The growth of labelled bonds, including green bonds, sustainable bonds, and social bonds, has significantly contributed to the advancement of impact investing in listed markets over the past five years [1]. Both in terms of nominal issuances and the percentage of total debt issuances, these bonds have played a crucial role. Looking at emerging markets (EM), in 2023, the growth of the labelled bond market in EM continued to outpace the overall growth of the EM bond market, which has been a consistent trend in recent years. As a result, the share of EM labelled bonds as a percentage of the overall EM bond issuance reached 30% in 2023, compared to only 7% in 2019 and 2020 [2]. This growth has expanded the investment universe for impact-oriented investors and provided more impact data for analysis and reporting, making it increasingly viable to develop robust and credible impact investing strategies in listed debt markets.


 “Labelled bonds enabling impact investing in public markets”

The International Capital Market Association (ICMA) promotes best practices and standards in the global capital markets and plays a significant role in the labelled bond market by providing guidelines and principles for issuers to follow when issuing green, social, or sustainable bonds. This helps ensure transparency and credibility in the market. Labelled bonds possess specific attributes that are highly crucial in the context of impact investing and its three pillars: intentionality, measurability, and additionality.

These bonds have defined eligible use of proceeds, which allows impact investors to determine whether the impact intent and planned use of proceeds align with their own impact objectives at the issuance or due diligence stage. This ring-fencing element also enables investors to finance specific impactful projects from a company or country.

Furthermore, these bonds align with impact investing through their impact reporting requirements as they disclose pre-defined impact key performance indicators (KPIs) at issuance. After one year of issuance, impact and allocation reports are disclosed, presenting the bond’s actual impact performance through selected KPIs. This ensures the measurability component of impact investing is met and helps investors evaluate the level of impact they enabled and calculate their contribution to the Sustainable Development Goals (SDGs).

The additionality pillar is considered through engagement activities and by selecting investments benefitting underserved individuals and communities. Social eligible projects in labelled bonds offer detailed target beneficiaries as part of their selection criteria in sustainable finance frameworks. This ensures that positive activities, such as affordable housing or essential services, specifically target underserved households, or micro-, small and medium-sized enterprises (MSMEs). Engaging with issuers to help improve sustainability practices and disclosure along, with mitigating sustainability risks, represents another form of investor impact contributions and additionality available in this asset class.


New developments in public markets for impact investing

In addition to the traditional ICMA-aligned [3] green, social, sustainable, and sustainability-linked bonds, exciting new developments have recently emerged, offering additional possibilities to strengthen impact practices for listed debt impact investors.


Blue bonds – Oceans Sustainability & Blue Economy

Blue bonds have emerged as a recent addition to the labelled bond market, aiming to channel funding towards sustainable projects related to oceans and freshwater. These bonds play a crucial role in addressing the pressing issue of safeguarding water resources in the face of climate change. The health, productivity, and resilience of the world’s oceans and water resources are vital for global sustainable development, particularly considering the challenges posed by climate change, overfishing, and pollution.

Despite the significance of water-related Sustainable Development Goals, funding for such initiatives remains insufficient. The Seychelles pioneered the issuance of the first blue bond in 2018, which was subsequently followed by companies and other sovereigns. However, between 2018 and 2022, only 26 blue bonds were issued, indicating a limited level of activity in this nascent market. The lack of standardisation has hindered the growth of blue bond issuances.

Nevertheless, the International Finance Corporation (IFC) has emerged as a key player in advancing the blue bond market, enabling standardisation and credibility for this new type of bond. Collaborating with the other development agencies, and notably the recognised ICMA, the IFC has co-published new guidance for the Blue Economy. Furthermore, the World Bank’s private sector arm has established a fund to invest in blue bonds issued by companies in developing nations in 2023. To support this initiative, the IFC manages a Technical Assistance Facility aimed at enhancing the quality and quantity of blue bond issuances in emerging markets.

As a result of these developments, we can anticipate an increase in blue bond issuances in 2024 and the years to come. Factors such as market standardisation and the growing need for sustainability solutions to address issues like ocean acidification and rising temperatures are expected to act as catalysts for this growth.


Orange bonds – Gender Lens Bonds

Another recent and emerging development in the impact bond market is the introduction of orange bonds, with the Impact Investment Exchange (IIX) issuing the first orange bond in 2023 as part of their women livelihood bond series. Orange bonds are gender-focused bonds that adhere to the principles outlined in the Orange Bond Principles™. These principles, published in October 2022, provide guidelines to support issuers, investors, arrangers, and approved verifiers involved in facilitating orange bond transactions.

To qualify as an orange bond, transactions are expected to align with three overarching principles: Gender-Positive Capital Allocation, Gender-Lens Capacity and Diversity in Leadership, and Transparency in the Investment Process and Reporting. These principles serve as best practices and provide inspiration for new issuers interested in promoting gender empowerment.

Whether issuers are interested in funding gender-focused strategies with the orange bond principles or choose to follow the more widely accepted ICMA-aligned social bond principles, which also include the possibility of financing gender-positive projects, is yet to be determined. The decision between these frameworks will likely depend on the specific objectives and preferences of the issuers, as well as the perceived complexity versus value add of innovative frameworks.


Green & Sustainability-linked bonds – Best of two frameworks in one bond

In 2023, a new and innovative bond mixing existing ICMA standards has emerged, known as Green & Sustainability-linked bonds (G&SLBs) and Sustainable & Sustainability-linked bonds (S&SLBs). They offer a well-defined use of proceeds that are ring-fenced, along with sustainability-linked impact targets that can be tracked over time with a financial incentive for the issuer to strive towards achieving these sustainability targets, with a coupon step-up or step-down mechanism. For impact investors, these bonds, with their combination of attractive attributes. represent a welcomed addition to the suite of labelled bonds.

Two notable examples of these bonds were issued by corporates in Latin America. CMPC in Chile issued a bond primarily focused on sustainable management of natural resources and land use, with key impact performance indicators targeting GHG emissions and industrial water use. Aegea in Brazil issued a bond with environmental and social targets related to energy consumption and increasing the representation of women and black employees in leadership positions.

Overall, these bonds offer a unique proposition for impact investors, combining the benefits of clearly defined use of proceeds with the ability to monitor and incentivise sustainability-linked impact targets, while remaining within the realm of well-recognised frameworks.


Sustainable Development Impact Disclosure guidance – Enabling wider impact disclosure for general bond issuers

While most new developments for listed debt impact investing focused on use of proceeds investments, a new taskforce to enhance impact disclosure for general non-labelled bonds was created in 2023 [4]. This taskforce brings together public and private financial institutions, capital markets participants, and other financial industry stakeholders, and provides voluntary guidance to entities on the principles of impact measurement and monitoring. The guidance emphasises the importance of intentionality, whereby entities explicitly specify the positive impacts they aim to achieve and design appropriate strategies to pursue them. Measurability is also highlighted, with a focus on identifying specific metrics and targets to measure progress on socioeconomic issues. The guidance encourages entities to set ambitious targets that go beyond the baseline and prioritise addressing the most acute development gaps based on empirical data.

The guidance complements the efforts of the International Sustainability Standards Board (ISSB), which provides standards for companies to disclose sustainability-related risks, opportunities, dependencies, and impacts.

Issuances following the Sustainable Development Impact Disclosure guidance represent a hybrid type of issuance between general bonds and sustainability-linked bonds. These issuances do not have a designated use of proceeds but include sustainability targets with the intention of disclosing more comprehensive and ambitious sustainability and impact targets. The enhanced disclosure from issuers with material impact targets and metrics allows impact investors to expand their investible universe and gain a deeper understanding of the impact of their investments.


Existing challenges

One important consideration regarding these new standards and frameworks is whether the need for such instruments, along with the increased disclosure they offer, outweighs the potential complexity they may introduce compared to existing well-functioning ICMA-aligned green, social, sustainability, and sustainability-linked bonds. An example to follow in 2024 is the new EU Green Bond Standards. The premise of these new standards is to improve the transparency, comparability and credibility of the green bond market, with an alignment of bonds to the EU Taxonomy. However, the stricter criteria of such standards might lead to more costly issuances, leading to low interest from issuers and potentially bringing back the “greenium”. Would this pricing benefit for issuers outweigh the complexity of such issuance, and would investors agree to pay a higher price for EU-Taxonomy aligned bonds?

Labelled bond frameworks need as much clarity, credibility, and standardisation as possible to be adopted by investors. Sustainability-linked bonds (SLB), which do not have use of proceeds but simply sustainability targets and a financial incentive to achieve them, are often seen as not ambitious enough and sometimes face investor backlash. 2023 saw a 14% decrease in the global issuances of SLB compared to 2022 [5], probably as such instruments are not as well perceived by investors, with sustainability targets often seen nonmaterial to the issuer.

Regardless of the instrument, impact investors will still need to remain critical of every sustainable finance framework and reporting created by companies and sovereigns. Engaging with issuers and requiring impactful projects with strong additionality and clear impact measurements will enable managers to differentiate from others and contribute the sustainable development goals.



The sustainability and impact bond market continues to evolve, experiencing strong growth and the emergence of new innovative instruments. Overall, the ongoing evolution of the sustainability and impact bond market presents promising opportunities for investors to contribute to addressing sustainability challenges and bridging the funding gap for sustainable development goals. Continued efforts to enhance market standards will play a crucial role in ensuring the credibility and effectiveness of these new instruments in the impact bond market, indirectly benefitting impact investing.

These new developments play a major role in increasing the investible universe for impact investors. With impact-focused debt markets growing in size and credibility, impact investing strategies have more breadth and can easily scale as well as being competitive.


[1] Bank of America, Global Research, 2023 labeled bond issuance: in charts, 2024

[2] Bank of America Global Research, ESG Fixed Income Quarterly, 2024

[3] Bank of America Global Research, ESG Fixed Income Quarterly, 2024


[5] Finance sector seeks to plug impact investing gap with new ‘taskforce’, Financial Times, November 2023




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