The market for publicly traded bonds that provide intentional, direct and measurable social and/or environmental impact has evolved significantly. Over the past decade, five themes have supported this, resulting in a deeper and more diverse set of opportunities for investors seeking to incorporate impact goals into their fixed income portfolios.

1. Market growth
   Estimating the size of the impact bond market is a challenge. Market participants have yet to coalesce around a consensus definition of an impact security. Data providers, however, have generally come to agree on GSS as an acceptable acronym for this market: green, social and sustainable bonds. Issuance of GSS-labelled bonds exceeded $1 trillion for the first time in 2021 and nearly doubled in 2020 and 2021, according to Environmental Finance’s Sustainability Bond Insights 2023. And while 2022 was a challenging year for bond markets generally, and GSS bond issuance declined, the underlying trends for 2022 signal the ongoing maturation of this market. Issuance declined 26% across fixed income markets, yet green-labelled bonds experienced a significantly lower fall of 10%. The sustainable bond market’s share of the outstanding global bond market rose to 13.5%, an increase from 12% in 2021 and 7% in 2020.

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