AFME ESG Finance Report Q2 2023 | AFME

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Data Research
AFME ESG Finance Report Q2 2023
09 Aug 2023
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Author Julio Suarez Director
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AFME is pleased to circulate its European ESG Finance quarterly data report for the second quarter of 2023. The aim of this report is to provide detailed data and analysis on the rapidly growing Sustainable Finance market in Europe.

This Report contains up to date trends for the European Sustainable Finance market as at 30 June 2023, as well as a high-level regulatory and supervisory snapshot.

Key highlights:

  • European ESG bond and loan issuance accumulated €151bn in proceeds during Q2’23, declining 23.9% year-on-year (YoY) and 11.1% quarter-on-quarter (QoQ).
    • Half year volumes for ESG-labelled bonds increased 17% YoY predominantly driven by the robust green bond issuance during Q1’23.
    • Sustainable-linked bond market witnessed a sharp decline in Q2’23 at 46.5% QoQ and a 16.3% YoY decrease.
    • No ESG securitisation issuance was recorded in Q2’23.
  • Carbon prices: EU and UK carbon prices have diverged in the course of the year, with European Union Allowance (EuA) carbon prices standing 10% above December 2022 levels while UK carbon prices have accumulated a decline of 35% over the same period.
  • Global ESG Funds decreased marginally during Q2’23
    • Funds with an ESG mandate (including Mutual Funds and ETFs) reached a value of $8.4tn as of Q2’23, representing a 25.3% increase from Q2’22 but a marginal decrease of 0.1% when compared to Q1’23.
    • The marginal quarterly decline was accompanied by net fun outflows, which accumulated a total of $26.3bn during the second quarter of 2023.
  • ESG price premia: spreads of corporate ESG bonds against non-sustainable benchmarks widened in the second quarter of the year from c0.2bps at the start of April to c1.8bps in late July 2023.
  • Regulatory update: We present a selective list of upcoming European initiatives for 2023. For a more comprehensive update please see AFME and Linklaters report Sustainable Finance in Europe: Regulatory State of Play (2023 updated edition)