Green bonds rise and ESG funds suffer amid scrutiny on sustainable investment products

Global green bond issuance hit a record USD195.9bn in the second quarter of 2024, attracting higher inflows compared to newer forms of sustainable debt. Meanwhile, ESG equity funds and SLBs have faced significant outflows and declines, influenced by the US anti-ESG movement and greenwashing concerns. Legal experts note that green bonds are seen as the most credible form of sustainable investment due to their established frameworks and transparency. However, there is still scrutiny, and a shift towards "deep green bonds" aligned with the EU Taxonomy is emerging. Despite this, experts caution that SLBs and other sustainable finance instruments should not be overlooked, as they can effectively integrate sustainability into broader financing strategies.

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