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The Road to Our 1000th SPO: How We Got Here and What’s Next in Sustainable Finance

Posted on June 29, 2022

Heather Lang
Heather Lang
Senior Vice President, Corporate Solutions

The sustainable finance market, including green, social and sustainability bonds and loans, is a constantly evolving space, with different approaches and instruments to choose from. Over the past two years, global crises, such as the COVID-19 pandemic and Russia’s invasion of Ukraine, have had a dramatic effect on the fixed income market. As a global leader in second-party opinions (SPOs) of sustainable bonds and loans, Sustainalytics maintains a unique vantage point to observe how the market has changed. Here are some noteworthy developments. 

The Shift from Green Bonds to KPI-Linked Instruments 

Green bonds have historically been the leading sustainable finance instrument in terms of total number, and volume of deals. Now, other financial instruments are catching up, with the share of Sustainalytics SPOs dedicated to green bonds dropping from 58% in 2020 to 48% in 2021.  

This trend primarily speaks to the rise in popularity of KPI-linked or sustainability-linked instruments, accounting for a growing segment of the pie. With that said, an increase in financing related to net-zero commitments across most instruments affirms that “green” is still at the heart of sustainable finance. 

Social Bonds Fluctuate in Response to Global Crises 

Lately, social bond issuances have been on the decline since peaking at the height of the COVID-19 pandemic in late 2020. However, we expect social bonds to reclaim their place in the market, given their demonstrated ability to respond to timely social developments in a flexible manner. Regional interpretations of the social use of proceeds will clearly be key to the growth of these instruments. 

Sustainability Bonds Support Expansive Mandates  

Sustainability bonds, including combined green and social use of proceeds categories, have steadily accounted for a quarter of Sustainalytics’ opinions delivered to date. The flexibility to broadly allocate proceeds appeals particularly to financial institutions and sovereign issuers with expansive mandates. 

The Rise of Sustainability-Linked Bonds 

Sustainability-linked bonds (SLBs) represent the fastest growing market segment in the past two years, thanks to their flexibility in financing general corporate purposes. In parallel, investors have become more discerning regarding the strength of key performance indicators (KPIs) and the ambitiousness of sustainability performance targets (SPTs). 

Transition Bonds Competing for Market Share   

Transition bonds have gained interest from hard-to-abate industries, such as aviation and shipping. However, they have not attained the level of momentum that was anticipated when they first entered the market in late 2020. We attribute this in part to the flexibility of SLBs and the lack of a common definition for transition financing. 

What’s Next in Sustainable Finance? 

In the past year, Sustainalytics has begun providing opinions on harmonized sustainable finance frameworks, targeting both use of proceeds and linked issuances. This exciting new hybrid model allows issuers to finance impactful green and social projects while also committing to overall corporate-level sustainability improvements. 

As an emerging best practice, these harmonized frameworks will support stronger alignment across issuers’ sustainability strategies, performance, and capital raising activity. 


Since 2014, Sustainalytics has become a proven leader in second-party opinions, providing more than 1,000 SPOs to a wide variety of bond and loan issuers. While our first 500 SPOs were delivered over a six-year period, our next 500 SPOs came in rapid succession, over a 19-month period. For more information on our 1000th SPO milestone, visit


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