Sustainable debt moves into the spotlight

The energy crisis gripping Europe in 2022 raised fears about a surge in fossil fuels investment at the expense of a focus on sustainable sources. But there are good reasons to think a long-term focus on the energy transition will persist, spurred by the increasingly pressing need to respond to climate risks. As a result, we expect sustainable debt investing will play a vital role in tackling not just the climate challenge but urgent planetary and social issues too.

Key takeaways
- The energy crisis has turned the spotlight on the energy transition but ultimately, high power prices should hasten a socially responsible transition to a lower carbon economy.
- The yields now offered by sustainability-labelled bonds might appeal to new investors who may have previously struggled to place green, social and other sustainability-related bonds in their strategic allocation.
- The euro investment-grade universe may currently enjoy the broadest opportunity set for high-quality sustainability-labelled debt.