Sustainable Finance Market size was USD 5.4 trillion in 2023 and is anticipated to record a CAGR of more than 22% during the forecast period of 2024-2032, led by increasing awareness among people and governments about environmental and social concerns.
Across the world, governments are increasing their efforts to encourage sustainable financing. The driving force for these efforts arises from increased awareness of social and environmental issues, and an appreciation for the central role that finance can play in meeting objectives of sustainable development.
For example, in September 2023, Singapore and China set up a new green finance taskforce to enhance their bilateral collaboration in green and transition finance. The taskforce, referred to as the China-Singapore Green Finance Taskforce (GFTF), will work to intensify cooperation between the two nations and promote increased public-private sector involvement in sustainable finance activities.
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| Report Attribute | Details |
|---|---|
| Base Year | 2023 |
| Sustainable Finance Market Size in 2023 | USD 5.4 Trillion |
| Forecast Period | 2024-2032 |
| Forecast Period 2024-2032 CAGR | 22% |
| 032 Value Projection | USD 31.1 Trillion |
| Historical Data for | 2021-2023 |
| No. of Pages | 240 |
| Tables, Charts & Figures | 360 |
| Segments covered | Investment Type, Transaction Type, Investor Type, and End-use |
| Growth Drivers |
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| Pitfalls & Challenges |
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Sustainable finance Market Trends
With more advanced data analysis, greater transparency, and simplified access to ESG data, fintech developments are transforming sustainable finance. Supply chain finance becomes more transparent with blockchain technology and enhances the trackability of sustainable investments. Impact indicators can be assessed, ESG criteria can be screened, and stakeholders can be engaged by investors more effectively with the aid of digital tools and platforms.
Funding climate change projects is essential to reduce its impact and transition to a low-carbon economy. Financing carbon reduction initiatives, climate-resilient infrastructure, renewable energy projects, and adaptation strategies is being mobilized by financial institutions. Addressing and managing climate risks within investment portfolios is increasingly depending on scenario analysis and climate-related financial reporting.
Sustainable finance Market Analysis
Investing is becoming greener! Today, there are various kinds of investments that prioritize various aspects of sustainability, such as the environment, social factors, and general responsible investing. Green bonds are a significant portion of this, accounting for more than a third of the market in 2023. They’re utilized specifically to finance projects that benefit the environment, such as constructing sustainable buildings, conserving water sources, and assisting wildlife. Green bonds have grown even more popular and innovative over the last few years. Green bond-issuing companies began including more and different kinds of projects, such as sustainable buildings, flood management, and adaptation to climate, in their offers. Banks and financial institutions facilitate making green bonds a reality through deal structuring and product formulation catering to investor demand. And if you need to invest on the path of creating a greener future, then green bonds and other eco-conscious investments deserve consideration.
Green finance is being driven by governments and regulatory bodies across the globe through policies, incentives, and frameworks. For example, the EU Green Bond Standard has set out well-defined rules and requirements on what a green bond is. This puts pressure on issuers to adhere to green finance standards and reveal information about the environmental performance of financed projects, hence leading to investment.
Sustainable Finance Market Companies
Key companies that operate in the sustainable finance sector are
Blackrock
HSBC Group
Deutsche Bank AG
Goldman Sachs
BNP Paribas
UBS
Bank of America
Sustainable Finance Industry News
Indosuez Funds issued Chronos Green Bonds 2028, a fixed-maturity fund that invests in green bonds of companies that are engaged in the process of adopting initiatives that are aligned with the United Nations’ Sustainable Development Goals, in June 2024. The fund is an Article 9 fund under the EU’s Sustainable Finance Disclosure Regulation (SFDR) and has a conservative risk profile that guarantees returns with a moderate risk.
During January 2024, State Bank of India raised USD 250 million by issuing green bonds, which will be due in December 2028. The net proceeds of the green bond issue will be used to finance eligible green projects under SBI’s ESG Financing Framework. This is consistent with SBI’s sustainable development strategy and promoting a favorable environmental impact.
The market research report on sustainable finance contains comprehensive coverage of industry with estimates & forecast in revenue ($Bn) terms from 2021 to 2035, of the following segments
Market, By Investment Type
Equity
Fixed income
Mixed allocation
Others
Market, By Transaction Type
Green bond
Social bond
Mixed-sustainability bond
ESG integrated investment funds
Others
Market, By Investor Type
Institutional investor
Retail investor
Market, By End-use
Utilities
Transport & logistics
Chemicals
Food & beverages
Government
Others
Regional Insights
The North America sustainable finance market is anticipated to exhibit a significant CAGR over the forecast period. Growing regulatory support and increased environmental awareness among consumers and investors are responsible for the growth of the market. The financial institutions in the region are quickly innovating to address the growing demand for sustainable investment products, including green bonds and sustainability-linked loans. This is supported by government policies aimed at ensuring sustainability, which have provided a supporting environment for sustainable finance. Due to this, North America will continue to follow a strong growth path, with forecasts pointing toward a continued increase in sustainable investments in the following years
U.S. Sustainable Finance Market Trends
The U.S. sustainable finance industry was in the leading position in 2024. The U.S. is experiencing a movement toward sustainable investment strategies, and large institutional investors, asset managers, and pension funds are making ESG considerations a top priority in their portfolios. The U.S. experienced growing demand for sustainable investment opportunities that meet the values and ethics of an individual. Banks are reacting by expanding their products to encompass other innovative financial instruments that meet this need. Additionally, regulatory policies are increasingly accommodative of sustainable finance activities, further propelling market expansion and drawing in more investors.
Europe Sustainable Finance Market Trends
The European sustainable finance sector was the biggest with 38.39% in 2024. The region has seen robust government support and regulatory policies that encourage sustainable finance activities. European nations have put in place numerous policies and regulations that compel financial institutions to integrate ESG considerations into investment decisions. The action plan of the European Union for sustainable finance has been instrumental in propelling sustainable finance growth with the establishment of clear standards and guidelines for sustainable investment products.
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Asia Pacific Sustainable Finance Market Trends
The Asia Pacific sustainable finance industry is expected to expand at a CAGR of 27.3% in the forecast period. There has been an increased awareness among the governments and business communities in the region regarding the significance of sustainable development and confronting environmental and social issues. Governments in China, Japan, and South Korea have introduced ambitious sustainability targets and projects, providing a favorable environment for sustainable finance. In addition, there is growing awareness and demand for sustainable investment products among Asia Pacific investors.
China sustainable finance market is anticipated to grow at the highest growth rate in the forecast period. China is fast becoming a key player in the global sustainable finance market, fueled by government support of green finance and environmental sustainability. In addition, investment in green technologies and renewable energy projects is accelerating as the public and private sectors identify the need to align financial activities with sustainability objectives, thus driving the market growth.
The Japan sustainable finance market had a significant market share in 2024 and is transforming as investors and consumers become increasingly aware of environmental concerns. The government of Japan has been aggressive in adopting policies that promote sustainable investments, which has resulted in greater interest in green bonds and other environmentally oriented financial products.
