Climate Bonds Initiative: ‘Integrity remains the number one concern for investors’
Sean Kidney, CEO and co-founder of the Climate Bonds Initiative talks to PA Future‘s Natalie Kenway about innovation, the evolution of the green bond market and where he sees the the green bond universe heading in the next two to three years.
Q: For readers who might not be familiar, what is the Climate Bonds Initiative and what is it trying to achieve?
Climate Bonds Initiative exists for one reason – to mobilise global capital for climate action. We’re an investor-focused, not-for-profit organisation and our role is to make it easier, safer and faster to put capital into projects and assets that are genuinely aligned with a 1.5°C future. That means we clarify what counts as “green” through science-based taxonomies, we certify bonds and loans to give investors confidence they’re not exposed to greenwashing, and we track every green and sustainable bond issued globally.
We also support policymakers and regulators in designing frameworks that unlock climate investment, and we work directly with investors through training and portfolio alignment tools. In short, we help inspire investors, demonstrate demand, influence policy and drive the growth of a high-quality market.
Q: How has the green bond market evolved over the past five years? What’s driving it?
The growth has been remarkable. By the first half of 2025, cumulative green bond issuance had reached $3.8trn, and when you include sustainability, social and transition bonds, the broader sustainable debt market now stands at $6.2trn. Green remains the engine of this market, contributing around 61% of volumes.
The past 18 months have seen some of the strongest quarters on record, powered by steady issuance from development banks and governments, deep liquidity in the euro and dollar markets, and rising participation from Asia. One major catalyst has been greater policy clarity – particularly the EU Green Bond Standard – which is giving issuers and investors a common reference point and raising confidence in labelled markets.
See also: European Green Bond Standard ‘will become a prominent subset of the market’
Q: Where are you seeing the most interesting new entrants?
We’re seeing sovereigns take a bigger leadership role. China issued its first offshore sovereign green bond, while Pakistan entered the market with its inaugural local currency green bond. These are important because sovereign deals set benchmarks that local markets can build around.
We’re also seeing innovation at the municipal level – for example, the Bay Area Toll Authority issued a Climate Bonds Certified deal that was the first active bond to be certified under our Shipping Criteria. Corporate issuance is also evolving. Data centre operators, driven by AI-driven energy demand, are issuing green bonds and asset-backed securities to finance energy-efficient infrastructure.
And since the EU Green Bond Standard came into effect, we’ve seen a wave of first-time adopters in Europe from utilities to real estate.
Q: Climate Bonds has been instrumental in shaping frameworks and standards. What are the latest developments?
This year marks the first real test of the EU Green Bond Standard in the market, and we’re seeing strong adoption. It requires 85% of proceeds to be aligned with the EU taxonomy and mandates independent verification and reporting. Alongside that, we’ve expanded our own Climate Bonds Certification Scheme with new criteria for sectors like shipping, hydrogen and data centres.
We’ve also just released a taxonomy for climate resilience – because adaptation is lagging dramatically behind mitigation in terms of finance flows. The same is true for nature and agriculture, so we’ve now published a transition framework for agrifood supply chains, including deforestation – and conversion-free criteria. And finally, we are working with UNEP FI and the PRI to improve interoperability between national taxonomies, so capital can move more seamlessly across borders.
Q: What issues are front of mind for managers of green bond funds?
Integrity remains the number one concern. Investors want to know that what they buy is genuinely aligned with climate science. That’s why certification, robust data and transparent methodologies matter. They’re also asking for better visibility on future pipelines – particularly in emerging markets, adaptation and nature-based solutions. Another area is sovereign credibility.
As more governments issue green bonds, investors want to see whole-of-economy transition plans behind them, not standalone instruments. And increasingly, managers are asking how to integrate resilience and agriculture into fixed-income strategies, which is why our frameworks in those areas are gaining traction.
See also: ‘Convenience comes at a cost’: Navigating the green bond landscape
Q: What’s next? Where do you see the green bond universe heading in the next two to three years?
We’re entering a new phase. The question is no longer “can we issue a green bond?” – it’s “can we finance the transition of entire economies with speed, integrity and scale?” Over the next few years, our focus will be on expanding certification across more sectors and regions, improving interoperability between taxonomies, and mainstreaming investment into resilience, nature and agrifood transitions. We’ll also continue working with sovereigns and regulators on transition planning to unlock private capital at scale.
Ultimately, the future of this market will be defined by ambition and trust. Investors are ready. Capital is available. What they need are credible frameworks, clear policies and investable pipelines. If we get those right, the green bond market won’t just grow – it will help reshape the global economy for a resilient, low-carbon future.