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Bonds Linked to Sustainability Goals Could Become Ethical Debt of Choice

  • Europe’s sales of sustainability-linked debt jump sevenfold
  • Cheaper terms on offer lure companies worried about rate hikes
Wind turbines and solar panels in fields in the Seine-Maritime department of Normandy, France.

Wind turbines and solar panels in fields in the Seine-Maritime department of Normandy, France.

Photographer: Nathan Laine/Bloomberg

Sales of bonds with sustainable targets have jumped sevenfold in Europe this month, competing with green debt to become the dominant force in the ethical market.

Such sustainability-linked bonds, requiring borrowers to commit to targets, reached nearly a fifth of the region’s ethical debt sales this month, up from just 2% last January. That’s squeezing out other parts of the market including more traditional green and social bonds, and could signal a shift away from notes where the proceeds fund set projects.