Issuance of Sustainable Debt Decreases as Markets Position for 2026 Repetition
Global sustainable debt issuance slowed in 2025, down 12% year-on-year even as clean energy investment increased – a difference that shapes expectations across debt capital markets for 2026.
Data from Institute of International Finance (IIF) shows emissions falling to around $1.4 trillion by 2025, marking the slowest growth rate in five years. Despite the economic downturn, total unsecured debt continued to grow, reaching nearly $7.8 trillion.
Investment demand remains strong
The soft output background contrasts with continued momentum in the real economy. Investments in the world’s energy transition have risen to 2.3 billion dollars, underscoring that the use of decarbonisation remains strong as financial patterns are adjusted.
Because large markets stakeholders, the difference suggests that demand for sustainable financing remains the same but is more sensitive to policy, pricing and issuer behavior.
The market is expected to grow again in 2026
I look forward to the research ING shows global sustainable finance (excluding asset-backed securities) could recover modestly by 2026 to around $1.62 trillion. While still below the highs, the perceived reversal points to a market correction rather than a reversal.
Analysts stress that the key change lies in changing market structure, regional dynamics and product preferences towards diversification.
Regional styles vary
Europe, the Middle East and Africa (EMEA) is expected to remain the largest sustainable emissions region in 2026, supported by financing needs and the continued deployment of clean energy. Central and Eastern Europe has shown strong momentum following growth of nearly 40% year-on-year through 2025.
In contrast, the US market has softened amid policy uncertainty and reduced financial yields, prompting companies and financial institutions to withdraw from stable issuance. ING expects that US volumes will remain muted in 2026, although the increase in electricity demand linked to AI infrastructure and electrification could provide partial support.
Asia-Pacific continues to show strong growth, driven primarily by financial institutions and companies, with continued growth expected next year.
The product mix continues to evolve
Green bonds and green loans are expected to remain the primary engine of market growth in 2026, as they are expected to issue approximately $700 billion and $255 billion respectively. These instruments continue to benefit from clear standards and strong investor confidence.
Stability-linked bonds, however, are likely to remain subdued amid ongoing concerns about KPI reliability and limited financial penalties for missed targets. Financial instruments for change may see moderate expansion, particularly in the Asia-Pacific where new national frameworks are emerging.
Business emissions are showing signs of recovery
The sustainable issuance of non-financial companies has decreased by more than 15% in 2025, but ING expects to double the proportion in 2026, with volumes likely to reach around $640 billion. Refinancing cycles and growing infrastructure investment needs are expected to be the main drivers.
Investment in utilities – particularly in electric grids and power systems – remains a central structural theme, along with growing energy demand from AI data centers and broader electrification trends.
The practical takeaway is that although sustainable credit growth has cooled, refinancing cycles, infrastructure spending and regional demand changes should continue to support the prospects for issuance in 2026.
The layout route is always correct
Despite near-term volatility and policy headwinds in some regions, the broad indication of a sustainable fiscal path appears to be intact. Governments, corporations and financial institutions continue to rely on labeled debt markets to finance decarbonisation and energy transformation projects.
For debt capital market participants, the focus in 2026 is likely to shift from headline growth rates to regionally evolving architecture and stable issuance output.
