PUBLISHER: The Business Research Company | PRODUCT CODE: 1808800
PUBLISHER: The Business Research Company | PRODUCT CODE: 1808800
Sustainable finance involves integrating environmental, social, and governance (ESG) criteria into financial decision-making, investment strategies, and lending practices. Its goal is to foster economic growth while mitigating environmental impact, addressing societal issues, and promoting effective governance. Sustainable finance aims to align financial systems with sustainable development objectives, ensuring that financial investments contribute to sustainable economic progress and the welfare of society and the environment.
The primary investment categories within sustainable finance include equity, fixed income, mixed allocation, and others. Equity represents a company's net assets owned by shareholders after deducting liabilities. It plays a crucial role in advancing the shift toward sustainable finance and a more sustainable economy. Various financial instruments include green bonds, social bonds, mixed-sustainability bonds, ESG-integrated investment funds, and others. Investor types span institutional investors and retail investors, while industry sectors encompass utilities, transport and logistics, chemicals, food and beverage, government, among others.
Note that the outlook for this market is being affected by rapid changes in trade relations and tariffs globally. The report will be updated prior to delivery to reflect the latest status, including revised forecasts and quantified impact analysis. The report's Recommendations and Conclusions sections will be updated to give strategies for entities dealing with the fast-moving international environment.
The sharp rise in U.S. tariffs and the ensuing trade tensions in spring 2025 are having a considerable impact on the financial sector, particularly in the areas of investment strategies and risk management. The increased tariffs have intensified market volatility, leading institutional investors to adopt more cautious approaches and driving greater demand for hedging solutions. Banks and asset managers are encountering higher costs in cross-border transactions as disrupted global supply chains and declining corporate earnings weigh on equity market performance. At the same time, insurance providers are facing elevated claims risks linked to supply chain interruptions and trade-related business losses. Furthermore, reduced consumer spending and weaker export demand are limiting credit growth and dampening investment appetite. In response to these challenges, the sector must focus on diversification, accelerate digital transformation, and strengthen scenario planning to manage the heightened economic uncertainty and safeguard profitability.
The sustainable finance market research report is one of a series of new reports from The Business Research Company that provides sustainable finance market statistics, including sustainable finance industry global market size, regional shares, competitors with a sustainable finance market share, detailed sustainable finance market segments, market trends, and opportunities, and any further data you may need to thrive in the sustainable finance industry. This sustainable finance research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenarios of the industry.
The sustainable finance market size has grown exponentially in recent years. It will grow from $6718.2 billion in 2024 to $8240.52 billion in 2025 at a compound annual growth rate (CAGR) of 22.7%. The growth in the historic period can be attributed to a rise in investor demand and risk management, the rise of corporate social responsibility initiatives, increasing regulatory support, a rising focus on sustainable supply chains, and rising investments in renewable energy.
The sustainable finance market size is expected to see exponential growth in the next few years. It will grow to $18224.29 billion in 2029 at a compound annual growth rate (CAGR) of 21.9%. The growth in the forecast period can be attributed to a rising focus on reducing carbon footprint, growing demand for sustainable investments, growing awareness of sustainability among various sectors, growing demand for financial instruments and services, and increasing access to green bonds. Major trends in the forecast period include technological advancements, integration of artificial intelligence, green technology adoption, climate resilience financing, and sustainability-linked loans.
The forecast of 21.9% growth over the next five years reflects a modest reduction of 0.8% from the previous estimate for this market. This reduction is primarily due to the impact of tariffs between the US and other countries. This is likely to directly affect the US through slower adoption of green investments, as environmental impact measurement tools and environmental, social, and governance (ESG) reporting platforms, primarily sourced from Denmark and Finland, become subject to specialized software tariffs. The effect will also be felt more widely due to reciprocal tariffs and the negative effect on the global economy and trade due to increased trade tensions and restrictions.
The growing focus on corporate social responsibility (CSR) initiatives is expected to drive the expansion of the sustainable finance market in the future. CSR refers to a business approach where companies aim to create a positive impact on society, the environment, and their stakeholders, going beyond profit maximization. The increase in CSR initiatives is driven by factors such as ethical responsibility, improving brand reputation, employee engagement and retention, risk management, and meeting consumer expectations. By aligning financial practices with ethical, environmental, and social objectives, CSR initiatives enhance a company's reputation, attract investment, and foster the development of innovative financial products, contributing to a more sustainable and resilient global economy. For example, in April 2022, a survey conducted by the International Business Machines Corporation (IBM), a US-based technology company, found that 51% of 16,000 global consumers considered environmental sustainability more important than it was a year prior. As a result, the rise of CSR initiatives is fueling the growth of the sustainable finance market.
Major corporations in the sustainable finance sector prioritize leveraging sustainable finance innovation to enhance their competitive edge. This innovation involves developing and deploying novel financial products, services, and strategies that integrate environmental, social, and governance (ESG) criteria to advance sustainable development goals. For instance, in April 2024, Ernst & Young Global Limited, a UK-based transaction services firm, inaugurated a new Sustainable Finance Innovation Hub in Dublin. This initiative assists global financial institutions in accelerating their compliance with ESG regulations and reporting requirements, offering specialized advisory services and expertise to navigate the evolving landscape of sustainable finance.
In August 2023, Environmental Resources Management (ERM), a UK-based consultancy, acquired NINT to bolster its capabilities in sustainable finance and ESG consultancy, particularly in the Latin American market. NINT, a US-based consultancy specializing in sustainable finance services, was acquired for an undisclosed sum.
Major companies operating in the sustainable finance market are AXA Group, Bank of America Corporation, Citigroup Inc., The Hongkong and Shanghai Banking Corporation, BNP Paribas, Morgan Stanley Dean Witter Discover & Co., Internationale Nederlanden Group, Mitsubishi UFJ Financial Group, UBS Group AG, Goldman Sachs Group Inc., Barclays plc, Sumitomo Mitsui Financial Group Inc., Aviva plc, Credit Suisse Group AG, BlackRock Inc., Standard Chartered plc, Nomura Holdings Inc., Natixis SA, Northern Trust Corporation, Amundi SA, Macquarie Group Limited, Legal & General Group plc, State Street Global Advisors, Robeco
North America was the largest region in the sustainable finance market in 2024. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in the sustainable finance market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.
The countries covered in the sustainable finance market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Canada, Italy, Spain.
The sustainable finance market includes revenues earned by entities by providing services such as sustainable loans, environmental, social, and governance (ESG) integration, sustainable investment funds, and advisory services and related social impact bonds (SIBs), green mortgages, and carbon offsets and credits. 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.
Sustainable Finance Global Market Report 2025 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 sustainable 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 sustainable finance ? How does the market relate to the overall economy, demography and other similar markets? What forces will shape the market going forward, including technological disruption, regulatory shifts, and changing consumer preferences? The sustainable 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 forecasts are made after considering the major factors currently impacting the market. These include the technological advancements such as AI and automation, Russia-Ukraine war, trade tariffs (government-imposed import/export duties), elevated inflation and interest rates.