Sustainable Finance

ICMA’s sustainable finance work in 2025 focused on providing practical guidance, supporting market integrity, and engaging with policymakers on evolving regulatory frameworks. Through updated principles, research, and targeted dialogue, ICMA continued to support the development of credible, consistent, and scalable sustainable finance markets.

Guidance from the Principles for nature bonds and transition bonds
The 2025 Annual General Meeting, hosted in London by the EBRD in June, produced several major updates. The headline release was the Sustainable Bonds for Nature: a Practitioner’s Guide, which clarified how use-of-proceeds bonds can be deployed for nature-related investments. The Guide also introduced the option for issuers to apply a “Nature Bond” secondary designation for green bonds exclusively financing nature projects, thus helping to formalise a fast-growing segment of sustainable finance.

At the AGM, the Executive Committee also issued a statement in the form of a Q&A in the updated Guidance Handbook reaffirming that defence-related projects are unlikely to qualify for sustainable bonds. At the same time, it emphasised the important role of social bonds in supporting vulnerable populations through dedicated projects in fragile and conflict-affected states.

The Annual Conference, held separately in November in Tokyo and co-hosted with the JSDA, drew over 560 participants, both on-site and virtual. The conference highlighted the Climate Transition Bond Guidelines (CTBG) , which establish the Climate Transition Bond (CTB) as a standalone label, supported by definitions, safeguards, and a preliminary list of eligible project categories.

The introduction of the CTBG responds to years of market debate and builds on leadership from issuers in Asia, particularly Japan, while aligning with progress in the global policy debate as illustrated by the IEA’s report on Scaling Up Transition Finance. An updated Climate Transition Finance Handbook was also published, incorporating the CTBG and adding new annexes on transition-plan frameworks, tools, and methodologies for assessing credibility.

Regulatory dialogue and policy engagement
ICMA contributed to the debate on the EU Omnibus Simplification Package by publishing a commentary in February that raised concerns about possible large-scale exemptions from the CSRD and the potential removal of transition-plan mandates under the CSDDD. The commentary emphasised that such changes could undermine the availability of essential ESG data, weakening market transparency and the effective integration of sustainable bond reporting.

In March, ICMA published Reflections and recommendations for the sustainable fund market in a new regulatory environment , analysing the implications of evolving EU and UK fund-labelling rules. The paper highlighted the importance of consistency in future SFDR reviews to avoid unnecessary market disruption, broader recognition of sustainable investments beyond EU Taxonomy criteria, and the inclusion of transition-finance investments, particularly in hard-to-abate sectors.

Research and thought leadership
In November, ICMA published a research paper entitled Understanding the opportunity from carbon markets for sustainable finance and the wider market , providing an analysis of both compliance and voluntary carbon markets. The paper traces the rapid expansion of compliance carbon markets and their growing relevance to financial markets, as reflected in carbon allowances trading of USD 950 billion in 2024, as well as their use in hedging and structured finance. It also clarifies the more limited, but potentially complementary, role of voluntary carbon markets in transition strategies and innovative sustainable bond issuance, illustrated by the World Bank’s “outcome bonds”.

Other notable activities
Other important initiatives continued during 2025, including the Sustainable Finance and FinTech Taskforce, alongside the launch of new activities such as the SLB Working Group webinars and ICMA’s Transition Finance Training programme.

ICMA also participated in and spoke at several events during New York Climate Week in September.

Contact: sustainabilitybonds@icmagroup.org