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​​What to expect for sustainable finance in 2024

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​​What to expect for sustainable finance in 2024
  • Geopolitical changes are predicted to have a big impact on the growth of green finance in 2024 but, while some markets may experience a setback, others are predicted to grow
  • In order to ramp up the volume of investments in green and other sustainable projects, transparency, scrutiny and accessibility remain paramount
  • New and improved regulatory frameworks can help prevent greenwashing, and make the market more attractive for investors

2023 wasn’t exactly a stellar year for some segments of the sustainable finance market. According to Bloomberg New Energy Finance, global sustainable finance issuance volumes reached $1.3tn last year, down from $1.55tn in 2022 and down on the $1.8tn peak seen in 2021.

While green bond issuance saw an 11 per cent increase year on year in 2023, according to ING’s Sustainable Finance Pulse, sustainability-linked bond issuance fell 24 per cent and sustainability-linked loan issuance fell 55 per cent. 

“It’s clear that the markets have seen two years of total volume decline and, at the start of the year, a lot of people were still quite positive that 2023 would bring growth — well, that didn’t happen and we’ve seen that reflected also in sustainability-linked products,” says Jacomijn Vels, global head of sustainable finance at ING.

ING attributes last year’s faltering demand for sustainable finance debt to investors reassessing the market, greenwashing concerns and the need for greater regulatory clarity. While demand for sustainable finance products remains strong, ING says investors and lenders will continue to seek out “higher quality” structures.

ING researchers forecast global ESG bond supply of €820bn this year, compared to an estimated €815bn for the end of last year, with 40 per cent of total issuance expected to be in euros. 

However, Vels says it is not easy to predict where the sustainable finance markets will go in 2024. “American elections are more likely to be a negative than a positive for sustainable financing. The nearer you get to the elections, the more corporate clients are going to think about what the anti-ESG sentiment might do to issuing debt. That’s the region I’m most uncertain about.”

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In the US, Donald Trump has added his voice to Republicans condemning ESG investment, which is expected to be a major election issue in the run-up to the presidential race later this year. The FT reported last year that at least 49 “anti-ESG” bills were introduced across the US and investors such as BlackRock have been accused of not honouring their fiduciary duty by applying ESG to their investment decisions.

Nick Robins, professor in practice for sustainable finance at the London School of Economics, says the ESG backlash, which succeeded, in part, in steering firms away from investing their funds in sustainable projects for fear it would deliver fewer returns, has had an impact in some regions more than others. “Within the financial realm, green finance is no more a sort of pure technical matter, but a highly politicised topic within the market, especially in jurisdictions like the US,” he says.

Underpinning the ESG backlash is this debate as to whether investment managers and other institutional investors are permitted or even required to consider ESG issues when discharging their duties to their end clients or beneficiaries. Many critics believe ESG investing goes against managers’ main duty, which is to make money for investors. 

Robins says the US presidential elections bring a level of uncertainty in the direction the US will take with regards to regulation and whether local institutions still have the “courage” to continue making sustainability-linked investments.

Emerging economies a bright spot

However, there is positive growth momentum in other parts of the world. In the Asia-Pacific region, ING still expects to see healthy growth. Last year, the bank hired sustainable finance experts in Australia and South Korea with the view to growing its business in the area. “We’re seeing the traction start to come up in Apac,” says Vels, adding that Asia is a difficult region given the issues it faces in terms of the green transition. 

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Many Asian economies are still heavily reliant on fossil fuels and are not expected to transition as quickly to net zero as other regions such as Europe where regulation and investment is more aligned with ‘greening’ the economy. 

This year, Robins foresees an increase in the volume of investments in so-called emerging economies. “2023 was the year in which sustainable finance and green finance really landed in India, and I believe that the trend will continue this year. Also in Brazil, which in many ways has been a real pioneer in these sectors of the market, we expect to see more growth in 2024.”

Transparency and accessibility

To meet the goals set out by the Paris Agreement, aimed at containing global warming to below a 1.5C rise since pre-industrial levels, companies across sectors need to scale up their efforts to decarbonise their business. Green finance plays an important role in the transition, but certain structures such as green loans haven’t always been as popular with investors compared to sustainability-linked loans. 

Historically, green loans haven’t proliferated because a lot of borrowers didn’t want to be restricted in the use that they make of the proceeds, says Arash Mojabi, ING’s UK lead for sustainable finance. “They didn’t yet have the kind of financing identified to make it worth doing a separate green loan.”

Greater transparency on the requirements attached to green bonds and loans, and sustainability-linked loans, is fundamental to driving greater investor demand in the market.

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Ingrid Holmes, executive director at the Green Finance Institute, says the emergence of green taxonomies, as well as transition plans, is introducing a level of scrutiny around green claims from clients and from financial institutions, which will drive up quality, but also build a better understanding of what actually needs to be financed.

“Banks have done a good job integrating climate into their risk management systems, but their focus now needs to shift to how to better create green deals, because the finance system is only going to be as green as the economy is,” she says. 

Corporate investors may ask why they can’t just opt for a ‘plain vanilla’ loan, rather than having to undertake the effort needed for a sustainability-linked loan, which must be clearly tied to verifiable and robust key performance indicators.

However, Mojabi says that on the sustainability-linked side, clients have set 2030 targets, so it is about holding them accountable. “On the flip side, we’ve made a long-term commitment to be net zero by 2050, so our portfolios have to transition. We need to quickly understand who’s on that path with us, because the most disruptive thing would be to have to sell swathes of our portfolio to meet those targets.”

How is regulation impacting green finance?

In spite of the huge steps forward that have been made in green finance, the risk of greenwashing remains a concern for clients, financial institutions and regulators alike. Last year, the European parliament  approved voluntary standards for companies wanting to use the “European green bond label”. As Sustainable Views reported, the standards require issuers to disclose “considerable information” on use of proceeds with at least 85 per cent of these being allocated to activities covered by the EU sustainable finance taxonomy.

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Last year’s release of the sustainability-linked loan principles also helped the market by providing direction on what you should do to make sure you have ambitious and relevant KPIs, says Vels of ING. “It also provides the guidance that you need to have them [KPIs] checked and validated externally for all borrowers. That has actually helped in structuring sustainable loans.” 

The introduction of regulations like the EU’s Corporate Sustainability Reporting Directive should allow banks to more transparently engage with their clients on KPIs, she adds. “This transparency hopefully will also bring us more intelligence in terms of what capex [capital expenditure] is necessary for our clients to fund the transition. In the end, regulation will help us grow the market and, hopefully, also our clients in knowing where to invest.”

But Vels says regulation should not just be about disclosure, but also provide tools to stimulate investment in the transition. “My fear is that the regulation on the disclosure side will grow and we won’t get the stimulus next to it,” she says.

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Government finance statistics: net financial worth

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Government finance statistics: net financial worth

The general government financial accounts cover transactions in financial assets and liabilities as well as the stock of financial assets and liabilities. The difference between the stock of financial assets and the stock of liabilities is called net financial worth.

At the end of the first quarter of 2025, the EU net financial worth stood at -€8 948 billion or -49.4% of the gross domestic product (GDP). Compared with the end of the fourth quarter of 2024, the EU net financial worth increased by €72 billion. Compared with the end of the first quarter of 2024, the EU net financial worth decreased by €213 billion.

This information comes from data on quarterly government finance published by Eurostat today. This article presents a handful of findings from the more detailed Statistics Explained article.

Source  dataset: gov_10q_ggfa

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The net financial worth can change due to transactions or due to other economic flows (mainly price changes, also known as holding gains or losses). The main liabilities on the EU general governments’ balance sheets are debt securities. As these instruments are traded on the financial markets, their value changes over time and can be volatile.

At the end of the first quarter of 2025, the continued EU general government deficit (net financial transactions, measured as transactions in financial assets minus the transactions in liabilities, -€166 billion) contributed negatively to the evolution of net financial worth. However, at the EU level, compared with the fourth quarter of 2024, the net financial worth improved due to the financing of the deficit being off-set by positive revaluation of financial assets (+€137 billion), notably equity, as well as negative revaluations of liabilities (-€101 billion), notably debt securities. 

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Indicted Jackson prosecutor's latest campaign finance report rife with errors

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Indicted Jackson prosecutor's latest campaign finance report rife with errors
The indicted prosecutor’s recent campaign finance disclosure reflects a pair of transactions that correspond with key details in the government’s allegation that he took money from undercover informants to pay off a local official’s debt.
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Fed independence faces a ‘showdown’ between Trump & the market

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Fed independence faces a ‘showdown’ between Trump & the market

00:00 Speaker A

I also want to ask about what’s going on with economic data and the Federal Reserve, guys. Um, Ed, what are you hearing there in D.C.? Right? There is now some reporting out there that Kevin Hassett is kind of the front-runner to potentially take Jay Powell’s place at the Federal Reserve. What are you hearing and what’s the kind of vibe in Washington around this decision?

00:43 Ed

So, Julie, the way I’d view this is that President Trump always loves competition. You know, he came to some of his most recent national prominence by having the Apprentice show. And so, my expectation is that President Trump is going to keep multiple people in the running. Kevin Hassett certainly is in there. Kevin Warsh is in there. I’d put Christopher Waller, who’s already on the Fed board, as well as Treasury Secretary Bessant. I’m watching to see if there’s an opening on the Fed. If a governor steps down, like Michael Barr, now that he’s no longer vice chair for supervision, does one of these individuals get onto the board? I’m also watching for Waller as there are rate decisions here in July and September. Is there going to be a dissent? You generally don’t see dissents among Fed governors, but as you’re auditioning for that role, showing that you would be much more dovish is something that President Trump is going to be looking for and could move him up the list of potential Fed chairs come May of next year.

02:26 Speaker A

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Yeah, I think the Apprentice Federal Reserve edition is something that no one asked for, uh, guys. I don’t know, Dory, like, in terms of market reaction to all of this, um, you know, we’ve seen rates kind of remain range-bound here as we get numbers like CPI yesterday and PPI today. But do you think at some point that this competition is going to start to really come to bear in the bond market?

03:25 Dory

Uh, yeah, I think we have a showdown coming. Uh, most people in the marketplace want to preserve the independence of the Fed, and when I say that, I mean that both ways, not just from Trump’s standpoint, but from the Fed’s standpoint. I’ve always said the Fed is, in my mind, Powell being a little political in some of his rate cuts early last year. Having said that, the market has always anticipated for the last couple of years anyway, uh, more rate cuts than actually should have happened or did happen. And I think we’re falling into that trap, and so is Trump as well. I’m kind of a wait-and-see kind of guy right now. I do think the next Fed chair is going to be one of those type of interviews, hey, I’m Donald Trump and I believe this, and if you believe this, I’d like to have you as Fed chair. That points to Hassett being the, uh, being, being there. And, uh, I think that’s going to get some criticism from the market. I think we need that independence. We need good independent valuation. Uh, and, and, you know, I think cutting too soon, soon could be, uh, extremely dangerous when we all know that our deficit is out of control, our debt is out of control, and we don’t want to become a Venezuela.

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