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Sustainable Finance Market size was valued at USD 4.2 trillion in 2022 and is projected to register a CAGR of 22.4% between 2023 and 2032, driven by increasing impact investing efforts. The rise of impact investing, where investors seek financial returns alongside measurable social and environmental impacts, has contributed to the market growth.
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Advancements in technology, such as data analytics and artificial intelligence, have improved the assessment and integration of ESG factors in investment decision-making. For instance, distributed ledger technology can be used to create a marketplace for trading carbon credits, ensuring that the credits are genuine and that the proceeds are used to support sustainable projects.
Report Attribute | Details |
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Base Year: | 2022 |
Sustainable Finance Market Size in 2022: | USD 4.2 Trillion |
Forecast Period: | 2023 to 2032 |
Forecast Period 2023 to 2032 CAGR: | 22.4% |
2032 Value Projection: | USD 30.9 Trillion |
Historical Data for: | 2018 to 2022 |
No. of Pages: | 300 |
Tables, Charts & Figures: | 322 |
Segments covered: | Investment Type, Transaction Type, Investor Type, Industry Vertical |
Growth Drivers: |
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Pitfalls & Challenges: |
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Similarly, IoT sensors can be used to monitor the energy use of light bulbs and appliances in a building, providing insights into how energy can be saved. Besides, the development of standardized ESG reporting frameworks, such as the Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB), has facilitated transparency and comparability in sustainable finance.
However, transitioning to sustainable practices and integrating ESG factors may involve additional costs and resource allocations, which some businesses and investors might be hesitant to bear. Besides, some investors might perceive sustainable investments as riskier due to uncertainties related to emerging sustainability issues and the evolving regulatory landscape, leading to sluggish growth.
The COVID-19 pandemic has positive impact on the sustainable finance market. The crisis brought greater attention to environmental and social issues, leading to an increased focus on sustainable investments and ESG considerations. Many investors recognized the importance of resilience and long-term sustainability in portfolios during times of crisis. The overall trend toward sustainable finance appears to have strengthened as investors and businesses increasingly prioritize sustainability and responsible investment practices post-COVID-19.
Sustainable finance is seen as a way to manage long-term risks associated with environmental and social challenges, as these factors can impact a company's financial performance and reputation. Companies are incorporating sustainability goals into their CSR initiatives, aiming to attract socially responsible investors and stakeholders, carving a robust growth trajectory for the market.
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The institutional segment held over 78% of the sustainable finance market share in 2022. Institutional investors, such as pension funds, sovereign wealth funds, and insurance companies, play a crucial role in driving sustainable investment practices. Institutional investors increasingly recognize the importance of integrating ESG factors into their investment decisions to manage risks and achieve sustainable long-term returns.
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The green bond segment accounted for 34% of the sustainable finance market share in 2022. Green bond transactions are crucial to driving the market by providing a dedicated funding source for environmentally sustainable projects and initiatives. Green bonds offer a way for issuers to raise capital for environmentally friendly projects and initiatives while meeting investor demands for socially responsible investments. The transparency and alignment with specific environmental objectives make green bonds an attractive option for issuers and investors seeking to support sustainable initiatives.
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Europe sustainable finance market was over 39% of revenue share in 2022. Strong government and regulatory support for sustainable initiatives, increasing investor demand for responsible investments, and the region's commitment to achieving environmental and climate goals will drive market growth in Europe. For instance, the European Union's Sustainable Finance Action Plan aims to redirect capital flows toward sustainable projects and align financial markets with sustainability objectives. Additionally, the EU Taxonomy Regulation provides a standardized framework for classifying sustainable economic activities, enhancing transparency and credibility in sustainable finance practices across Europe.
Major companies operating in the sustainable finance market
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Market, By Investment Type
Market, By Transaction Type
Market, By Investor Type
Market, By Industry Vertical
The above information has been provided for the following regions and countries: