Experimental indicators on sustainable finance
These indicators give an overview of issuances and holdings of sustainable debt securities in the euro area. They provide information on the proceeds raised to finance sustainable projects, and thus also on the progress of the transition to a net-zero economy. They will bring more transparency to the financial markets and are relevant for the inclusion of climate change considerations when designing and implementing the ECB’s monetary policy, as well as when analysing economic developments and financial stability.
As of November 2023, data on sustainable debt securities are published for two levels of assurance: i) instruments with a second party opinion validating the sustainability claims of the issuer, and ii) all sustainable instruments, i.e. with all degrees of assurance including self-labelled instruments.
This section convers the following:
- Issuances of sustainable debt securities in the euro area
- Holdings of sustainable debt securities in the euro area
- Issuances and holdings of green debt securities by country and sector
- Data access
This dataset does not yet fully conform to the Public commitment on European Statistics by the ESCB and hence is published in the form of experimental indicators. Please consult the technical annex and the methodology report (to be updated when the enhanced ‘Carbon emissions’ and ‘Physical risks’ indicators are released, envisaged for March 2024) for further details on the methodology, data sources and limitations.
The outstanding amount of sustainable debt securities issued in the euro area has more than doubled in the last three years. Securities designed to finance green and social projects, which account for the majority of the market (Chart 1), have seen a particularly strong increase. Over the same period, sustainability-linked bonds recorded the highest growth rate. The majority of the sustainable debt securities issued by euro area residents have received a second party opinion (SPO) validating the sustainability claims of the issuer. Virtually all green debt securities issued in the euro area have obtained such a second party opinion. However, the relevance of these instruments in the overall debt securities market remains minor (Chart 1).
Since the beginning of 2021 euro area holdings of sustainable debt securities have grown continuously, similar to the trend observed for euro area issuances. These instruments are becoming increasingly relevant investment alternatives but overall remain a minor portfolio item (Chart 2). While euro area investors seem to prefer sustainable debt securities issued in the euro area, the euro area as a whole is a net buyer of these instruments – that is, its holdings outperform its issuances. Also, most of the sustainable bonds held by euro area residents have obtained a second party opinion, although the share of SPO validated instruments is lower for the euro area holdings of sustainable debt securities than for the issuances.
France and Germany are the top issuers and holders of green debt securities in the euro area, accounting for more than half of the market (Chart 3). The Netherlands is the third-largest issuer and Luxembourg is the third-largest holder. The remaining euro area countries represent a small share of both the issuances and holdings of the green bond market. Some countries have only residually entered the market or are yet to enter it. This analysis remains equally valid for green debt securities with a second party opinion.
Governments, monetary financial institutions, and non-financial corporations are the leading sectors in the issuance of green debt securities in the euro area (Chart 5). Virtually all green bonds issued by euro area governments have obtained a second party opinion, highlighting the importance of meeting the growing market demand for independent, external reviews on the alignment of labelled green bonds with international standards and the expected contribution of the financed projects to climate outcomes. Similarly, most of the green bonds issued by all other sectors have obtained a second party opinion. With regard to holdings of green debt securities by euro area residents, other financial institutions (mostly investment funds) are the main market players, followed by insurance corporations and pension funds as well as central banks. The remaining sectors play a very residual role, with households entering the green debt market only indirectly, via investment funds. As with the issuances, most green bonds held by all sectors have an SPO.
The aggregated data for the experimental sustainable finance indicators are published in the ECB Data Portal as part of the CSDB-Derived Securities Issues Statistics (CSEC) and the Securities Holdings Statistics (SHSS) datasets.
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Sustainable debt securities classification. Green: debt securities where the proceeds are used to finance projects with clear environmental benefits. Social: debt securities where the proceeds are used to finance projects that address social issues and seek to achieve positive social outcomes. Sustainability: debt securities where the proceeds are used to finance a combination of both green and social projects. Sustainability-linked: debt securities where the issuers are committed to future improvements in sustainability outcomes, with no restrictions on how the proceeds can be used.