Global sustainable debt issuance of US$315 billion in the March quarter was triple the level of ESG debt flows in the March quarter last year, taking the size of sustainable debt on issue to US$2.2 trillion.

According to the Institute of International Finance, flows into ESG debt funds outpaced flows into broad debt market funds during the quarter.

Non-financial corporates were the biggest issuers during the March quarter, followed by financial corporates.

The most common form of sustainable debt is green bonds, with green loans, social bonds, green ABS and sustainability-linked loans also in the mix.

Climate is the dominant theme in the sustainable debt market, as more corporates make net-zero emissions commitments.

An emerging funding category is transition bonds, which are designed for companies with high greenhouse gas emissions looking to raise funds and “green” the operations at the same time.

Included in the terms of these bonds is a commitment by the issuer to shift to more sustainable business practices.