Returns and impact of sustainability-labeled bonds (Roundtable 'Green, Blue & Orange Bonds' – part 2)

December 4, 2025

^{This report was originally written in Dutch. This is an English translation.}

How can we stimulate sustainable financing in emerging markets without undermining the credibility of green standards? In part 2 of the roundtable discussion, experts discuss the balance between strict guidelines and regional flexibility, the role of blended finance, and the emergence of blue and orange bonds.

By Manno van den Berg

This is part 2 of the report. You can read part 1 here. Part 3 will be published on Friday 5 December.

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 labeled bonds. However, I do think it's 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 apply the same principles as in developed markets now, we would not be able to finance these local projects.'

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 apply the guidelines for these labeled 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 size of $15 million, focused on 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.'

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

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

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 on more responsibility. Now is the time, because there is a huge financing gap for the SDGs, and that gap is widening due to declining government support.'

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 labeled bonds are an important tool for mobilizing capital toward 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 CO2 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 implement that change. Finally, we invest directly in solutions.'

De Bruin: 'Green bonds and blue bonds help, but they are 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.'

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 workers 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 they could use to bring products to market, to clean water and sanitation facilities. 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 typically create value for companies. So you often need some kind of government guarantee.'

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

The size of orange bond issues is fairly 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 more often: 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.'