AFME is pleased to circulate its European ESG Finance quarterly data report for the fourth quarter of 2022 and full year 2022. The aim of this report is to provide detailed data and analysis on the rapidly growing Sustainable Finance market in Europe.

Key highlights:

• European ESG bond and loan issuance accumulated €680bn in proceeds during 2022, a 10% annual decline predominantly driven by lower social bond issuance.

ESG bonds and loans include ESG-labelled bonds (proceeds-based), sustainable-linked bonds, transition bonds, green-linked loans, and sustainable-linked loans.

• Green bond issuance grew 6% in 2022 notwithstanding the wider market turbulence of the year.
• Social bond issuance declined 40% in 2022FY. The strong participation of the French agency CADES did not offset the contraction in European Commission Social bond issuance.
• Sustainable bond issuance declined 12%FY, which is of similar proportion than the wider market contraction in non-ESG bonds during the year.
• Sustainable-linked bond declined 16% in 2022 notwithstanding a quarterly record amount in Q1’22.
• ESG securitisation issuance declined from €8bn in 2021 to €1.2bn in 2022.

• Carbon prices: the European Union Allowance (EuA) price per metric tonne finalised Q4'22 at €81/Tn, from €80/Tn at the end of 2021. During the first months of Q1’23, EuA spot prices have increased to €100/Tn.

• Global ESG Funds rose during Q4’22, after a sequence of quarterly declines during the first three quarters of the year.
  • Funds with an ESG mandate (including Mutual Funds and ETFs) totalled $7.7tn as of Q4’22 a 18% decrease from Q4’21 ($9.4tn).
  • The full-year contraction was driven predominantly by lower valuations as total outflows accumulated only $1bn during 2022.

• ESG price premia: spreads of corporate ESG bonds against non-sustainable benchmarks widened in the second half of the year from c1bps at the start of the year to c4bps in November 2022, before returning to c1bps in early 2023.

• Regulatory update: We present a selective list of upcoming European initiatives for Q4’22 and 2023.