The supply of green bonds has nosedived by nearly 30%, according to the latest figures.
In total, the global green bond market stood at $151.4bn at the end of June, which was nearly a third lower than a year earlier.
Corporate and sovereign issuers sold $65.7bn between them in the second quarter of 2025 – the lowest total in nearly five years.
“The falloff primarily reflects a drop in issuances in the US, where issuers issued a total of $1.7bn in green bonds in the second quarter, down 88% from the same period a year earlier,” noted MSCI, which conducted the research this week.
Last week, consultancy Ecovadis polled 400 executives at US firms, and found 87% had maintained or increased their investment in sustainability so far this year, but nearly a third were keeping quiet about it amid pushback against ESG.
This reluctance to being explicit about green spending is driving some of the drop in green bonds out of the country. Nearly 80% of green bonds issued in the quarter were issued in Europe, followed by Asia (3.8%) and the U.S. (2.6%), it added.
Transition funds and technology
MSCI’s latest research also found that a fifth of all investments in publicly-traded climate funds are in companies in the information technology sector, which has seen its emissions skyrocket to account for the boom in artificial intelligence (AI).
The International Energy Agency estimates that the electricity needed to power data centres – which are required for AI – increased on average 12% per year between 2017 and 2024, and is forecasted to double by the end of the decade.
Research published this month by Cambridge University predicted that, “by 2040, the energy demands of the tech industry could be up to 25 times higher than today, with unchecked growth of data centres driven by AI expected to create surges in electricity consumption that will strain power grids and accelerate carbon emissions”.
Investment funds that claim to support the climate transition have a carbon intensity nearly 2.5 times higher than those that claim to be aligned with the goals of the Paris Agreement, according to MSCI.
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