PUBLISHER: The Business Research Company | PRODUCT CODE: 1578689
PUBLISHER: The Business Research Company | PRODUCT CODE: 1578689
ESG finance involves integrating environmental, social, and governance (ESG) factors into financial decision-making and investment processes. This approach evaluates how a company's operations and practices affect the environment, society, and governance, aiming to promote sustainable and responsible investing. Investors and financial institutions use ESG criteria to identify risks and opportunities related to sustainability and social responsibility.
The main investment types in ESG finance include equity, fixed income, mixed allocation, and others. The equity segment focuses on investing in shares of companies that meet ESG criteria, emphasizing ownership in companies with strong ESG practices to generate long-term growth and positive societal and environmental impacts. Investors are categorized into institutional and retail investors. Transaction types include green bonds, social bonds, mixed sustainability bonds, ESG-integrated investment funds, and others. Industry verticals for ESG investments span utilities, transport and logistics, chemicals, food and beverage, government, and more.
The ESG finance market research report is one of a series of new reports from the business research company that provides ESG finance market statistics, including ESG finance industry global market size, regional shares, competitors with an ESG finance market share, detailed ESG finance market segments, market trends and opportunities, and any further data you may need to thrive in the ESG finance industry. This ESG finance market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenario of the industry.
The ESG finance market size has grown rapidly in recent years. It will grow from $5,716.79 billion in 2023 to $6,347.59 billion in 2024 at a compound annual growth rate (CAGR) of 11%. The growth observed during the historic period can be attributed to several factors such as increased awareness of climate change, regulatory developments, the rise of green bonds, corporate sustainability initiatives, and growing consumer preferences for responsible investing.
The ESG finance market size is expected to see rapid growth in the next few years. It will grow to $9690.94 billion in 2028 at a compound annual growth rate (CAGR) of 11.2%. The anticipated growth in the forecast period can be attributed to several factors such as strengthening regulatory frameworks, increased focus on climate risk management, rising corporate sustainability goals, growing institutional investment, and global climate initiatives. Major trends during this period include enhanced ESG data and analytics, advancements in ESG technology, improved analytics tools, the integration of AI, and the use of blockchain technology.
The rising investment in green bonds is anticipated to drive the growth of the ESG finance market. Green bonds are fixed-income securities issued to raise capital specifically for financing environmentally sustainable projects and initiatives. The surge in green bond investments is attributed to increasing global awareness of climate change and a growing demand for socially responsible investments. Institutional investors, such as pension funds and insurance companies, are increasingly focusing on investments that meet environmental, social, and governance (ESG) criteria. ESG insurance provides coverage and risk mitigation for sustainable projects, boosting investor confidence and supporting the financing of green initiatives. For example, in May 2024, The International Finance Corporation, a US-based international financial institution, projected that green bond issuance would grow at an annual rate of 7.5%, reaching $156 billion by 2025, up from $135 billion in 2023. This rise in green bond investments is expected to propel the growth of the ESG finance market.
Key players in the ESG finance market are integrating artificial intelligence (AI) technologies, such as AI-powered data analytics and research platforms, to enhance investment decision-making and address the growing demand for transparency and accountability in sustainable finance. AI-powered data analytics and research platforms use artificial intelligence to process and interpret large volumes of environmental, social, and governance data, providing actionable insights and improving decision-making in sustainable finance. For instance, in March 2022, ESG Data Services Inc. (ESG Analytics), a Canada-based provider of advanced data solutions, launched ESG Analytics, an AI-powered platform for ESG data, analytics, and research. This web-based solution and API utilize extensive alternative data sources and AI to assess risks and opportunities in the ESG practices of countries, companies, and ETFs. ESG Analytics' dynamic big data platform offers real-time insights, aiding researchers, analysts, funds, and corporations in integrating ESG factors into investment management and corporate decision-making processes.
In April 2022, Goldman Sachs Group, Inc., a US-based investment banking company, acquired NN Investment Partners (NN IP) from NN Group N.V. for $1.85 billion. This acquisition underscores the ongoing consolidation in the asset management sector and the growing importance of sustainable investing. It enhances Goldman Sachs' position in the European market and boosts its ability to cater to the increasing demand for responsible investment solutions. NN Investment Partners, based in the Netherlands, focuses on sustainable investment strategies.
Major companies operating in the ESG finance market are JPMorgan Chase & Co., HSBC Holdings plc, Morgan Stanley, BNP Paribas Asset Management S.A., The Goldman Sachs Group Inc., UBS Group AG, Deutsche Bank Aktiengesellschaft, Fidelity Investments Inc., The Bank of New York Mellon Corporation, BlackRock Inc., State Street Corporation, The Vanguard Group Inc., Franklin Templeton Holdings Ltd., Northern Trust Asset Management, T. Rowe Price Group Inc., Amundi Asset Management Inc., Invesco Ltd., Schroders plc, Pacific Investment Management Company LLC, Allianz Global Investors GmbH, Columbia Threadneedle Investments Inc., AXA Investment Managers S.A., Wellington Management Company LLP, Natixis Investment Managers International, Legal & General Investment Management Limited
Europe was the largest region in the ESG finance market in 2023. North America is expected to be the fastest-growing region in the forecast period. The regions covered in the ESG finance market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.
The countries covered in the ESG finance market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Canada, Italy, Spain.
The ESG finance market includes revenues earned by entities through services such as sustainable investment advisory services, corporate sustainability reporting services, and ESG education and training. The market value includes the value of related goods sold by the service provider or included within the service offering. Only goods and services traded between entities or sold to end consumers are included.
The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD, unless otherwise specified).
The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.
ESG Finance Global Market Report 2024 from The Business Research Company provides strategists, marketers and senior management with the critical information they need to assess the market.
This report focuses on ESG finance market which is experiencing strong growth. The report gives a guide to the trends which will be shaping the market over the next ten years and beyond.
Where is the largest and fastest growing market for ESG finance ? How does the market relate to the overall economy, demography and other similar markets? What forces will shape the market going forward? The ESG finance market global report from the Business Research Company answers all these questions and many more.
The report covers market characteristics, size and growth, segmentation, regional and country breakdowns, competitive landscape, market shares, trends and strategies for this market. It traces the market's historic and forecast market growth by geography.
The impact of sanctions, supply chain disruptions, and altered demand for goods and services due to the Russian Ukraine war, impacting various macro-economic factors and parameters in the Eastern European region and its subsequent effect on global markets.
The impact of higher inflation in many countries and the resulting spike in interest rates.
The continued but declining impact of COVID-19 on supply chains and consumption patterns.