Canadian Sustainable Bond Issuance Drops 30 Percent in 2025
Green and social bond volumes in Canada fell to US$17.47 billion last year, marking a significant contraction in the market.
Sustainable bond issuance in Canada fell by 30.2 percent in 2025. Total volume for green, social, and sustainability-linked bonds dropped to US$17.47 billion. This represents a decline of nearly one third compared to 2024 levels. The contraction occurred amid trade instability and Treasury market turmoil.
Canada’s share of global sustainable bond issuance decreased from 2.4 percent to 1.7 percent. The Institute for Sustainable Finance (ISF) identified challenging economic conditions as a primary driver. Political resistance to ESG standards in the United States also contributed to the slowdown.
Issuer activity remains stagnant
Only 21 unique issuers completed sustainable bond deals in Canada last year. Just one of these was a new entrant to the market. The lack of new private participants highlights structural barriers to entry. Repeat public-sector issuers continue to dominate the issuance volume.
Yingzhi Tang, a senior research associate at the ISF, noted the need to broaden the issuer base. Encouraging more corporate participation is essential for market growth. The current structure relies too heavily on established public entities. Diversifying the pool of issuers could stabilize future volumes.
Green bonds dominate allocations
Green bonds account for approximately 85 percent of Canadian sustainable issuance. Sustainability bonds make up almost all of the remaining volume. Social bonds have nearly vanished from the market. This concentration indicates a strong preference for environmental projects over social ones.
Clean energy, clean transportation, and green buildings received nearly 80 percent of disclosed allocations. Climate adaptation projects captured only 1 percent of funding. Canada has not yet issued a clearly labeled transition bond. Other jurisdictions use these instruments to finance emissions reductions in heavy industry.
Future market opportunities depend on taxonomy
The ISF report suggests that a transition bond market could emerge once Canada finalizes its taxonomy. This would open new opportunities to finance credible transition activities. Yrjö Koskinen, ISF director of research, highlighted the need to address barriers for new private issuers. Clarifying definitions and standards is a critical next step for market expansion.
