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ESG Issuance Sees Strong Quarterly Growth Amid Yearly Decline

The Association for Financial Markets in Europe (AFME), a trade association, has published its Q2 2022 report outlining ESG bond and loan issuance from the last quarter. It noted a 16.5% increase compared to Q1, although the year-on-year volume declined 20.7%. ESG bond issuance, including ESG-labelled, sustainability-linked and transition bonds, represented 19.1% of total European bond issuance in H1 2022. The sustainability-linked bond market has decelerated in Q2, with a 47% year-on-year and a 59.3% quarter-on-quarter decline in issuance. ESG-labelled bond issuance remained fairly steady with a 6% year-on-year increase, which AFME accredits to a 47.9% year-on-year growth in the green bond segment. On carbon prices, the European Union Allowance price per metric tonne finalised H1 2022 at €88/Tn, an increase from €80/Tn at the end of 2021. Global ESG fund issuance decreased during Q2, with ESG-mandated funds totalling US$6.5 trillion, a 16.7% decrease from Q1 levels. AFME says the quarterly decline was primarily driven by valuation losses, with net outflows from ESG funds totalling US$37.5 billion in Q2, which is representative of less than 5% of the decline in the total amount of Global ESG funds. 

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