Sustainable Finance Market Size, Share & Trends Analysis Report By Asset Class (Equities, Fixed-income, Multi-asset), By Offerings (Equity Funds, Bond Funds, ETFs/Index Funds), By Investment Style, By Investor, By Region, And Segment Forecasts, 2025 - 2030

Sustainable Finance Market Summary

This heightened awareness has increased the demand for sustainable finance solutions as individuals, businesses, and institutions seek to align their investments with their values and contribute to a more sustainable future. Moreover, regulatory frameworks and government initiatives are playing a crucial role in driving the market’s growth.

Many countries have implemented policies and regulations encouraging sustainable investment practices, such as tax incentives, disclosure requirements, and sustainability reporting standards. These regulatory measures create a supportive environment for sustainable finance and incentivize market participants to incorporate sustainability factors into their investment decisions. Furthermore, investors are increasingly recognizing the financial benefits of sustainable finance. It is no longer seen as just an ethical choice but also a strategic one.

Sustainable investments have demonstrated competitive financial performance and risk mitigation potential, attracting investors seeking financial returns and positive environmental and social impacts. This shift in investor preferences has resulted in a surge in sustainable investment products and strategies, driving the growth of the sustainable finance industry. In addition, technological advancements and data analytics have played a significant role in driving the market. The availability of data on Environmental, Social, and Governance (ESG) factors has improved, enabling investors and financial institutions to assess the sustainability performance of companies and investment portfolios more accurately.

Technological tools and platforms have also facilitated the integration of ESG considerations into investment processes, making sustainable finance more accessible and efficient. In addition, companies and organizations increasingly recognize the importance of sustainability in their long-term business strategies. The adoption of sustainable practices not only helps mitigate risks but also enhances brand reputation, customer loyalty, and employee engagement. This corporate sustainability trend has increased the demand for sustainable finance solutions to support green projects, sustainable supply chains, and responsible business practices.

However, the market is restrained by the lack of standardized and globally recognized definitions, metrics, and reporting frameworks for sustainability. This creates challenges in comparing and evaluating the sustainability performance of different companies and investment products. To overcome this restraint, efforts are being made to develop common standards and frameworks. For instance, initiatives like the Task Force on Climate-related Financial Disclosures (TCFD) and Global Reporting Initiative (GRI) have provided guidelines for companies to disclose their sustainability-related information. In addition, collaborations among financial institutions, industry associations, and regulatory bodies are working towards harmonizing sustainability reporting requirements and promoting the adoption of globally recognized frameworks.

Asset Class Insights

The equities segment accounted for the largest share of 47.92% in 2024. Equities allow investors to actively engage in sustainable investing and support companies that demonstrate strong ESG practices. Moreover, equities offer a higher liquidity level than other asset classes in the sustainable finance industry. Investors can easily buy and sell equity securities, allowing for greater flexibility and responsiveness to market conditions. This liquidity makes equities an attractive choice for both institutional and individual investors seeking exposure to sustainable investments.

The multi-asset segment is expected to grow at the highest CAGR during the forecast period. Multi-asset strategies offer investors diversification across different asset classes, including equities, fixed income, real estate, and alternative investments. This diversification helps mitigate risk and provides a more balanced portfolio, appealing to investors seeking a comprehensive approach to sustainable investing. Moreover, multi-asset strategies allow for flexible capital allocation to various sustainable investment opportunities.

Offering Insights

The equity funds segment held the largest market in 2024. The sustainable equity fund has emerged as a critical driver in the growth of the sustainable finance industry. This fund strategically invests in the stocks of large- and mid-cap companies that demonstrate strong financial performance and adhere to specific social and sustainability criteria. By focusing on sustainable business practices and considering ESG factors, the sustainable equity fund aims to achieve positive long-term capital appreciation while promoting sustainability characteristics. This fund exemplifies the increasing demand for investment options prioritizing ESG factors and aligning with investors' sustainability goals.

The ETFs/index funds segment is expected to register a highest CAGR during the forecast period. These index funds offer a diversified portfolio of securities that track a specific sustainable index or theme. ETFs/Index funds provide investors with a convenient and cost-effective way to gain exposure to a broad range of sustainable assets across various sectors and regions. The increasing popularity of these funds can be attributed to their transparency, liquidity, and flexibility, which attract both individual and institutional investors. Moreover, ETFs/Index funds allow investors to align their investments with their sustainability goals, as they focus on companies with strong ESG performance.

Investment Style Insights

The active segment dominated the market in 2024. Active investment strategies involve portfolio managers actively selecting and managing investments based on their expertise and analysis. In the context of sustainable finance, active managers play a crucial role in identifying companies that not only meet financial objectives but also adhere to sustainable principles and practices. By conducting in-depth research and analysis, active managers can identify sustainable investment opportunities and make informed decisions that align with ESG considerations. This approach allows investors to have a more targeted and tailored exposure to sustainable assets, allowing them to make a positive impact while pursuing financial returns.

The passive segment is expected to grow at a highest CAGR during the forecast period. Passive investment involves tracking an index or a benchmark, aiming to replicate its performance rather than actively selecting individual securities. In the context of sustainable finance, passive investing is gaining traction due to the increasing popularity of sustainable indexes and ESG benchmarks. Investors are drawn to passive strategies because they offer broad exposure to a diversified portfolio of sustainable companies, aligning with their values and sustainability goals. Passive investment products such as ESG-focused ETFs and index funds have seen significant inflows driven by the desire for transparent, low-cost, and easily accessible sustainable investment options.

Investor Type Insights

The institutional investors segment dominated the market in 2024. Institutional investors, such as pension funds, sovereign wealth funds, and insurance companies, play a crucial role in driving sustainable investment practices. They have the financial capacity and long-term investment horizons to allocate substantial capital toward sustainable investment strategies. Institutional investors increasingly recognize the importance of integrating ESG factors into their investment decisions to manage risks and achieve sustainable long-term returns.

The retail investors segment is anticipated to grow rapidly during the forecast period. Retail investors, which include individual investors, high-net-worth individuals, and retail investment funds, are increasingly becoming aware of the importance of sustainable investing and seeking investment opportunities aligned with their values and sustainability goals. There is a rising awareness of the environmental and social challenges faced by the world, such as climate change and social inequality, which has led individuals to seek investment options that can make a positive impact. In addition, technological advancements and increased accessibility to information have empowered retail investors to research and access sustainable investment products easily.

Regional Insights 

The North America sustainable finance market is expected to witness a notable CAGR during the forecast period. Increasing regulatory support and a heightened awareness of environmental issues among consumers and investors can be attributed to the growth of the market. The region's financial institutions are rapidly innovating to meet the rising demand for sustainable investment products, such as green bonds and sustainability-linked loans. This trend is reinforced by government initiatives aimed at promoting sustainability, which have created a favorable environment for sustainable finance. As a result, North America is expected to maintain a robust growth trajectory, with projections indicating a continued rise in sustainable investments over the coming years

U.S. Sustainable Finance Market Trends

The U.S. sustainable finance market held a dominant position in 2024. The U.S. is witnessing a shift toward more sustainable investment practices, with major institutional investors, asset managers, and pension funds prioritizing ESG criteria in their portfolios. The U.S. has seen an increase in demand for sustainable investment options that align with individual values and ethical standards. Financial institutions are responding by diversifying their offerings to include various innovative financial products that cater to this demand. Furthermore, regulatory frameworks are becoming more supportive of sustainable finance initiatives, further driving market growth and attracting a broader investor base.

Europe Sustainable Finance Market Trends

The Europe sustainable finance industry led the largest share of 38.39% in 2024. The region has witnessed strong governmental support and regulatory frameworks that incentivize sustainable finance initiatives. European countries have introduced various policies and regulations that require financial institutions to incorporate ESG factors into their investment decisions. The European Union's action plan on sustainable finance has played a crucial role in driving the growth of sustainable finance by setting clear guidelines and standards for sustainable investment products.

The Germany sustainable finance market is expected to grow rapidly in the coming years, owing to stringent regulations aimed at fostering environmentally responsible investments. In addition, German financial institutions are increasingly integrating ESG criteria into their investment strategies, reflecting a broader commitment to sustainability that resonates with both institutional and retail investors.

The UK sustainable finance market is expected to register a moderate CAGR during the forecast period. This is owing to the strong regulatory support and an increasing focus on sustainability among both consumers and businesses. The UK government has implemented policies that encourage investments in green projects and promote responsible financial practices. In addition, there is a noticeable shift in investor behavior towards prioritizing ESG factors in their investment decisions, which is further propelling the growth of the market.

Asia Pacific Sustainable Finance Market Trends

The Asia Pacific sustainable finance market is anticipated to grow at a CAGR of 27.3% during the forecast period. There is a growing recognition among businesses and governments in the region about the importance of sustainable development and addressing environmental and social challenges. Countries such as China, Japan, and South Korea have implemented ambitious sustainability goals and initiatives, creating a conducive environment for sustainable finance to thrive. Moreover, there is an increasing awareness and demand for sustainable investment products among investors in the Asia Pacific region.

China sustainable finance market is expected to grow at the highest growth rate during the forecast period. China is rapidly emerging as a major force in the global sustainable finance industry, driven by government initiatives promoting green finance and environmental sustainability. Furthermore, investment in renewable energy projects and green technologies is surging as both public and private sectors recognize the importance of aligning financial practices with sustainability goals, thereby propelling the growth of the market.

The Japan sustainable finance market held a substantial market share in 2024 and is evolving as awareness of environmental issues grows among investors and consumers alike. The Japanese government has been proactive in implementing policies that encourage sustainable investments, leading to increased interest in green bonds and other environmentally focused financial products.

Key Sustainable Finance Company Insights

Some of the key companies in the sustainable finance industry include JPMorgan Chase & Co., BlackRock, Inc., and Morgan Stanley and others. The key companies often engage in mergers and acquisitions, strategic partnerships, and collaborations to expand their market share and enhance their service offerings. With a strong focus on sustainability and responsible investment, these key players aim to capture a significant portion of the market and establish themselves as leaders in the sustainable finance sector. As the demand for sustainable finance continues to grow, these companies are expected to maintain their market dominance and play a pivotal role in global sustainable finance's future.

• JPMorgan Chase & Co. is committed to driving sustainable solutions for both its clients and operations. The company leverages its capital, data, expertise, and resources to tackle climate change and foster long-term, innovative solutions for a more sustainable future. This commitment is reflected in the growing portfolio of sustainability-driven initiatives across the firm.

• BlackRock, Inc. is an asset management firm that offers sustainable investing products and solutions. The company’s sustainable investing platform helps investors meet their goals by using environmental, social, and governance (ESG) data.

Recent Developments

• In October 2024, Standard Chartered launched sustainable finance variants of Borrowing Base Trade Loans (BBTL). This solution will initially be available in the U.S., UK, UAE, Singapore, South Africa, and Hong Kong, with additional market launches planned for the future. The BBTL is a secured revolving credit facility designed to address the unique financing needs of businesses, particularly those in the commodity sector.

• In January 2024, Societe Generale and the International Finance Corporation, a member of the World Bank Group, entered into a collaboration framework agreement to advance sustainable finance in developing countries. This initiative reflects both institutions’ shared commitment to supporting the UN Sustainable Development Goals (SDGs) and promoting environmental transition and sustainability. Under this agreement, the two organizations aim to enhance the development of diverse financing solutions, including project co-financings and risk-sharing agreements, to help mobilize the private sector in support of the climate transition.

Sustainable Finance Market Report Scope

Global Sustainable Finance Market Report Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global sustainable finance market report based on asset class, offerings, investment style, investor type, and region:

• Asset Class Outlook (Revenue, USD Million, 2018 - 2030)

  • Equities

  • Fixed-income

  • Multi-asset

  • Alternatives

• Offerings Outlook (Revenue, USD Million, 2018 - 2030)

  • Equity Funds

  • Bond Funds

  • ETFs/Index Funds

  • Alternatives/Hedged Funds

• Investment Style Outlook (Revenue, USD Million, 2018 - 2030)

  • Active

  • Passive

• Investor Type Outlook (Revenue, USD Million, 2018 - 2030)

  • Institutional Investors

  • Retail Investors

• Regional Outlook (Revenue, USD Million, 2018 - 2030)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Luxemburg

    • Germany

    • UK

    • France

  • Asia Pacific

    • China

    • Japan

    • India

    • South Korea

    • Australia

  • Latin America

    • Brazil

  • Middle East and Africa (MEA)

    • KSA

    • UAE

    • South Africa