Market Overview: A Changing Sustainable Lending Landscape

Pearl Nyakunengwa Data Analyst – EMEA Syndicated Loans Data, Bloomberg LP

Venti Mulani Data Specialist – EMEA Sustainable Fixed Income, Bloomberg LP

Sustainable lending activity slowed in Q2 2026, with total volumes falling to around €68.5 billion, from just over €100 billion in Q2 2025.

The decline was broad-based across green, sustainability-linked, and sustainability/social lending, although green financing remained the largest segment.

Green lending, for example, reached more than €47 billion in July 2025 alone, while sustainability-linked lending was particularly strong in the first quarter of that year. By Q2 2026, activity had become more measured, with fewer large transactions driving monthly totals.

Green lending nevertheless continued to show resilience. Volumes picked up in June 2026, exceeding the same month a year earlier, suggesting that use-of-proceeds structures remain firmly embedded even as the broader market normalises from previous highs.

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The Euro Takes the Lead

The currency mix shifted noticeably during the quarter. Euro-denominated activity rose to around €30 billion equivalent in Q2 2026, recovering strongly from the subdued levels seen in late 2025 and early 2026.

Dollar-denominated financing moved in the opposite direction, falling to around €23 billion, compared with almost €40 billion a year earlier. This marks a clear change from 2024, when dollar issuance regularly exceeded €50 billion per quarter and reached almost €69 billion in Q4 2024.

As a result, the euro became the larger of the two major currencies in Q2 2026. The trend points to a more resilient European sustainable lending market, while dollar activity has become less consistent following the much stronger issuance environment of 2024 and early 2025.

Source: Bloomberg

Sector Trend: Sustainable Lending Becomes More Concentrated

The most striking sector trend in Q2 2026 was the growing importance of utilities. Utility-sector sustainable financing reached around €29 billion, up from approximately €21 billion a year earlier, making it by far the largest sector and accounting for more than two-fifths of overall activity during the quarter, while financials remained the second-largest segment.

Real estate also emerged as a significant source of issuance, reaching around €8.8 billion compared with €7.1 billion in Q2 2025.

This contrasts sharply with sectors such as energy, communications and technology, where activity fell back significantly from Q2 2025 levels. Energy volumes, for instance, declined from around €13.1 billion to €4.3 billion, while communications dropped from more than €10 billion to around €2.1 billion.

The shift suggests that sustainable lending is becoming increasingly concentrated around sectors with large and recurring capital requirements, particularly power, grids and infrastructure, while real estate has also emerged as a significant source of issuance. This is also a change from earlier periods, when sustainable financing was spread more evenly across energy, industrials, technology and communications.

Source: Bloomberg

Regional Dynamics Shape Issuance

Regional trends differentiated in Q2 2026, with EMEA remaining the largest and most diversified sustainable lending market. Green financing accelerated sharply in the region in June, driving a pronounced increase in overall issuance toward quarter-end, while sustainability-linked lending remained an important source of activity throughout the quarter. The Americas, by contrast, were almost entirely green-led, while APAC saw green volumes soften toward quarter-end as sustainability-linked lending gained momentum. The data points to an increasingly differentiated market, with regional preferences shaping both the scale and mix of sustainable financing structures.

Source: Bloomberg

Leading Markets Continue to Evolve

Sustainable lending activity remained concentrated in a small number of markets across Q2 2025 and Q2 2026, although overall volumes and the country mix shifted year on year. The United States remained the largest country of risk, albeit at a materially lower volume, while Germany moved into second place as Australia fell down the rankings. Europe became more prominent among the leading markets, with Spain, Turkey, France and Italy all retaining top-eight positions, while APAC representation shifted from Australia and Taiwan to Australia and Singapore. Turkey and France were comparatively resilient, recording modest increases against Q2 2025.