Green Bonds Lead $241 Billion Sustainable Bond Market in Q1 2026 According to Moody’s Data

According to Moody’s data, green bonds raised $152 billion in the first quarter of 2026, confirming their role as a cornerstone of global sustainable finance despite the market slowdown. Social bonds doubled their quarterly volumes, returning to early 2025 levels.

The global sustainable bond market is opening 2026 with growth compared to the final months of 2025, although still below last year’s levels. This is according to the latest Moody’s report, which found that in the first quarter of the year, sustainable bond issuance reached $241 billion, up 18% compared to the previous quarter but down 17% compared to the same period in 2025.

Despite the slowdown, the agency expects overall volume for the year to remain essentially stable compared to 2025 levels, thanks primarily to the resilience of green bonds and the recovery in European issuance.

Europe confirmed its position as the main driver of the global market, with $137 billion in sustainable emissions, accounting for over half of global volumes. This figure represents a 58% increase compared to the previous quarter and reflects the increasingly central role of European regulation and public energy transition strategies in supporting demand for ESG instruments. By contrast, the North American market remained stable but still far from the historic peaks seen in previous years.

According to Moody’s, the quarter also saw a significant recovery in sovereign and public financial institution issuance. Government issuance reached $42 billion, while corporate issuance rose to $46 billion, both more than double the previous quarter. Municipal and supranational issuance also grew, although the latter remains well below the record levels reached a year ago.

Green bonds still dominate, social bonds boom

Green bonds, in particular, supported the market , totaling $152 billion in the quarter, confirming their position as the largest category in global sustainable finance. This represents a 5% increase compared to the previous quarter, although it remains 4% lower year-over-year.

Approximately two-thirds of these originated in Europe, which recorded issuance of $100 billion, a 41% increase compared to the previous quarter. European growth helped offset the sharp slowdown in Asia-Pacific, where green bonds fell to $25 billion, almost half the previous level.

One of the most significant findings in the report concerns social bonds, which doubled in quarterly volumes, reaching nearly $48 billion and returning to the levels seen at the beginning of 2025. The market share of these instruments has thus risen to around 20% of the global total of sustainable issuance. Europe also played a key role in this segment, with $26 billion in issuance, the highest level since the first quarter of 2024.

The sector was primarily driven by public entities, responsible for 56% of total social issuance. Among the issuers, the French CADES (Caisse d’Amortissement de la Dette Sociale) stands out, being the largest issuer of social bonds in the quarter with $12 billion raised.

The sustainability bond segment, on the other hand, was weaker , recording issuance of $34 billion, a slight increase compared to the previous quarter but a 55% decline year-over-year, primarily impacted by the decline in supranational issuance. Sustainability-linked bonds (SLBs) and transition bonds also made a marginal contribution.

SLBs raised just $3 billion in the quarter, stable compared to the previous quarter but down 60% year-over-year. Transition bonds, on the other hand, totaled $4 billion, issued entirely by Japanese entities and primarily targeting hard-to-abate sectors.

Data centers and energy transition support the ESG market

Moody’s report also pays particular attention to new growth areas in sustainable finance, starting with data center financing.

Since 2020, sustainable debt issuance related to this sector has exceeded $50 billion, with green bonds representing 83% of the total. According to the agency, issuance has more than doubled since 2023 thanks to increased demand for energy- and water-efficient digital infrastructure.

Sustainable loans: ESG-based lending slows in 2025

Looking at sustainable lending , Moody’s notes an overall slowdown in 2025. Global sustainable loans reached $762 billion in the entire previous year, divided between $398 billion in sustainability-linked loans, $337 billion in green loans, $20 billion in sustainability loans, and $7 billion in social loans.

Total volume decreased by 20% compared to the previous year, primarily due to the sharp decline in sustainability-linked loans, while green loans continued to grow.

Improve the quality of sustainable finance instruments

Finally, the report highlights an improvement in the quality of sustainable finance instruments assessed by Moody’s through its Second Party Opinions (SPOs), which are independent assessments issued by external parties to verify the soundness and credibility of the ESG frameworks used in sustainable bond issuances.

Specifically, 83% of the issues analyzed achieved an SQS1 or SQS2 score, the highest levels on Moody’s scale, corresponding to “excellent” and “very good,” respectively. According to the agency, “use-of-proceeds” instruments, in which the funds raised are allocated to specific environmental or social projects, continue to demonstrate higher quality standards than sustainability-linked structures, which are instead based on the issuer’s achievement of specific ESG objectives.

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(Featured image by Towfiqu barbhuiya via Unsplash)

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