75 per cent of investors have publicly committed to net zero by 2050, with the integration of climate risks and opportunities into general investment practices now the norm for nearly all investors.
Meanwhile, 9 in 10 investors were found to apply exclusions or negative screening approaches, and 89 per cent engaged in climate finance-related policy advocacy.
Investors cited a lack of investable climate opportunities, policy uncertainty and insufficient government incentives as growing barriers.
The Clean Energy Council’s Clean Energy Australia Report 2025 was also published in Q2, providing a comprehensive overview of Australia’s clean energy sector performance.
It found that Australia recorded its highest-ever clean energy investment in 2024, totalling AU$12.7 billion.
This included significant investment in wind-power – the strongest year since reporting began – with rooftop solar continuing to lead the transition, now contributing over 12 per cent of Australia’s energy generation.
However, Westpac acknowledged that despite strong investment, this was not equally reflected in grid-connected capacity additions. These were found to be modest, with only 1.3 GW of large-scale solar and 836 MW of wind added.
