Roundtable 'Green, Blue and Orange Bonds'

December 1, 2025

 

MODERATOR: Sevinç Acar, NN Group   PARTICIPANTS: John Amoasi, Neuberger Berman Michiel de Bruin, Robeco Gwennaële Bruning, Achmea Investment Management Robbert Lammers, MN Anahi Machado, DPAM Mitch Reznick, Federated Hermes Jessica Zarzycki, Nuveen Fixed Income

The success of green bonds, which finance sustainable projects, is undeniable. At the end of 2024, the outstanding value of these bonds worldwide was nearly $3 trillion: six times more than in 2018. Green bonds play a crucial role, particularly in tackling climate change and financing renewable energy. However, they are part of a much larger sustainable bond market, with labels such as green, social, sustainability, and sustainability-linked.

According to the IFC development bank, governments and companies issued more than $1,000 billion of these GSSS bonds in 2024, 3% more than the previous year. This represents modest growth. Emerging countries saw a clear dip in issuance volume, and this year the segment faced political headwinds in the US. Is the market in a consolidation phase? Is there still significant growth potential? Are there obstacles to that growth? What do new sustainable labels such as blue and orange actually add?

These and other questions were discussed in a roundtable discussion, to which Financial Investigator invited seven experts at the end of September. Moderator Sevinç Acar, Head of Public Markets at NN Group, opened the lively discussion with a reference to the pioneering role of green bonds.

What lessons can we learn from green bonds for other impact bonds, such as blue bonds, transition bonds, social bonds and orange bonds?

Gwennaële Bruning: 'The most important lesson is that you need a strong institutional framework. ESG regulations, particularly the EU taxonomy, were instrumental in the growth of green bonds. A similar taxonomy would also be extremely useful for social bonds.'

Mitch Reznick: 'Regulation can indeed give the capital markets the confidence they need to scale up. However, overregulation can also create barriers. That is my concern with the EU taxonomy. I would rather have an imperfect market with sufficient scale, where investors themselves decide on bonds that do not meet certain criteria, than a perfect but too small market.'

Jessica Zarzycki: 'Take a step back and consider why green bonds have been so successful, namely because of the ability to invest capital in specific projects and measure the results of that investment. That is different from the stock markets. Labelled bonds are a powerful tool for scaling up. I agree with my predecessor: overregulation can hinder innovation and growth. If we had waited for regulation or a taxonomy, we would never have invested in the first blue bonds issued by governments or in projects related to biodiversity and nature conservation. Fixed income is one of the best ways to achieve impact and scale up capital.'
 

Green bonds have performed similarly to unlabelled, comparable bonds. An important conclusion.

 
Anahi Machado: 'One of the lessons is that it’s not just about the underlying investment project, but also about the credibility and commitment of the issuer. In addition, performance is always important in the fixed income market. To attract sufficient capital, not just niche capital, you have to deliver performance.'

How do social bonds fit into an ESG or impact investment strategy? What role can they play for pension funds and their objectives?

Robbert Lammers: 'They are one of the instruments in the toolkit for achieving these goals. They allow you to clearly define the financing and provide a starting point for discussions with companies. In addition, the frameworks for labelled bonds help to identify and define projects and investments that best support our social or environmental goals.'

Michiel de Bruin: 'Social bonds can play a crucial role in tackling one of the biggest problems we face today: the lack of housing. They are also highly scalable. In terms of performance, I have been investing in green bonds since 2012 and the results have never disappointed. Green bonds have delivered a similar performance to non-labelled, similar bonds. That is an important conclusion.'
 

I don't think increasing fragmentation is positive for market growth. Institutional investors have an interest in uniform market standards.

 
Bruning: 'Indeed, financial results are important. But social bonds also offer pension funds an accessible path to a multitude of social projects, from healthcare to access to clean water, affordable housing and various forms of social cohesion. The credit quality is solid: generally investment grade, comparable to green bonds.'

Should we relax the guidelines compared to developed markets in order to stimulate growth in green bonds in emerging markets?

John Amoasi: 'I don't think we need to relax the guidelines, because they are already flexible enough when it comes to issuing labelled bonds. However, I do think it is important to give emerging markets a little more leeway than developed markets when it comes to sustainability targets. We also need to focus on reducing the costs that companies in emerging markets pay to finance these sustainable projects. Perhaps blended finance could play a role in this.'

Lammers: 'It is important to view the choices made by issuers in emerging countries in the right context. In developed markets, green bonds are used to replace existing infrastructure and make it greener. In emerging countries, infrastructure investments are more focused on new construction and expansion, for example to improve energy security. Take into account the context in which issuers in emerging markets are trying to achieve their goals.'

Bruning: 'But what do you consider to be emerging markets? China is probably ahead of us in the energy transition. So why would you relax criteria or lower performance targets?'

Machado: 'In this context, I also think about the importance of government support. That support helps to reduce costs and also build capacity. That is more important than relaxing standards. We may be able to introduce standards in phases and enrich them with regional policies and taxonomies. If we were to apply the same principles as in developed markets, we would not be able to finance these local projects.'
 

One of the advantages of blended finance is not only the reduction of risks, but also access to experts.

 
De Bruin: 'I also think that regional taxonomies are a good idea as a guideline for assessing green bonds in emerging markets. Perhaps we could be a little less stringent in the reporting requirements, because some emerging economies will need more investment to meet Western standards.'

Lammers: 'Emerging markets urgently need capital to close the large financing gap for the energy transition, but also to tackle growing problems such as biodiversity loss. However, companies and governments in these countries have less governance capacity than those in developed markets, so it may be particularly important to continue to apply the guidelines for these labelled bonds without compromise.'

Blue bonds are gaining ground as a financing instrument for the ‘blue economy’, supporting the conservation and restoration of oceans and marine habitats. How can we scale up issuance?

Zarzycki: 'We were involved in the first blue bond, issued by the Seychelles in 2018 with a volume of $15 million, aimed at nature conservation, ecotourism and sustainable fisheries. This was a blended finance structure with the World Bank. Scaling up issuance in emerging markets, especially in regions you are less familiar with, is a challenge. One of the advantages of blended finance is not only reducing risk, but also access to experts. There have now been a number of larger blue bond issuances by governments.'

Amoasi: 'We have participated in some of the larger blue bond issues. The market is still relatively small: less than $20 billion. We are looking at issues starting at around $500 million because of liquidity. Smaller issues do not fit our portfolios. But it is an important segment where we want to see growth in the future among companies and governments.'

Reznick: 'Development banks play a crucial role in these blended financing solutions. However, they are now under pressure from declining support from national governments, due to political reasons or new budget priorities. They are looking for ways to maintain their activities despite this decline in funding. Collaborating with asset managers in origination-sharing models is one way to do that. For years, there have been calls for private markets to take more responsibility. Now is the time, because there is a huge financing gap for the SDGs, and that gap is widening as government support declines.'

De Bruin: 'We need to remind investors that oceans also have a large capacity to absorb CO2 and heat, thereby contributing significantly to climate mitigation. This is sometimes forgotten. In addition, water management plays an important role in climate adaptation. Financing this remains a challenge for some countries. Blue bonds from supranationals, for example, could play a role here.'

Do green and blue bonds generate enough impact to achieve a net-zero economy?

Machado: 'Green bonds, blue bonds and other types of labelled bonds are an important tool for mobilising capital towards sustainable goals, but they are not enough for net zero. The International Energy Agency estimates that by 2030, we will need $4 trillion in annual investments in clean energy to achieve the 1.5-degree climate target. The issuance of green bonds in 2024 was approximately $600 billion. We are far behind. To truly achieve a net zero economy, we need a broader range of solutions, ranging from carbon pricing and policy measures to corporate transformation plans.'

Bruning: 'I agree. You need a mix of asset classes to achieve that systemic shift to net zero. Private equity, for example, plays a crucial role in financing innovation and the transition to a circular economy, something that is often insufficiently addressed through green bonds.'

Lammers: 'We use all ‘responsible investment’ instruments to contribute to a net zero economy. We exclude companies that do not fit in with this, such as companies that are still completely dependent on coal production. We try to shift portfolios towards companies that have aligned their policies with net zero or are willing to do so. Where necessary, we engage in dialogue with companies and help them to implement that change. Finally, we invest directly in solutions.'

De Bruin: 'Green bonds and blue bonds help, but not enough. If you look at sectors that are difficult to make sustainable, you see that transition finance poses a clear challenge because it involves issuers that are still heavily dependent on fossil fuels.'
  

We do not have a separate mandate for labelled bonds. Our approach always starts with assessing the company itself. That is where we define our universe.

  
Amoasi: 'New green bonds are often used to refinance old projects rather than to fund new solutions. In addition, you also have to take the social aspect into account. Trying to move away from coal and oil to renewable energy is great, of course, but you also have to consider the employees in these industries.'

How can orange bonds strengthen the position of women and girls?

Zarzycki: 'Less than 2% of global investments are directly targeted at women, while according to the World Bank, women are relatively more severely affected by climate and economic shocks. We invested in our first orange bond in 2022. It was worth $50 million. That's small, but that $50 million had a direct impact on the lives of more than 50,000 women. That impact ranged from access to their first car, which enabled them to bring products to market, to clean water and sanitation. The benefits are enormous, not only for women today, but also for future generations. We are now seeing more investment focus on socio-economically disadvantaged communities.'

Reznick: 'In general, it is challenging to create a cash flow opportunity for social projects. The projects do not usually create value for companies. So you often need some kind of government guarantee.'

Machado: 'What is important to me is accountability. Investors expect measurable gender results, which encourage transparency and also longer-term impact. Yes, the size of the issues is quite small, but the impact is incredible.'

Amoasi: 'The size of the issue is still a barrier: $50 million has an impact, but from a portfolio management and liquidity perspective, you probably need to include a large portion of the issue in your portfolio to make a significant impact from a return perspective. We work with companies in emerging markets and, through engagement, we try to ensure that they hire more women, support local communities and offer training programmes.'

Zarzycki: 'We hear this a lot: when this segment reaches a larger scale, we will get involved. But someone has to take the first step. We are willing to contribute to innovation as long as it fits within our own impact framework, the structure is scalable and we are compensated for the risks. Innovative transactions often have a lower correlation with the broader market and contribute to alpha in the portfolio.'

Bruning: 'If you were to include these types of projects in a broader social context, it would be easier to raise a larger amount. You can actually do social goals a disservice if you want a separate framework for each individual goal.'

Is a multitude of labels counterproductive for institutional investors such as pension funds, for example in their communication with participants?

Lammers: 'These bonds finance noble causes. But can you explain all those labels to pension fund participants? Wouldn't a single label be simpler, for example the label ‘sustainability bond’?'

Bruning: 'I don't think increasing fragmentation is good for market growth. Institutional investors have an interest in uniform market standards. And if you look at the green and social principles, they actually already cover blue bonds and orange bonds. We are not fans of sustainability-linked bonds, because their objectives are generally not very ambitious and this can create the wrong incentives.'

De Bruin: 'We can invest across portfolios in all labels, as long as they fit within our ESG framework. In that sense, fragmentation is not such a problem, as long as there is sufficient liquidity within a label.'

Zarzycki: 'Labels are useful because they can give direction to the underlying projects. They offer issuers and investors a framework. To check whether a project fits within our own framework, we look less at labels and more at the direct use of proceeds, measurable results, and the positive ecological and social outcomes of projects.'
 

Companies are also motivated by non-financial aspects. A labelled bond leads to a diversified investor population, usually very long-term oriented and stable.

 
Machado: 'As for fragmentation, I don't think it needs to undermine the credibility of the market. However, we do need internationally recognised frameworks to provide that credibility. We also need stricter sanctions to ensure that companies remain fully committed to the objectives of their bonds throughout the term of the financing.'

How can we mobilise the capital needed for the transition to a more sustainable economy? Should capital providers be satisfied with lower returns?

Bruning: 'The problem is more the availability of high-quality projects. Lowering return requirements is not productive. Green bonds are already a very cheap way to finance the energy transition. Compared to private instruments or private equity, these are often much more expensive forms of capital for the issuer.'

Zarzycki: 'Financial returns are central to what we do. If you sacrifice returns, it becomes difficult to scale up capital via fixed income. We have already reached the point where we are seeing significant scale in various sectors, enough to build a diversified portfolio.'

Lammers: 'The portfolios we manage belong to pension funds, which expect us to generate returns so that their participants receive a good pension. That remains the top priority. We therefore prefer green bonds that are comparable to other bonds in terms of financial characteristics. If a green bond is clearly priced worse than a comparable bond, you may wonder whether the project is worth financing.'

De Bruin: 'It is true that the so-called greenium for green bonds, based on the logic that investors are willing to pay extra or accept lower returns, is disappearing. This increases the financial attractiveness of these bonds. In addition, they offer strong reputational benefits, alignment with sustainability strategies and improved investor engagement.'

Reznick: 'No, returns should not be lower in order to scale things up. In fact, they should be higher. The greenium is now negligible and is clearly offset by the advantages of green bonds for investors: lower volatility, good tradability and the impact they offer.'

Zarzycki: 'Although many see the greenium as an advantage for an issue, the real benefits lie in the issuer's ability to diversify its investor base. In doing so, investors support long-term projects that generate more stable cash flows and lower spreads in the medium term.'

Amoasi: 'We are still seeing issuers coming to market with these labelled bonds, but the volume is lower than in 2021. However, companies are also motivated by non-financial aspects. A labelled bond leads to a diversified investor population, usually very long-term oriented and stable. It also helps companies improve their reporting and reputation.'

What are the challenges for carbon accounting of green bonds?

Reznick: 'If I buy a green bond from companies that should actually be issuing these bonds – high-emitting companies – then, based on current standards, I have to allocate the entire carbon footprint of that company to these bonds. I think we would be more inclined to buy green bonds if there were a way to reduce the carbon footprint of the portfolio. For example, through project-based carbon allocation.'

Amoasi: 'We are also experiencing that problem. A number of green bonds from utility companies have recently come onto the market. We allocated the issuer's entire carbon footprint instead of going to 0% or 50%, because it is better to overestimate than to underestimate. However, this meant we had to sell, because the emissions were higher than the client's target.'

Lammers: 'From a climate perspective, we would rather have a portfolio full of cement companies with a large footprint but which are Paris-aligned than a portfolio with a low footprint but where no company is Paris-aligned. We will still need cement or steel in 2050. You want to finance those companies that are switching to a lower-intensity production process. But if you look purely at footprint, you cannot invest in those companies.'

Machado: 'We do not have a target for CO₂ emissions or footprint. If we did, companies might be tempted to simply divest their polluting assets.'

Zarzycki: 'Through green bonds, we invest in ‘brown’ companies and help finance their energy transition. If you compare our portfolio to a CO₂ benchmark and engage an external party to do so, our portfolio will look like a larger emitter. But in reality, we invest in projects that support the transition of these companies.'
 

For the sake of simplicity and comprehensibility, the market often divides sustainability into separate silos, even though these themes are inextricably linked.

 
Machado: 'What I think we do well is educate our clients. Why we do this and why it is important from an impact perspective to continue investing in these types of companies.'

Bruning: 'Investors often focus on avoiding CO₂ as a performance metric. But that is not the whole picture, of course. The biggest challenge lies in the different methodologies that issuers use to calculate their avoided CO₂ emissions. The voluntary PCAF standard already helps enormously, but there can often still be many differences in the scoping and models of the life cycle analyses that underlie it.'

Reznick: 'If we invest in high-emitting companies that are genuinely reducing their emissions, the portfolio should decarbonise over time.'

What are the challenges for sustainable portfolios and how do you deal with them?

Reznick: 'Sustainable bonds are a subset of the broader market. But you still have to create diversification and investment returns. That’s a challenge.'

De Bruin: 'The market is not that small. The outstanding value of the MSCI Global Green Bond Index is now around $1.7 trillion. Around 20% of corporate bonds in euros are now labelled. As a portfolio manager, I can therefore build well-diversified portfolios with labelled bonds. But it would be nice if more countries could follow the German approach of building a green curve, rather than mainly issuing long-term bonds. We would also like to see more issuance of labelled bonds in dollars and in emerging markets. Supply still lags behind demand there.'

Lammers: 'We do not have a separate mandate for labelled bonds. Our approach always starts with assessing the company itself. That is where we define our universe. Within the remaining universe – the companies that match our clients’ ESG ambitions – we prefer labelled bonds.'

Bruning: 'The green bond market is well diversified, although certain sectors are indeed underrepresented. Diversification is a challenge for social bonds, however. That is still a fairly concentrated universe in terms of issuers. You therefore have to approach this as a niche strategy.'
 

The size of orange bond issues is fairly small, but the impact is incredible.

 
Machado: 'We don't have a purely labelled bond fund, but we do have climate trend strategies that invest up to 95% in labelled bonds. We ensure that we allocate capital to different segments, thereby creating flexibility.'

How do you ensure that you, as a bondholder, achieve success with engagement? What are the preconditions?

Reznick: 'Companies need capital, like oxygen. As capital providers, that gives us a seat at the table. Engagement does not work with stressed or distressed companies trying to make it to the end of the week, but it does work with companies that are regularly active in the bond markets. Don't sit down at the table with a short-sighted agenda without understanding what the company does and where its cash flows come from. Successful engagement takes time, research, a holistic understanding of the company and genuine collaboration.'

Machado: 'You can influence a company's behaviour by influencing their cost of capital or access to capital. You can also provide them with information about best practices in the market. Engagement financing is always a matter of timing. Do it before companies issue bonds.'

De Bruin: 'We have a five-step process in which we assess whether a labelled bond actually does what it is supposed to do. If we believe that the issuer can improve something, for example its reporting, we enter into dialogue and explain how important this is to us. In doing so, we draw on our extensive experience with engagement and good relationships with issuers.'

Bruning: 'With labelled bonds, formal engagement is less relevant because these companies are usually already well advanced in their transition path. So I agree that it is more of a cooperative approach, where you provide feedback on projects, especially in the social segment, where there are fewer guidelines.'

Are we seeing growth in certain segments, or notable shifts in types of issuers or regions?

Amoasi: 'Broadly speaking, we saw a decline in the first half of the year compared to previous years, but we definitely saw an increase in the social markets, especially in Europe. If you compare the first half of 2024 with the first half of this year, the issuance of social bonds is about 30% higher.'

De Bruin: 'As a manager of labelled bonds, I have experienced two difficult periods in which issuance initially declined: during Covid and in the first quarter of this year, when spreads widened significantly. Both times, the market recovered strongly. This shows resilience. We are seeing encouraging issuance volumes in the APEC region and in South America.'

Reznick: 'The issuance of US labelled bonds has fallen significantly, but social bonds have actually increased sharply in recent years, particularly in relation to housing, one of the most pressing social issues. Social bonds have even slightly exceeded the volume of green bonds this year.'

Does the consolidation in the issuance of labelled bonds indicate a mature market? Or is there new momentum for further growth?

De Bruin: 'It does indeed indicate a mature market. But consolidation does not mean stagnation. The new initiatives around orange or blue bonds could open up new opportunities. There is also room for growth in labelled government bonds. Whereas many of the issues in the European corporate segment are now labelled, the weight of green European government bonds in the index, for example, is only just over 3%, even though there is high demand for them.'

Amoasi: 'There is still growth in the global market. On the point of fragmentation: pension funds are also fragmented in terms of their values. One fund focuses on health, another on education. A fragmented market to serve the diverse values of pension funds is not such a bad thing.'

Zarzycki: 'Green bonds offer scale and diversification, but blue bonds, orange bonds and debt-for-nature swaps still make up a relatively small part of the labelled market. The best way to build a diversified portfolio and generate alpha for our clients is to look across the different labels. We need trillions of dollars to achieve green and social goals, and fixed-income investments can help scale up these investments.'

Reznick: 'For the sake of simplicity and comprehensibility, the market often divides sustainability into separate silos, even though we know that these themes are inextricably linked. Portfolios need differentiation, not only for returns but also to optimise impact. With silos, you run the risk of niche portfolios that cannot deliver on either front.'

Lammers: 'I think the market could benefit from bonds that focus on improving or protecting biodiversity. There is a lot to be done in this area in the coming years. When we talk about how mature the market is, my feeling is that, certainly on this topic, we are still only at the beginning.'

Machado: 'I agree with the comments about fragmentation. It feels somewhat contradictory to the need for growth for the market as a whole. The most important thing, however, is that there is sufficient demand from investors, and we have seen that here today.'
  

SUMMARY Following green bonds, blue and orange bonds are also appearing on the market, but fragmentation raises questions about clarity and impact. The EU taxonomy gave green bonds a boost, but too many rules can actually hinder innovation. Housing and social infrastructure in particular offer scalable opportunities for pension funds. Blended finance, regional taxonomies and government support are crucial for upscaling in emerging markets. The market for blue bonds still needs to grow. However, demand is increasing, both among investors and governments. Green and blue bonds help, but are not enough to achieve a net-zero economy.

Sevinç Acar Sevinç Acar is Head of Public Markets at NN Group. In this role, she is responsible for the public fixed-income products and equities in the company's investment portfolio. Prior to this, she was Investment Director Fixed Income at PGGM. She holds a Master's degree in Business Economics from Maastricht University.

 

John Amoasi John Amoasi, Senior Vice President, joined Neuberger Berman in 2022 as Stewardship & Sustainable Investing Specialist within the Emerging Markets Debt team. Previously, he worked at Franklin Templeton as a Senior Sustainable Investment Specialist and at Legg Mason, Goldman Sachs and PIMCO as a Fixed Income Product Specialist. He holds a Master's degree in Chemical Engineering from UCL, is a CFA Charterholder and holds the CFA ESG Investing certificate.

 

Michiel de Bruin Michiel de Bruin is Head of Global Macro and Portfolio Manager at Robeco, responsible for the green bond, global aggregate and euro government bond funds. With over three decades of experience, he has held various management positions at BMO Global Asset Management in London and Deutsche Bank in Amsterdam. He is a CEFA charterholder and holds degrees from VU Amsterdam and Amsterdam University of Applied Sciences.

 

Gwennaële Bruning Gwennaële Bruning has been Head of the Credit Team at Achmea Investment Management since 2014. Under her leadership, various credit and impact-oriented strategies have been developed. From 2009 to 2014, she worked at Achmea Group, where she was responsible for the fixed-income portfolios of the insurance companies. Previously, she worked at AXA Investment Managers and NN Investment Partners. Bruning studied Economics at the University of Amsterdam.

 

Robbert Lammers Robbert Lammers is Senior Advisor Responsible Investment and has been working at MN since 2018. As a specialist in ESG integration and impact investments within the One Portfolio team, he is closely involved in the fiduciary advice and management of pension funds' fixed income portfolios. Lammers studied International Political Economy in Groningen and previously gained experience at TKP Investments.

 

Anahi Machado Anahi Machado joined Degroof FMC, the predecessor of DPAM, in 2011 as a fixed income fund manager. Prior to that, she worked at BNY Mellon as a Market Controller Corporate Actions. Machado began her career in 2005 at Eurochambers as a Financial Analyst. She holds a Master's degree in Management Sciences from the Louvain School of Management. Machado also holds the ICMA Fixed Income Certificate.

 

Mitch Reznick Mitch Reznick joined Federated Hermes in February 2010 as Head of Research within the Credit team, before becoming Co-Head of Credit from 2012 to 2019. In 2019, he also became Head of Sustainable Fixed Income and co-manager of the Federated Hermes Global High Yield Credit Engagement Fund. In May 2024, Reznick was appointed Group Head of Fixed Income – London.

Jessica Zarzycki Jessica Zarzycki is Lead Portfolio Manager for the Global Core Impact strategy and co-Portfolio Manager of the Global Credit Impact, U.S. Core Impact Bond, Green Bond and Short Duration Impact Bond strategies at Nuveen Fixed Income. She was a member of the ICMA Advisory Board, which advises the Executive Committee, in 2020–2021. She is also a member of the Steering Committee for the Orange Bond Principles.

Attachments

• FI-7 - 2025 - RT Green, Blue and Orange Bonds.pdf