ESG Syndicated Loans Reshape Across EMEA: From Volume to Value in 1H25
Iolanda Barbati EMEA Contributor Relations Manager – Loans, LSEG Data & Analytics
Maria Christina Dikeos Head of Global Loans Contributions, LSEG LPC
In the first half of 2025, global sustainable finance volumes—encompassing both loans and bonds—reached $774.7 billion, marking a 14% year-on-year decline.
This contraction was largely driven by a sharp drop in syndicated loan issuance, while the bond market showed signs of resilience, registering a modest 3% increase compared to the same period in 2024.
Source: LSEG LPC
Zooming in on syndicated loans, global volumes fell to $327 billion in 1H25, representing a steep 30% decline from the previous year.
The Americas recorded $97.4bn in 1H25. Despite promising growth indicators in 2021 and 2022, the calendar of new regional issuance has slowed meaningfully in the last few years as appetite for ESG compliance has become politically fraught in the US. APAC excluding Japan recorded $61.2bn in 1H25, down 24% year over year. The region was not sheltered from the wider market headwinds.
Source: LSEG LPC
The EMEA region, traditionally a stronghold for ESG lending, was particularly affected. Volumes dropped by 32%, from $228.34 billion across 309 deals in 1H24 to $156.08 billion across just 181 transactions in 1H25. The slowdown was most pronounced in the first quarter, where issuance plummeted by 48% year-on-year, falling from $136.91 billion in Q1 2024 to $70.53 billion in Q1 2025. This front-loaded weakness reflected a broader loss of momentum in ESG loan origination.
The macroeconomic environment remained challenging in the first half of 2025, with persistently high interest rates across Europe. At the same time, the market is undergoing a transition: borrowers are now subject to more rigorous scrutiny, with sustainability metrics expected to align with sectoral pathways and be supported by auditable data. Geopolitical tensions — including the ongoing war in Ukraine, the Israel-Gaza conflict, and the Iran-Israel escalation — combined with economic uncertainty stemming from President Trump's reciprocal tariff programme, created a complex backdrop in 1H25 and weighed on the overall loan market in the first half of 2025.
Germany led the EMEA region in Sustainable Finance loan volume, while Spain topped the region in deal count.
Source: LSEG LPC
ESG formats, which often require additional structuring and negotiation, were not immune to the pressures mentioned above. Many corporate borrowers opted for straightforward refinancing solutions, avoiding the complexity of sustainability-linked structures that demand credible KPIs and third-party verification.
Regulatory developments also played a significant role. The European Banking Authority’s final guidelines on ESG risk management, published in January 2025, pushed banks to embed ESG considerations into credit origination and monitoring processes. The increased focus on due diligence contributed to slower deal execution.
Guidelines on the management of ESG risks | European Banking Authority
The market is undergoing a transition. Borrowers are now subject to more rigorous scrutiny, with sustainability metrics expected to align with credible sectoral pathways and be supported by auditable data.
Structurally, the ESG loan market is shifting from rapid expansion to consolidation. The emphasis is increasingly on quality over quantity, with fewer but more robust deals coming to market. Innovation in funding structures is also underway.
In summary: 1H25 confirmed a slowdown in ESG syndicated loans, driven by higher rates, regulatory tightening, and credibility concerns. While headline volumes fell, the quality of deals is improving, suggesting the market is in a transition phase from expansion to consolidation, setting the stage for more resilient growth ahead.
Post scriptum
The data presented in this article is reflective of news stories, press releases and lenders activities across the sustainable finance sector. If you wish to contribute for league tables purposes, please send transactions info to emea.loans@lseg.com
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