How can sustainable debt support China’s energy transition?

Sustainable debt has become a popular tool to fund green and sustainability-linked activities since it first emerged in the mid-2010s, providing a tailwind to clean energy investment. Global sustainable debt issuances have risen nearly tenfold since 2016, peaking at over USD 1.7 trillion in 2021. These instruments have been leveraged by governments to raise capital for green infrastructure, by financial institutions to facilitate green or sustainable lending, and by corporates to raise funds for their net-zero efforts. One driver of issuance has been the willingness of many investors to accept lower interest rates if a bond is classified as green or sustainable, a distinction often referred to as the “greenium.”