The sustainable debt market: labels, structures and size

Sustainable debt is ordinary borrowing with a sustainability promise attached. A company, bank or government raises money through a bond or a loan, pays interest and repays the principal in the usual way. What is different is the promise. It is either a promise about where the money will go, or a promise about what the borrower will achieve.

There are two basic designs:

• Use-of-proceeds instruments ring-fence the money. Green bonds, social bonds, sustainability bonds, blue bonds and transition bonds all work this way. The borrower promises to spend the money on eligible projects and to report on how it was spent.
• Performance-linked instruments do not ring-fence the money. Sustainability-linked bonds and loans can fund any business purpose, but their cost changes depending on whether the borrower meets company-wide targets.

Together, these are often called GSS+ debt: green, social and sustainability, plus the newer labels. The label does not change who repays the debt or how safe it is. It changes what the borrower has promised and what it must disclose.

The main labels at a glance

Size of the global market

The Climate Bonds Initiative (CBI) tracks labelled debt that meets its screening rules. Its May 2026 figures show:

• More than $7 trillion of aligned GSS+ debt has been issued worldwide since 2006.
• Aligned issuance was above $1 trillion a year for the third year in a row in 2025.
• Green bonds are the largest part, at more than $4 trillion in total. They made up 64% of aligned issuance in 2025.
• More than 400 new issuers entered the market in 2025.

India's share

A March 2026 report by CFA Society India, using CBI data, gives this picture:

• India's green bonds totalled about $32.2 billion by mid-2025, roughly 0.9% of the global green bond market.
• Green bonds make up about two-thirds of India's labelled debt.
• Sovereign green bonds issued by the Government of India account for about 23% of India's green bond total.
• India's first sustainability-linked bonds came in 2021. All three were sold overseas in US dollars: UltraTech Cement ($400 million), Adani Electricity Mumbai ($300 million) and JSW Steel ($1 billion).
• No transition bonds or transition loans had been issued in India at the time of the report.

Label checks: reviewers, reports and regulators

• External reviewers. These give a second-party opinion, verify the issuer's processes, certify the bond against a standard (such as the Climate Bonds Standard) or give it a score. SEBI requires an independent third-party reviewer for listed green debt and for listed ESG debt securities.
• The issuer's own reports. An allocation report shows where the money went. An impact report shows what it achieved.
• Regulators. In India, SEBI sets the disclosure rules for listed labelled debt and RBI sets the rules for green deposits.

Checks that apply to every label

1. Eligibility: the projects or targets are clearly defined against a named standard or taxonomy.
2. Materiality: the projects or targets relate to the borrower's main environmental or social impacts.
3. Tracking: the money (or the KPI) is tracked and checked by someone independent.
4. Reporting: allocation and impact reports are published on time and are specific.
5. Consistency: the borrower's overall strategy matches the label. A green bond from a company that is expanding its most polluting activities deserves a closer look.