Why surety bonds are important for ESG and sustainability-focused businesses

Published on 24 July 2025

As ESG and sustainability continue to drive corporate decision-making, how are bond requirements being affected, and what are the implications for companies and projects in energy-intensive industries, such as construction and infrastructure?

Sustainability is no longer just a buzzword – it’s a business imperative. Across sectors, and particularly in global markets, companies are embedding ESG (environmental, social and governance) and sustainability principles into their long-term growth strategies. As these priorities shift, businesses are seeking more adaptable and innovative ways to finance and secure their projects.

That’s where we come in. Our surety bond solutions represent an effective alternative to bank financing and guarantees, while our specialty credit solutions can work in parallel with them, helping to unlock more financial capacity, reduce risk, and provide the flexibility needed for businesses to meet their evolving  sustainability goals.

Global emissions targets and climate regulations are reshaping markets and industries worldwide. As a result, demand for greener infrastructure, low-carbon technologies, and sustainable construction is accelerating. In today’s environment, ESG and sustainability principles are essential; they play a key role in decision-making, securing financing, and meeting the expectations of all stakeholders – from investors to customers. 

In early 2025, analysis from  BloombergNEF found that low-carbon energy infrastructure projects are attracting more investment than ever, with investment growing 11% in 2024 alone. The International Energy Agency (IEA) forecasts that US$2.2 trillion will be spent on “clean” energy projects globally in 2025 – double the anticipated US$1.1 trillion spent on fossil fuels. 

In April 2025, market analysis from Sustainable Construction Review found that construction firms with strong ESG performance consistently outperformed their peers in securing large-scale projects and attracting investment. Meanwhile, the findings of PwC’s Annual Global CEO Survey for 2025 confirmed that sustainability investing is paying off, with one-third of CEOs reporting increased revenues because of climate-friendly investments made over the last five years, and two-thirds saying these investments had either reduced costs or at least not led to cost increases.    

With more companies across sectors embracing low-carbon technologies and making longer-term ESG and sustainability commitments, more diverse financing solutions are needed to support these priorities. 

Insurer-backed surety bonds can play a crucial role. Their financial security and risk mitigation benefits make surety bonds particularly well-suited for sustainability-driven infrastructure projects, which are typically large in scale, capital-intensive, and heavily linked with ESG regulation and compliance. Unlike bank guarantees, which may use part of your company’s existing credit lines, surety bonds typically sit off-balance sheet, helping you preserve liquidity and providing added financial flexibility.

At Allianz Trade, the global availability of our surety bonds adds even greater flexibility. Our surety experts are on the ground in local markets worldwide, with established networks and a thorough understanding of local regulations. They will work closely with your business to tailor your bond terms based on your project scope, sector, and local regulatory environment. 

In addition, when we assess the viability of a project, we consider a broad set of criteria, including ESG and sustainability factors and long-term value creation. Our underwriting model means that we’re well-positioned to work in parallel with banks to support sustainable growth and enable the transition to a low-carbon economy. 

At Allianz Trade, we understand that sustainability and growth now go hand in hand. That’s why we’ve built sustainability into the structure of our innovative Surety Green2Green solution, which is specifically designed to support low-carbon technologies and renewable energy infrastructure. 

Here’s how the solution works: when the plan for a project meets Allianz Trade’s low-carbon criteria, we issue a surety bond to secure it and guarantee its successful delivery. Then, we hold investments equal to or greater than the upfront premium related to the policy in certified green bonds. Our experts ensure these bonds remain consistent with evolving regulatory frameworks related to green investments, such as the Green Bond Principles (GBP) outlined by the International Capital Market Association (ICMA).

This way, our Surety Green2Green bonds have a dual sustainability impact. As Soenke Schottmayer, Global Head of Commercial Surety at Allianz Trade explains: “We create a full-circle benefit. We issue bonds that ensure low-carbon projects’ success, and we fuel the sustainable transition of the overall economy.” 

To date, we’ve endorsed and engaged in 25 Surety Green2Green projects across multiple countries – including in Germany, Italy, France, Poland, Sweden, Denmark, and Singapore – supporting a wide range of clients and their sustainability goals. 

One recent successful example comes from Germany. Using Allianz Trade’s Green2Green framework, our A-Team guaranteed the construction of a 300km “energy highway” that transports renewable power from northern Germany to the south. By issuing performance and pre-payment bonds, our experts enabled six of our partners to realize this project, which is set to deliver greener energy to 2 million people – a true milestone in Germany’s renewable energy transition.

At Allianz Trade, we recognize that if you’re committed to sustainability, you need more than just standard project financing and protections – you require a surety provider who understands the complexity of sustainable growth.

Our AA+ credit rating represents a mark of our strength and reliability in the global marketplace. It provides added confidence in our surety bonds to all parties involved in large-scale, complex sustainability projects – from owners and contractors to financiers. 

With our strong track record and wealth of local market expertise, our A-Team doesn’t just provide the financial capacity and security needed for sustainability projects – we also bring clarity and act as your trusted advisor for navigating the fast-changing landscape of ESG and sustainability.

As Sean McGroarty, Global Head of Surety at Allianz Trade, explains: “Surety is very much a relationship business. It’s important to have expertise on the ground and to deliver solutions that comply with local laws and regulations. Our clients value our global brand and capabilities.”

It’s clear that ESG and sustainability priorities are essential. Today, they’re at the core of business strategies, reshaping how projects are planned, financed, delivered and measured for success. As businesses embrace ESG and sustainability strategies, they need solutions that not only comply with the latest regulations – they must also be scalable and ready for future growth. 

At Allianz Trade, our tailored surety solutions offer the flexibility you need to meet today’s ESG and sustainability standards, while also realising tomorrow’s growth ambitions. Our innovative Surety Green2Green bonds exemplify our innovation and forward-thinking, while our A-Team provides the global network and local expertise to deliver the best solutions possible.