Green debt sales hit record levels in 2025 despite climate backlash

Singapore – Investors have piled into climate-friendly assets despite policy and regulatory rollbacks in the US and Europe, as artificial intelligence (AI) drives a boom in energy infrastructure demand.

Global green bond and loan issuance has reached a record US$947 billion (S$1.2 trillion) so far in 2025, according to data compiled by Bloomberg Intelligence.

That is as stock market gauges for renewables are set for their first annual gains since 2020, outperforming the S&P 500 by a wide margin, while shares of power-grid technology companies remain favoured.

The flows are notable in a year when US President Donald Trump backed fossil fuels and dismantled clean-energy subsidies and legislation. Europe has also rolled back some of its toughest environmental rules amid concerns about growth and competitiveness.

Still, clearer policy signals and an almost 4 per cent expected increase in global electricity demand, driven by AI, cooling and electrification needs, are lifting investor optimism.

“Green investments are increasingly becoming viewed as core infrastructure and industrial plays, not just niche ESG (environmental, social and governance) trades,” said Ms Melissa Cheok, associate director for ESG investment research at Sustainable Fitch.

“Capital is likely flowing towards areas with clear revenue visibility, policy backing and structural demand such as grid upgrades and renewables tied to electrification.” 

Asia-Pacific companies and government-linked issuers raised US$261 billion from green debt, up about 20 per cent from a year earlier, with China and India backing the roll-out of renewables, according to Bloomberg Intelligence.

China had a record US$138 billion in green bond issuance, led by its biggest lenders. It also debuted a sovereign offering in London earlier in 2025.

The so-called greenium – the lower borrowing costs on green bonds – is most evident in Asia-Pacific, with some issuers getting more than a 14-basis-point discount for using a green label in November, according to BloombergNEF. Green bonds are often used by companies to raise money to switch to renewable energy or lower-carbon transportation.

BNP Paribas and Credit Agricole are the leading underwriters of green bonds in 2025, according to data compiled by Bloomberg.

The amount of outstanding green bonds has grown at a 30 per cent compound annual rate over the past five years, and issuance now accounts for about 4.3 per cent of the global total, LSE Group researchers said in November.

Easing US interest rates and refinancing needs may boost global green bond sales to as much as US$1.6 trillion in 2026, said Ms Crystal Geng, ESG research lead for Asia at BNP Paribas Asset Management.

Green stocks have been a market leader in 2025. Clean-energy indexes from S&P Dow Jones Indices and WilderShares have surged 45 per cent and 60 per cent, respectively, though both remain below their 2021 peaks.

US solar and battery storage stocks have been among the top performers, while wind turbine makers have led gains in China and Germany. India has emerged as a hot spot for renewable-energy initial public offerings, with 11 listings raising more than US$1 billion and another six companies seeking more than US$3 billion. In 2024, 14 renewable energy companies raised US$2.4 billion through initial public offerings.

Not all markets are benefiting. US green debt issuance fell 7 per cent to US$163 billion in 2025 and supranational bond sales declined by a similar amount.

Sales of sustainability-linked debt slumped about 50 per cent in 2025 to US$165 billion amid greenwashing concerns, Bloomberg Intelligence data shows. Transition bond issuance more than halved to US$10.9 billion for hard-to-abate sectors.

The trends are likely to reverse over the next two years, said Mr Xuan Sheng Ou Yong, a client portfolio manager for sustainable investing at Robeco in Singapore.

Changes to European fund rules will let asset managers define what qualifies as a sustainable investment, opening the door to emissions-cutting investments in higher-polluting sectors, he said. BLOOMBERG