Since Donald Trump’s return to the White House, US companies have all but abandoned the green bonds that were once touted as a way for corporate America to have a hand in fixing the planet.
Only one such US dollar bond from an American firm has hit the market in 2025, a US$350 million ($469.33 million) note from Oglethorpe Power in January, marking the slowest start to a year in at least a decade. For years the main sellers of the bonds have included banks and utilities, with household names like Apple and Walmart also occasionally making splashy issues.
Now companies are shifting their approach to the climate cause, after emboldened Republican leaders have stepped up their attacks on investments that try to achieve environmental goals such as cutting emissions, as well social objectives like promoting equality, or governance targets. Bonds funding environmental projects, known as green bonds, are the most commonly sold type of ESG debt.
Even before Trump’s reelection, green bond sales were down from their 2021 peak amid GOP pushback, inconsistent cost savings for issuers and scrutiny over greenwashing from the left.
“In the US especially, it’s been a pretty steep, decent decline and a bleak outlook moving forward,” said Andrew Poreda, a senior research analyst on Sage Advisory Services’ responsible investing team. “Even just the label of a green bond might be contentious.”
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In other parts of the world, issuance is still going strong, with total green bond sales expected to reach US$660 billion this year, about an 8% bump over last year, BNP Paribas said in January.
In the US, green municipal bonds are still seeing strong issuance. And companies are still funding projects in the US to improve their efficiency and meet other environmental goals — they’re just doing so outside the green bond market.
Companies that continue clean-energy initiatives have quieted their messaging and sustainable debt has taken a hit, with overall ESG dollar-designated bond sales from American corporations and financial institutions down nearly 89% from the year prior through Thursday.
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The biggest American lenders have staged an exodus from the Net-Zero Banking Alliance, a global climate coalition, and tempered policies around diversity, equity and inclusion.
JPMorgan Chase & Co. is ready to sound the death knell for the debt.
“RIP USD ESG Issuance,” the bank’s credit strategists titled a research note Wednesday. “This year, political dynamics which have turned decidedly negative towards ESG issues in the US at the federal level have likely played a part, broadening the pushback,” they wrote.
In November, a group of 11 state attorneys general led by Texas accused BlackRock, State Street and Vanguard Group of violating antitrust law with ESG initiatives, a suit the asset mangers are now seeking to dismiss.
In December 2024, a Republican-led House committee said it found evidence of “collusion” by financial firms to impose ESG goals on US companies.
The backlash, along with broader policy uncertainty, has left some US companies adopting a “wait-and-see” approach when it comes to issuing bonds with a label, says Patrick Drum, who manages a sustainable fixed-income fund at Saturna Capital.
“We’ve seen a change in trend for green bonds in the US,” said Drum, who takes a broader approach to sustainable investing, including buying bonds sold by companies without the green label but that still address climate risks. “But is my investment world limited? No, in fact, I see it growing as our focus is global.”
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At Nuveen, Stephen Liberatore, the lead portfolio manager for the firm’s ESG fixed income strategies, has been focusing on growth sectors within the global ESG market, especially since the risk premium on US corporates has been historically low anyway.
“Given how rich corporate spreads have been, it’s been beneficial being able to shift away from that part of the market and position toward where we’re seeing value such as in taxable municipals, ABS and certain agencies,” he said.
Walmart didn’t return a request for comment, while a spokesperson for Apple declined to comment. Apple was still allocating funds last year from a euro green bond it issued in 2019, according to a report.
No greenium
Borrowers expect labelled bonds to come with a price benefit or “greenium”. That was the idea from the get-go: investors would buy bonds with lower yields if issuers promised to direct proceeds into projects that did good for the environment.
The price benefit helps offset extra issuer costs tied to a green bond sale, like hiring an auditor to confirm the offering aligns with international standards.
With last year’s premium the debt made sense for utility provider Xcel Energy. The landscape has since shifted and as of February American borrowers on average have paid more to sell green notes than regular US corporate bonds, according to data compiled by Bloomberg Intelligence.
Xcel still plans to spend on qualifying projects, but the company will only include the label if it lowers all-in funding costs.
“We’re making that investment in green tech and solar and wind regardless of whether it’s being financed with green bonds,” Todd Wehner, the company’s treasurer, said in an interview.
Growth elsewhere
US companies were never the leading issuers of green bonds, while the debt makes up a much larger portion of the market in Europe. In China, companies, including financial firms, sold more than US$17 billion of green bonds through the first two months of the year, almost five times the amount issued in the same period last year, according to data compiled by Bloomberg.
By many counts the market is expected to grow. BNP Paribas said that some US$570 billion of notes maturing in 2025 and 2026 will give ESG investors money to reinvest, spurring supply from issuers that want to roll over their outstanding debt.
Even in the US, municipal green bonds, which are sold by local and state governments, were issued at a faster pace through February than ever before. Issuance also grew in the UK through February, though it fell across Europe, the Middle East and Africa.
Moving capital in the direction of sustainable work is the market’s ultimate goal, says Sean Kidney, CEO of the Climate Bonds Initiative, a non-profit that promotes green investments. The label helps companies flag their intentions to money managers and align with globally accepted standards, a reason the market took off in the first place.
“US domestic institutions running for cover is not going to kill the market,” Kidney said. “The trajectory remains growth, but it’ll be bumpy.”
Chart: Bloomberg
