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SEB’s The Green Bond report: Raised forecasts for transition investment

In SEB’s latest The Green Bond report, our experts raise their forecast for transition investment further, to above USD 600 billion in 2023 and to more than USD 1 trillion by 2025. The report also looks at the emerging drivers of the accelerated energy transition in the shape of a geopolitically motivated “economic arms race” – including the EU’s newly announced Green Deal Industrial Plan.

New data for 2022 confirm the acceleration in transition investment. Global clean energy investments totaled USD 495 billion in 2022, the highest level on record. The new clean energy investments are mainly driven by China’s response to the energy shortages experienced in 2021. China’s investment doubled in 2022 compared with 2021, while investment in Europe and North America still haven’t broken with the past decade’s barely rising trend.

“Both the US and Europe must follow China into an accelerated transition, and this will shift the focus to the resource and capital requirements” says Thomas Thygesen, Head of Research, Climate & Sustainable Finance, at SEB. “To avoid dependency problems similar to Europe’s dependency on Russian natural gas, they need to build their own capacity to support the transition. However, while the US Inflation Reduction Act is a big leap forward, Europe risks getting left behind if policymakers do not become more ambitious, fast.”

The report also features a review of sustainable financing in 2022. The total amount of new labelled bonds and loans reached just under USD 1.5 trillion last year, down 12 per cent year-on-year. Globally and in Europe, new issuances of sustainable bonds have declined less than the overall bond market. In the Nordics, the amount issued through sustainable bonds even grew last year. Sustainable bonds accounted for a third of corporate bonds (excluding real estate) in Europe and the Nordics in 2022. Furthermore, ESG/SRI labelled fund inflows stalled, although fixed income funds saw inflows return in the second half of last year.

“Macroeconomic factors, including inflation, central bank rate hikes, the Russian war against Ukraine and the ensuing energy crisis all contributed to a perfect storm for bond markets in 2022,” says Gregor Vulturius, Advisor at Climate & Sustainable Finance at SEB. “Under these exceptional circumstances, the market for green, social, sustainability and sustainability-linked bonds showed greater resilience that the general market.”

About The Green Bond report
SEB, which together with the World Bank developed the green bond concept in 2007/2008, publishes the research publication The Green Bond 5-6 times a year. It strives to bring readers the latest insight into the world of sustainable finance through various themes. Even though the report covers all kinds of products and developments in the sustainable finance market, we have decided to keep its historic name – The Green Bond – as a tribute to our role as a pioneer of the green bond market. You can find The Green Bond report at www.sebgroup.com and here.

For more information, contact:
Lina Apsheva, Climate & Sustainable Finance
+46 70 767 6527

Press contact:
Niklas Magnusson, Head of Media Relations & External Communication
+46 70 763 8243

SEB is a leading northern European financial services group with international reach. We exist to positively shape the future with responsible advice and capital, today and for generations to come. By partnering with our customers, we want to be a leading catalyst in the transition to a more sustainable world. In Sweden and the Baltic countries, SEB offers financial advice and a wide range of financial services. In Denmark, Finland, Norway, Germany and the United Kingdom, we have a strong focus on corporate and investment banking based on a full-service offering to corporate and institutional clients. The international nature of SEB's business is reflected in our presence in more than 20 countries worldwide, with around 16,500 employees. At 31 December 2022, the Group's total assets amounted to SEK 3,533bn while assets under management totalled SEK 2,123bn. Read more about SEB at sebgroup.com.