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ANZ Sustainable Finance Insights, Q2 2023

Sustainable finance

2023-07-25 04:30

In this issue:

Quarterly highlights  |   Market update  |   Notable transactions  |   Sustainability developments and updates  |   ANZ updates  |   Sustainability events  |   ANZ contacts

Quarterly highlights

  1. Sovereign green bonds are on track for record issuance in 2023, as governments increasingly look to fund their Paris Agreement and other environment commitments and boost their climate and sustainability credentials (Graph 1). See Market update.

  2. Australia is getting in on the sovereign green bond action, with the federal government announcing plans to issue Australia's inaugural sovereign green bond in 2024. This would follow in the footsteps of the four Australian states to have funded in green, social and sustainability format so far. Western Australian Treasury Corporation (WATC) was the latest, pricing a AUD1.9bn 10-year inaugural Green Bond in June, with ANZ acting as Joint Sustainability Coordinator and Joint Lead Manager. See Notable transactions.

  3. There were several important updates to global regulations, standards and targets, including the below. See Sustainability developments and updates from the regulatory and legal environment.

    • The International Capital Market Association (ICMA) published updated versions of the Climate Transition Finance Handbook (CTFH) and Sustainability-Linked Bond Principles (SLBP).
    • The International Sustainability Standards Board (ISSB) released its first two IFRS Sustainability Disclosure Standards.
    • The Science Based Targets Network (SBTN) published corporate science-based targets for freshwater and land.
  4. ANZ Institutional achieved stellar results in the 2023 Peter Lee survey (Peter Lee Associates Large Corporate & Institutional Relationship Banking Survey, Australia), including #1 market leader in ESG/sustainable finance. See ANZ updates.

Graph 1: Global Sovereign Green Bond Issuance by Year

{CFINFOGRAPHIC: graph1-global-sovereign-green-bond-issuance-by-year.svg}
Source: BloombergNEF, ANZ

Market update

All market data are sourced from BloombergNEF as at 30 June 2023 and include original and tapped issuance, unless otherwise noted.

  • Global green, social, sustainability and sustainability-linked (GSSS) bond and loan issuance declined 9.6% q/q to USD340.6bn in Q2 2023 (Graph 2).

  • This was the lowest quarterly GSSS issuance since Q4 2020, which may reflect a confluence of factors. The global economy continued to slow, as central banks pushed policy rates higher in the face of still-too-high inflation. Recession risks remained elevated; some economies have already experienced mild technical recessions, although the damage to labour markets, households and businesses has been limited so far. Credit conditions tightened in the wake of the banking sector issues earlier in the year. Developments in climate and sustainability regulations and standards may be taking both borrowers and investors some time to digest and greenwashing concerns have become more acute.

  • Structural drivers of the sustainable finance market remain in place. The funding requirement for the energy transition is immense. Regulatory, policy and social pressure on governments, corporates, and institutions to set and achieve emissions reduction targets and other environmental and social commitments continues to grow (with some exceptions). And the market’s initial focus on climate is broadening to encompass other themes, such as nature. These structural drivers will continue to put upward pressure on issuance over the longer-term in the face of the cyclical and temporary drags.

  • Cumulative global GSSS issuance stood at USD6.58tn as at 30 June 2023.

Graph 2: Global Sustainable Debt Market by Product by Quarter

{CFINFOGRAPHIC: graph2-global-sustainable-debt-market-by-product-and-quarter.svg}
Source: BloombergNEF, ANZ

  • Sovereign green bonds are on track for record annual issuance in 2023, as governments increasingly look to fund their Paris Agreement and other environment commitments and boost their climate and sustainability credentials. Sovereign green bond issuance hit USD77.3bn in H1, almost double the H1 volumes of the previous two years (Graph 1). A EUR10.0bn (USD11.0bn) new green bond issued by the Italian government was the largest in H1, with other sizeable transactions by the German, UK, Irish and Austrian governments.

  • Sovereign sustainability bond issuance is also on track for a record year after a sharp rise in Q2, on the back of a new USD2.9bn bond by Mexico and USD4.5bn in tap issues by Peru.

  • The increased number of use of proceeds transactions by sovereign issuers in H1 2023 has funnelled additional funding towards green projects, with most green project categories seeing an increase in the number of transactions targeting them (Graph 3). Renewable energy, energy efficiency and clean transportation were the most common project categories targeted. In contrast, social project categories, which tend to be less popular, dropped off in H1 2023.

Graph 3: Number of Sovereign Use of Proceeds Transactions Targeting Eligible Project Categories*

{CFINFOGRAPHIC: graph3-number-of-sovereign-use-of-proceeds-transactions-target-ingeligible-project-categories.svg}
* Many transactions target multiple project categories
Source: Bloomberg, ANZ

  • Total green bond issuance hit a record in H1 2023, bucking the downward trend in the overall sustainable debt market (Graph 2). This was in part due to the surge in sovereign green bond issuance. In Q2, green bond issuance accounted for 55.5% of the overall sustainable debt market, the highest share in five years. Sustainability bonds are also tracking ahead of where they were this time last year but are down on their 2021 run rate.

  • Social bonds were the only format to record a quarterly increase in Q2, rising almost 20% q/q to USD44.0bn. This was a two-year high in quarterly issuance but still well off the pace of late-2020 and H1 2021 when governments were funding their COVID support response. Green loans tumbled to USD5.7bn, the lowest level since 2015, accounting for less than 2% of the sustainable debt market.

  • Sustainability-linked issuance dropped sharply over the past year to USD55.5bn in Q2 2023, the lowest since Q3 2020 (Graph 4). This was driven by a steep downturn in sustainability-linked loans (SLLs). Concerns around integrity and incentives in the SLL market have been raised, including by the Financial Conduct Authority, the UK's financial services industry regulator (see Sustainability developments and updates from the regulatory and legal environment).

Graph 4: Global Sustainable Debt Market, Use of Proceeds vs Sustainability-linked Products

{CFINFOGRAPHIC: graph4-global-sustainable-debt-market-use-of-proceeds-vs-sustainability-linked-products.svg}
Source: BloombergNEF, ANZ

  • Asia has cemented its position as the second-largest sustainable debt issuer, with almost 28% of the market in Q2 2023 (Graph 5). Europe remains the clear leader, accounting for almost 48% of total issuance in Q2. North American issuance has trended downward since mid-2021 to USD36.1bn in Q2 2023, the lowest quarterly volume in three years, to account for less than 11% of the market.

  • South American issuance jumped to its third highest quarterly result on record. This came on the back of the Government of Chile issuing new sustainability-linked bonds (see Sustainability developments and updates from the regulatory and legal environment) and tapping social bonds, and the Government of Peru tapping two sustainability bonds.

Graph 5: Global Sustainable Debt Market by Region by Quarter

{CFINFOGRAPHIC: graph5-global-sustainable-debt-market-by-region-by-quarter.svg}
Source: BloombergNEF, ANZ

Notable transactions

ANZ continues to support customers to access the sustainable finance market. Selected notable recent transactions supported by the ANZ Sustainable Finance team include:


New Zealand


  • Oversea-Chinese Banking Corporation (OCBC) issued AUD1bn of 3-year Green Senior Unsecured Floating Rate Notes (FRN). ANZ acted as Joint Lead Manager and Bookrunner. The issuance was only the second time an Asian bank has issued a green bond this year. Proceeds will be used to finance or refinance new or existing qualifying assets under the OCBC Sustainability Bond Framework.

  • Pertamina Geothermal Energy (PGE) successfully raised USD400m of 5-year 144a/RegS Green Senior Unsecured Bonds, which were 8.25 times oversubscribed. ANZ acted as Joint Lead Manager and Bookrunner. The transaction marks PGE’s debut global bond following its recent initial public offering. It was also the first green issuance from a sovereign-linked corporate in Indonesia. PGE has been raising capital to expand its installed geothermal capacity and support the Indonesian government’s net zero ambitions.

  • Hong Kong Air Cargo Terminals Limited (HACTL) successfully closed a 5-year HKD1.5bn Sustainability Linked Loan. This was ANZ’s inaugural sustainable financing mandate for HACTL. ANZ was Lead Sustainability Coordinator and provided end-to-end financing solutions with selected sustainability performance targets aligned to HACTL’s overall sustainability strategy. ANZ also acted as Mandated Lead Arranger.

  • PAG established the largest Sustainability-Linked Facility for a private credit fund in Asia-Pacific. ANZ acted as Joint Sustainability Coordinator and led the development of the sustainability-linked finance framework following market best practice and global standards. The framework provides guidelines for PAG’s private credit funds to incorporate sustainability-linked attributes into its financing activities, with the interest rate margin tied to performance across four ESG-related key performance indicators.


Sustainability developments and updates from the regulatory and legal environment


  • The International Capital Market Association (ICMA) published updated versions of the Climate Transition Finance Handbook (CTFH), Sustainability-Linked Bond Principles (SLBP), and accompanying Key Performance Indicator (KPI) registry.

    • The 2023 edition of the CTFH includes updated guidance and disclosure requirements for emissions reduction and added guidance for climate transition-themed bonds targeted at ‘hard-to-abate’ sectors, reflecting market developments and expectations. The focus is on transition as a theme rather than a label.
    • The SLBP update features new guidance and metrics specific to sovereign issuers, to facilitate sovereign SLB issuance, and an expansion of the KPI registry to include more metrics focussed on social issues, a just transition and value chains.
    • Other updates include an increased focus on target population identification and guidance for impact reporting for Social Bonds, recommendations and metrics for impact reporting for green bonds, and a revised mapping to the SDGs.
    • The 2023 Annual Conference of the Green, Social, Sustainability and Sustainability-Linked Bond Principles held in Singapore on 28 June covered these key updates (see Sustainability events and key dates).

  • The International Sustainability Standards Board (ISSB) released its first two IFRS (International Financial Reporting Standards) Sustainability Disclosure Standards: IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. The standards provide a high-quality, comprehensive global baseline for sustainability disclosures and are effective for annual reporting periods beginning from 1 January 2024. The ISSB does not mandate use of the standards and lets jurisdictional authorities decide whether to mandate use.

  • The Science Based Targets Network (SBTN) published corporate science-based targets for freshwater and land. These targets directly support biodiversity protection and complement Science Based Targets Initiative (SBTi) climate targets. SBTN provides methodology, tools and guidance for businesses to assess and prioritise their impacts on nature and set ambitious targets to address them. A pilot group of 17 companies plans to set SBTN-recommended targets this year.

    • The freshwater targets focus on 1) freshwater quantity, specifically withdrawals from surface bodies and groundwater, and 2) freshwater quality, specifically nitrogen and phosphorus pollution entering surface bodies.
    • The land targets are 1) halting conversion of natural ecosystems, 2) freeing up agricultural land for increased ecological productivity, and 3) improving the ecological condition of landscapes, including working lands, to enhance ecosystem structure, composition, and function and the social systems that depend on such landscapes.

  • SBTi published three new draft resources for the financial sector. These focus on setting credible net-zero targets, both near- and long-term, for financial institutions and aligning these targets with 1.5°C pathways (previously well-below 2°C). There are also proposed criteria on financial institutions’ interaction with fossil fuel companies. Public consultation on the draft resources is open until 14 August 2023.

  • Climate Bonds Initiative (CBI) launched a new Certification Scheme for sustainability-linked bonds, assets and entities. It is the fourth version of the Climate Bonds Standard. The Scheme was previously only available for use of proceeds debt instruments such as green bonds. This extended Scheme aims at supporting the transition to a low carbon economy, with CBI certification now also available to non-financial organisations with strong transition plans that are aligned with 1.5°C pathways as well as those transitioning towards alignment with 1.5°C pathways by 2030.


  • At the Australian Government’s second Investor Roundtable, the Government committed to:

    • The introduction of a Sovereign Green Bonds program. This will enable the government to raise funds for projects with climate and/or environmental benefits, offer investors a stake in public projects that align with their climate and environmental objectives, and demonstrate the government’s commitment to achieving its emissions reduction and environmental targets. The Australian Office of Financial Management (AOFM) plans to issue Australia’s inaugural sovereign green bond in 2024, following development of a Green Bonds Framework, in respect of which NAB and UBS have been appointed advisors.
    • Co-funding the development of an Australian sustainable finance taxonomy with the Australian Sustainable Finance Institute (ASFI), with AUD1.6m of funding allocated in the 2023-24 Budget. This will facilitate Australia’s net zero transition by increasing the credibility of Australia’s sustainable finance market and supporting investor decision-making in allocating capital to clearly defined climate and environmental activities.
    • The expansion and upgrade of the Nationwide House Energy Rating Scheme (NatHERS) to apply to existing residential properties.
    • An extra AUD4.3m funding for the Australian Securities and Investments Commission (ASIC) for surveillance and enforcement against misleading claims about the sustainability and/or efficiency of corporate products.

  • The Australian and New Zealand Governments agreed to align sustainable finance frameworks and tools at the inaugural Australia–New Zealand Climate and Finance Ministers’ Meeting in June in Wellington. Aligning frameworks, including taxonomies, will make it easier and clearer for businesses, investors and governments working across both countries to participate in the sustainable finance market. Ministers also agreed to establish a Net Zero Government Working Group and work together on increasing electric vehicle (EV) uptake, developing Guarantee of Origin Schemes, and improving monitoring and disclosure.

  • Ministers also acknowledged that First Nations and Māori people in Australia, New Zealand and the Pacific are disproportionately impacted by climate change and have valuable knowledge to contribute to taking action on climate change. On this front, the UN Framework Convention on Climate Change (UNFCCC) Local Communities and Indigenous Peoples Platform (LCIPP) Pacific Regional Gathering later in the year will provide an opportunity for First Nations and Māori people to positively contribute through knowledge sharing and dialogue with governments from the region.

  • The 2023-24 Australian Federal Budget included AUD4.6bn in climate-related spending commitments out to 30 June 2030 (Table 3.7, Budget Paper 1), adding to the AUD24.9bn in the October 2022-23 Budget.

    • The headline items were concentrated in the sub-category Reducing emissions in Australia’s energy system and broader economy and included AUD2.0bn for the Hydrogen Headstart program, AUD1.3bn for the Household Energy Upgrades Fund, and AUD314m through the Small Business Energy Incentive.
    • The Budget also allocated AUD83m for the establishment of a Net Zero Authority. The Authority’s objectives are to mitigate negative impacts of the net zero transition on workers, regions and communities and to help them, along with investors and companies, realise its opportunities. The government also allocated AUD400m from the Powering the Regions Fund to support existing and new industries through the net zero transition.

  • The Australian Government announced a full audit of environmental offsets, covering more than 1,000 offset sites, to improve compliance and ensure the ongoing integrity of produced offsets. The audit falls under the Government’s Nature Positive Plan and is commencing ahead of the introduction of a package of new national environmental legislation to Parliament by the end of the year. The package will include proposals for National Environmental Standards and the establishment of an independent Environment Protection Agency.

  • The Australian Government indicated that mandatory climate reporting requirements will commence from 1 July 2024 for large listed and unlisted companies and financial institutions in Australia. The Australian Accounting Standards Board (AASB) will develop detailed disclosure standards for Australia in close alignment with the ISSB’s final standards (see Global above). The second consultation on climate-related financial disclosure closed on 21 July.

  • The Victorian Government brought forward the deadline to end native logging in the state to 1 January 2024 from 2030. The 2023-24 Victorian Budget allocated an additional AUD200m to support timber industry workers and affected communities through the transition.

New Zealand

Each lays out three scenarios: Orderly, Disorderly (‘Too Little Too Late’ for the Financial Services Sector), and Hot House World. These scenarios followed the Marine Scenarios Report and Tourism Sector Climate Change Scenarios, first published under the Aotearoa Circle, with some scenarios complemented by adaptation roadmaps.



Other International

ANZ updates

As a global bank committed to supporting sustainable finance market growth, ANZ is actively working with customers to help them transition to net zero emissions by 2050. ANZ’s sustainability highlights for the quarter include the below.

Research and Publications

Sustainability News

Sustainability events and key dates


Date and event



Post-event materials

10-11 May

RI Australia 2023

Responsible Investment Association Australasia (RIAA)

Melbourne, Australia


24-26 May

55th ICMA AGM and Conference


Paris, France

Highlights, photos, speeches, presentations, panels and minutes

28 June

The 2023 ICMA Annual Conference of the Green, Social, Sustainability and Sustainability-Linked Bond Principles



Photos, speeches and presentations

19-20 July

Singapore Carbon Market & Investor Forum

Carbon Market Institute (CMI), with ANZ as Lead Partner



Upcoming in 2023

Date and event



Event details

8 Aug

RI Aotearoa NZ 2023


Auckland, New Zealand

Details, programme, speakers, tickets

21-22 Aug

2023 Climate Change Investment and Finance Summit

Investor Group on Climate Change (IGCC)

Sydney, Australia

Tickets, details, agenda and speakers

14-15 Sep

Australasian Emissions Reduction Summit

CMI, with ANZ as a major sponsor

Sydney, Australia

Details and tickets

18-19 Sep

2023 Sustainable Development Goals (SDG) Summit

United Nations (UN)

New York, US

Details, programme and registration

18 Sep

The Taskforce on Nature-related Financial Disclosures (TNFD) will publish its final recommendations for a framework for nature-related risk management and disclosure during Climate Week in New York.

3-5 Oct

PRI in Person

UN Principles for Responsible Investment (PRI)

Tokyo, Japan

Details and agenda

24 Oct

Australian Sustainable Finance Summit 2023


Sydney, Australia


30 Nov – 12 Dec

2023 UN Climate Change Conference (UNFCCC COP 28)


Dubai, UAE



ANZ Sustainable Finance Insights, Q2 2023
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ANZ contacts

ANZ has a global sustainable finance team with presence in Sydney, Melbourne, Brisbane, Perth, Auckland, Wellington, Singapore, Hong Kong, London and New York.

Feedback and enquiries can be directed to See key contacts from each jurisdiction below.



Katharine Tapley

Head of Sustainable Finance
T: +61 2 8937 6092
Based in Sydney

New Zealand

Dean Spicer

Head of Sustainable Finance, New Zealand
T: +64 4 381 9884
Based in Wellington

UK and Europe

Emily Tonkin

Head of Sustainable Finance, UK and Europe
T: +44 77 7134 3112
Based in London


Stephanie Vallance

Acting Head of Sustainable Finance, International
T: +65 6708 2839
Based in Singapore

Portfolio and Analytics

Jo White

Head of Portfolio, Sustainable Finance Portfolio & Analytics
T: +61 2 8937 6062
Based in Welliington

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