Debut issuers, who played a crucial role in the ESG market’s growth during the pandemic, are now pulling back.
First-time issuers face the burden of drafting a bond framework, verifying it with third parties, and reporting annually on the use of proceeds, which has led many CFOs to prioritize simpler, more straightforward funding options, especially amid concerns about market volatility and central bank rate hikes.
The six largest US banks, once regular issuers of ESG bonds, have also retreated. Last year, they collectively raised US$3.2bn in ESG debt, the lowest volume since 2018.
In 2023, Citigroup Inc. was the only major Wall Street bank to issue a benchmark-sized ESG bond, while Bank of America Corp., the largest corporate issuer of US ESG bonds, last issued one in June 2023, but in the European high-grade market.
Bank of America has acknowledged that its sustainable bond offerings…
