Investors turn to sustainability-linked bonds
Institutional investors are looking beyond green bonds due to concerns about greenwashing
The broadly-defined ESG bond market has grown exponentially in recent years, with the overall market growing to $1.3tn in 2020, according to non-profit the Climate Bonds Initiative. Issuance has responded to increasing investor demand driven by shifting public perception and regulatory change. Last year set a record for ESG issuance, and industry experts expect growth to continue as the range of ESG-labelled bond types broadens to include instruments such as sustainability-linked bonds (SLBs) and transition bonds. Unlike for green or sustainable bonds, the funds raised by SLBs are not tied to a specific use. Instead, SLB issuers commit to embed ESG-related key performance indicators more wid
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