Sustainability-linked investments, climate bonds and sustainable finance taxonomies

Current status of implementation and existing gaps

Although the total cost of ownership of electric trucks is comparable to or in many cases lower than diesel variants, companies can still struggle to adopt electric trucks due to the high upfront costs. Sustainability-linked investments, climate bonds and green taxonomies are channelling capital towards the adoption of electric trucks to overcome financial barriers.

Examples and initiatives

The EU Taxonomy Climate Delegated Acts, define “low-emission heavy-duty vehicles” under its scope, making them eligible for investments or incentives that are classified as ‘sustainable’ under the EU Taxonomy.

Current status of implementation and existing gaps

There have been several developments in using financial instruments dedicated to low-carbon investments in the shipping. For instance, there are a few early examples in Sustainability-linked investments and green bonds.

The Climate Bonds Initiative is developing a criteria for shipping as it has for industrial sectors such as steel and cement.

China and the EU also have their own taxonomies. However, there is a need for alignment with international standards and ambitious definitions to avoid market fragmentation.

Examples and initiatives

Hapag-Lloyd, Odfjell SE and Wallenius Wilhelmsen have issued sustainability-linked bonds against energy reduction targets.

In 2021, Maersk issued EUR 500 million in green bonds, the proceeds of which are aimed at developing a fleet of low-carbon methanol-fuelled container ships.

Current status of implementation and existing gaps

Limited progress has been made on green taxonomies in regulated markets, although China and the EU include SAF-related activities under their taxonomies (WEF, 2025). Fuel producers, airports and airline operators can attract investments by using green bonds and sustainability-linked instruments to promote the production and consumption of SAF. The criteria for accessing this financing should be tied to strict requirements outlined in green taxonomies for regulated and voluntary markets.

Examples and initiatives

Several taxonomies from non-state actors exist, such as the Climate Bonds Taxonomy, MDB-IDFC Common Principles and ISO 14030. Additionally, several countries have taxonomies that cover different aspects of sustainable aviation.

Neste has issued EUR 2.1 billion of green bonds for the development and expansion of refineries producing renewable fuels. In 2023, Air France-KLM issued EUR 1 billion of sustainability-linked bonds for reducing Scope 1 and 3 emissions.

Current status of implementation and existing gaps

Financial institutions have also started applying sustainability criteria to investments in iron and steel production assets. Today, about 77% of large publicly traded steel companies consider climate change as a key factor in their strategic assessments and operational decisions (WEF, 2024). Sustainability-linked loans and bonds are innovative financial instruments, categorised as “transition finance”, that enable companies to raise capital for general purposes while highlighting their environment, sustainability and governance targets. Transition finance has been rising over the last few years, driven by consumer and investor willingness to prioritise products and businesses with stringent environment, sustainability and governance goals (OECD, 2023a).

Examples and initiatives

As an example, the Sustainable Steel Principles, launched by a consortium of lenders, help banks align their steel lending portfolios with 1.5^°C climate targets. The latest figures show that half of the signatories to the Sustainable Steel Principles achieved alignment with well below 2^°C scenarios, and a third of them aligned with 1.5^°C scenarios (IRENA, 2024b). Similarly, the Climate Bonds Initiative has launched criteria for iron and steel production to guide banks and investors when investing in the sector’s sustainable activities and to incentivise the development of regulations (IRENA, 2024b).

China leads the global green bond market, with provinces like Hebei issuing specific transition finance guidance for the steel sector in 2024 (CBI, 2024).

US Steel Corp. issued a green bond worth USD 240 million to finance its electric arc furnace in Arkansas.

Current status of implementation and existing gaps

As with other industries, the chemical and petrochemical sector is turning to using different financial instruments to fund its transition. Key developments include the Basic Chemicals Criteria by the Climate Bonds Initiative and the Green Bond Principles by the International Capital Market Association. Several chemical producers, such as BASF, have established a green finance framework based on the latter.

Examples and initiatives

Speciality chemicals producer, Evonik, issued green bonds of a nominal value of EUR 500 million in 2025. (Evonik, 2025).

Current status of implementation and existing gaps

Sustainability-linked loans and bonds are innovative financial instruments, categorised as “transition finance”, that enable companies to raise capital for general purposes while highlighting their environment, sustainability and governance targets. Transition finance has been rising over the last few years, driven by consumer and investor willingness to prioritise products and businesses with stringent environment, sustainability and governance goals. Only a few international financial institutions, such as the World Bank and the International Finance Corporation, have cement-specific decarbonisation programmes (World Bank Group, 2025b).

Examples and initiatives

Several leading cement producers have issued green bonds and sustainability-linked loans to fund low-carbon cement projects.

Holcim raised EUR 3.5 billion in sustainability-linked bonds, tying its interest rates to carbon reduction targets. Heidelberg Materials secured EUR 500 million in green bonds to support CCUS and alternative fuel integration(GCCA, 2024).