The Future of ESG in Corporate Debt Markets
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The Future of ESG in Corporate Debt Markets

/ Article

Over the past decade, environmental, social & governance (ESG) factors have gained influence in capital markets. This article explores the future of ESG in corporate debt markets in the US, focusing on headwinds and opportunities, regulatory pressures, hard-to-abate sectors, and growing engagement with private companies and funders.

Key Insights

Over the past decade, environmental, social & governance (ESG) factors have gained influence in capital markets. This article explores the future of ESG in corporate debt markets in the US, focusing on headwinds and opportunities, regulatory pressures, hard-to-abate sectors, and growing engagement with private companies and funders.

Key Insights

  • While the growth of ESG in corporate debt markets—the issuance of debt instruments such as bonds or loans that incorporate ESG criteria—has recently slowed due to economic, political, and regulatory headwinds, demand for sustainability and new opportunities for innovation and diversification may eventually contribute to renewed growth.
  • New climate and sustainability-related reporting requirements in the US and the EU will likely boost investor confidence and increase the supply of ESG financing, creating competitive advantages for companies that adapt quickly.
  • ESG financing in corporate debt markets will increasingly motivate innovations for “hard-to-abate” sectors, which contribute about 30% of global CO? emissions but are the most challenging to decarbonize.
  • Private companies and private markets will play a growing role in shaping ESG financing, as new reporting regulations increasingly apply to privately held firms and a broad range of private funders embed ESG factors in their investment decisions.
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Authors

Andrew Jones, PhD

Andrew Jones, PhD Andrew Jones, PhD

Senior Researcher, ESG Center
The Conference Board

Read Bio

Christine Guinessey

Christine Guinessey Christine Guinessey

Program Manager, ESG Center
The Conference Board

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