By Federica Urso

(Reuters] – The European market for Green, Social and Sustainability Bonds (GSS), could exceed 1.6 trillion euro ($1.68 trillion) by 2026, according to a report. This figure represents almost half the new bonds issued in Europe, according Tuesday’s release.

PwC Luxembourg’s study draws from the firm’s survey of bond issuers and investors in 2021. It comes at a time when investors become increasingly worried about climate change, and Europe’s attempts to transition towards a sustainable economy.

Study shows that European GSS Bond issuances will exceed 1.4 Trillion Euros in 2026 according to its baseline assumptions and nearly 500 Billion euros in high-growth scenarios.

PwC reported that sustainability, and especially environmental considerations, have become more important than ever…in response to new regulations and shifting expectations of society – in particular Europe.

PwC projects that new green bonds will generate at least 691.2 trillion euros in 2026. By the same time, social bonds will produce 317.1 billion euros while sustainability bonds will create 391.8 billion.

According to the report, 60% of respondents considered secondary market liquidity a concern due to the limited availability of GSS bonds.

PwC stated that liquidity restrictions will fall over the next few years because of the growth in issuance (public and private)

39% of respondents were concerned about how the money from GSS bonds would be spent. However, the report noted that there are regulatory initiatives and voluntary guidelines to help mitigate any “greenwashing”.

Also, the study showed that GSS bonds will be issued mainly by the public sector, which is forecasted to increase to 712 million euros per year, up from 266 milliards last year.

It stated that corporate issuances, especially from non-financial sectors, will gain momentum, rising nearly threefold to 687.7 million euros by 2026.