How Green Bonds are Accelerating Corporate Energy Transition

The market for green bonds, which are used to finance environmental projects, has grown substantially, surpassing a cumulative US$6tn since the instrument was first conceived. The World Bank, in partnership with Swedish bank SEB, introduced the first green bond in 2008 as a mechanism to raise capital for climate action projects. In the years since, they have evolved into a major segment of the financial market.

A bond is a loan from an investor to a borrower, such as a corporation or government. The borrower uses the capital for specific projects and repays the loan over time with interest. Green bonds function in the same way, but the capital raised is directed exclusively towards projects with environmental benefits, such as renewable energy development or regenerative agriculture.

A rapidly expanding market

According to the Climate Bonds Initiative, GSS+ bonds (green, social, sustainability and sustainability-linked) have grown from just US$2bn 15 years ago to over US$6tn today. This milestone indicates accelerating interest from investors and issuers.

Sean Kidney, CEO and Co-Founder of the Climate Bonds Initiative, provides context on the pace of this growth. “The extraordinary US$6tn milestone was achieved just 14 months after the US$5tn mark,” Sean explains.

“And the market keeps growing. One of the leaders in green bond issuance has been China, and one of the bonds that got us over the US$6tn mark was China’s first-ever green sovereign bond, issued in the London market. We expect to see many more," he adds.

Sean adds that the scale of the market is beginning to create meaningful change. “With over US$6tn in cumulative aligned GSS+ issuance, we’re building the kind of market pressure that can achieve real climate outcomes. The bond market intimidates, so let’s make it work for the planet."

Data from The World Bank supports this, showing a cumulative figure of US$6.3tn for these bond types as of June 2025.

Green bonds in corporate funding strategy

SEB, which played a role in the creation of the first green bond, continues to integrate this form of financing into its corporate strategy. SEB views sustainable finance as an important area for growth. Kimberly Bauner, Head of Group Treasury at SEB, clarifies their position.

“Green bonds have been a part of SEB’s funding strategy since 2017, complementing our other market financing. With the new framework, we remain committed to continue issuing green bonds. By doing so, we can further diversify our global investor base while supporting the bank’s customers in their sustainability transitions,” Kimberly says.

The Asia-Pacific region is a leader in issuance, with China being the single largest country issuer in 2025. Corporate issuers are also a large part of the market, accounting for more than 40% of new green bond issuance.

Enhancing transparency and accountability

As the market expands, so does scrutiny regarding the tangible environmental impact of the projects being financed. Concerns about 'greenwashing', where funds are raised without delivering sufficient environmental benefits, persist.

In response, regulatory frameworks and standards are being developed to improve transparency. Initiatives like the EU Green Bond Standard and China’s enhanced disclosure requirements are pushing issuers towards more rigorous impact measurement and reporting.

The Climate Bonds Standard is also evolving, demanding more granular data and forward-looking forecasts on environmental impact.

These developments could mean that green bonds become an increasingly reliable tool for companies financing their net zero roadmaps and influencing their supply chains to adopt more sustainable practices.

High investor demand, coupled with more robust regulatory structures, could strengthen the foundation for corporate sustainability initiatives.

For the market to continue its ascent and contribute effectively to global climate targets, stakeholders must ensure environmental integrity remains central to every green bond issued.