MainStreet Partners Report Urges Action to Bridge Climate Adaptation Financing Gap

MainStreet Partners’ latest GSS Bonds Market Trends Report reveals both the resilience of the sustainable bond market and the urgent need to close the climate adaptation financing gap. Global issuance of Green, Social, and Sustainability (GSS) bonds has fallen by 3% since the beginning of 2025.

However, Europe continues to buck the trend, with green bond issuance up by 40% compared to the same period in 2024, representing 86% of the region’s total GSS activity. In contrast, issuance in the Americas has declined, while Asia’s market continues to expand rapidly, led by China, South Korea, and Japan, says MainStreet Partners.

MainStreet Partners Highlights Climate Adaptation Funding Gap

The report emphasizes that, despite this slight global slowdown, the market remains strong and mature. Green and sustainability bonds together accounted for nearly 90% of total issuance in the third quarter.

“The green bond market continues to demonstrate resilience and maturity,” said Pietro Sette, Research Director at MainStreet Partners. He noted that Europe is consolidating its leadership, with the EU Green Bond Standard (EuGBS) already representing 7% of total European issuance.

Sette added that while transparency and credibility in the market are improving, the limited focus on adaptation remains a serious concern. Less than 1% of GSS bond proceeds in 2024 were directed toward climate adaptation projects, despite the escalating physical risks of climate change.

Climate adaptation: the missing link

Since 2018, only about 1.8% of GSS bond proceeds have been dedicated to adaptation projects. This lack of funding contrasts sharply with the rising global vulnerability to climate-related disasters—1.8 billion people live in flood-prone areas, and drought-related losses are expected to exceed $13 billion by 2024, according to the MainStreet Partners Report.

Public issuers remain the dominant contributors, providing more than 96% of adaptation-focused green bond issuances between 2020 and 2024. The MainStreet Partners report presents case studies from the Netherlands and Indonesia, illustrating how targeted adaptation finance can strengthen resilience while delivering economic and social benefits.

Data quality and impact transparency

MainStreet Partners warns that poor data comparability and weak post-issuance reporting continue to limit adaptation financing. Only 30% of issuers including adaptation projects later disclose actual use of proceeds, highlighting the need for stronger accountability mechanisms.

EU Green Bond Standard gains momentum

The EuGBS continues to gain traction, accounting for 7% of total green bond issuance in Europe. Landmark examples include Denmark’s sovereign debut and Finland’s TVO, the first nuclear-related bond under the new standard.

These developments underscore the growing demand for transparent, taxonomy-aligned instruments that enhance credibility and standardization in sustainable finance.

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(Featured image by Markus Spiske via Unsplash)

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