Sustainable Finance Market Size - By Investment, By Transaction, By End Use, By Investor, Analysis, Share, Growth Forecast, 2025 - 2034

Sustainable Finance Market Size

The global sustainable finance market size was valued at USD 5.87 trillion in 2024 and is projected to grow at a CAGR of 19.8% between 2025 and 2034. Both natural disasters and human-induced catastrophes are imposing a growing threat on the global economy which is now having a marked impact on the sustainable finance market. Harsher human and unnatural activities including global heating, motivates even further the need to enhance clean energy investments and erect sturdier and more resilient infrastructures, as it leads to severe flooding, wildfires, and hurricanes which further result in major economic damages.
 

For instance, the Emergency Event Database EM-DAT reported a total of 387 natural disasters and hazards in the year 2023 alone. They claimed roughly 30,704 lives alongside 185 million people who suffered the brunt of these disasters. Cumulatively, these unfortunate events recorded economic damage of around 223.8 billion USD. Europe too is struggling with intense heat waves which made 16,000 people globally, while 88.9 million people in Africa are suffering due to the drought.
 

With the advancement of AI (Artificial intelligence) and ML (Machine Learning objectives), undeniable progress is being made in the sustainable finance market. Financial enterprises are changing the way they invest in sustainable assets, their monitoring procedures, and how the assets are assessed. Algorithms modelled on artificial intelligence take charge as they study the patterns and trends within ESG data, resulting in helping pick out opportunities for sensible investments. Now AI and machine learning advancements have made reporting within the environment, social, and governance framework more precise and reliable.
 

As an example, in June 2023, Diligen, partnered with Clarity AI to develop an ESG Module focused on climate data analysis. The objective is to provide businesses, organizations, and investors with critical information about their ESG scores in relation to climate data within industry benchmarks. The further development of AI and ML technologies will deepen their influence on sustainable finance and enable the industry to tackle significant challenges relating to sustainability.
 

Sustainable Finance Market Trends

• One of the biggest trends is green digital finance. In green digital finance, green projects that are marked and available in public registers can be accessed by stakeholders and investors through digital means. The digital tools that enable data analytics assist the relevant organ to simultaneously conduct environmentally friendly business decisions. All automation, smartphones and social networks make it easier to gather information from diverse sources, which makes accessibility easier; and information can be evaluated by relevant specialists for investment purposes.
   
• As an example, the National Bank of Cambodia supported the Economic Research Institute for ASEAN and East Asia to develop a strategy for green digital finance using green technologies. Competently conducting a set of activities will allow strengthening the application of green digital finance in solving objectives supporting business activities Part of ESG issues.
   
• The Internet of Things (IoT) has appeared as a revolutionary technology with great prospects for improving sustainability in the finance industry. IoT represents a growing network of devices and sensors that interconnect and share information via the internet for real-time monitoring, collection, and analysis. The application of IoT in sustainable finance improves efficiency, accountability, and transparency. IoT fosters sustainability in finance by tracking and analyzing environmental, social, and governance (ESG) issues.
   
• For example, the global market for IoT technology was estimated to USD 900 million in 2023 with projections of a CAGR exceeding 8% from 2024 to 2032. The growing adoption of IoT from various industries is a major contributing factor.
   

Sustainable Finance Market Analysis

Based on investment type, the sustainable finance market is divided into equity, fixed income, mixed allocation, and others. In 2024, the fixed income segment dominated the market accounting for around 41% share and is expected to grow at a CAGR of over 19.5% during the forecast period.
 

• Fixed income assets like social bonds or green bonds have lower returns than equities, but unlike them, their returns are more stable, thus making them favorable to risk-averse investors since they guarantee both impact and financial security. Green bonds, for instance, directly fund projects that are environmentally friendly. Investors are finding fixed-income securities more attractive, especially where the purpose of the funds is sustainable.
   
• For example, in September 2024 the International Finance Corporation (IFC) issued a green bond of $250 million to promote blue finance in developing countries. This is part of IFC's overarching strategy to foster sustainable development and better the health of marine ecosystems. The funds raised by the bond will be used to finance projects that aim to protect the oceans as well as increasing the availability of clean water and sanitation.
   
• Several governments have started new policies to recognize sustainable green bonds. In June 2024, Australia became the first country to issue its green bond worth $7 billion, making it a new milestone for green bonds in the country.
   

Based on investor type, the sustainable finance market is segmented into institutional investors and retail investors. In 2024, the institutional investors segment dominates the market with 79% of market share and the segment is expected to grow at a CAGR of over 19% from 2025 to 2034.
 

• Institutional investors can impact a corporation’s behavior because of their substantial equity holdings. With participation in sustainable investment, they can encourage positive change and better corporate behavior. Moreover, institutional investors have a longer time frame for holding an investment than retail investors do. This is likely to contribute to the growth of the segment during the forecast period.
   
• Participants in the marketplace are developing sustainable finance products targeting institutional investors. As an example, J.P. Morgan Securities Services introduced its Sustainable Investment Data Solutions for institutional investors in June 2023. These solutions are offered via Fusion by JP Morgan. Sustainable Investment Data Solutions allows investors to obtain maximum utility from sustainable investment data made available by other organizations through value-added technology management and computation services.
   

Based on the transaction type, the sustainable finance market is segmented into green bonds, social bonds, mixed-sustainability bonds, ESG integrated investment funds, and others, with the green bonds category expected to dominate due to their widespread adoption by governments, financial institutions, and corporations to fund environmentally friendly projects.
 

• The segment of green bonds is exceptionally growing due to increased investment from the investors. Green bonds are receiving more funding lately as they aid in financing renewable energy projects, improving energy efficiency, and reducing carbon emissions.
   
• The green bond market is no longer the sole domain of governments and development banks. Corporations, municipalities and even financial institutions are now issuing green bonds which allows investors better choice and greater diversity in projects to finance.
   
• As an example, Iberdrola issued its largest green bond in sterling in October 2024 which was worth £500 million (equivalent to €600 million). This bond with a duration of 12 years had demand from investors four times the offering and was used to finance renewable energy initiatives in the U.K.
   

In 2024, the U.K. region in Europe dominated the sustainable finance market with around 25% market share in Europe and generated around USD 585 billion in revenue.
 

• Increased investment in the circular economy in the U.K. has been a major contributor to the development of the sustainable finance sector. The country has recorded an almost 10% growth rate for circular economy deals over the years. This demonstrates that the country is growing its appreciation for climate action and how it creates economic value.
   
• For example, May 2023 saw Spacehouse Limited state that venture capitalists were quite active, accounting for 62 percent of all circular economy transactions at an average of 6.2 million dollars per investment.
   
• The market is benefitting from the UK Green Finance Strategy and the issuance of sovereign green bonds. Sustainable finance continues to grow in London, and the city remains an important center for institutional investors. ESG integration within banking and asset management is becoming more common in the UK as these firms adopt socially responsible lending and investment practices.
   

The sustainable finance market in U.S. is expected to experience significant and promising growth from 2025 to 2034.
 

• An increase in the issuance of green bonds and other debt instruments in the U.S. has been propelling demand in the sustainable finance market. These new financial instruments permit issuance by companies, governments, and organizations for the desired capital to be used for environmentally friendly projects, such as renewable energy, energy-efficient undertakings, and green infrastructure.
   
• For example, in February 2025, the UN Global Compact Network USA published a new titled report, “Driving Progress: Sustainable Finance for the Advancement of the Sustainable Development Goals (SDGs)”. This report emphasizes the pro-active role that is required from the U.S. private sector and businesses in contributing to global sustainability through financial innovation. This report also motivates the adoption of new instruments like sustainability-linked loans and green bonds alongside setting high impact, target-based goals to drive sustainability.
   

The sustainable finance market in the China is expected to experience significant and promising growth from 2025 to 2034.
 

• The Chinese green finance system is in the early stages of development, but is being rapidly advanced by government policies, market needs, and growing environmental and social consciousness. The People’s Bank of China (PBOC) released the preliminary framework for green finance and organized a working group – Green Finance Committee intended to develop metrics for standards.
   
• For example, in November 2024, the Monetary Authority of Singapore (MAS) proclaimed new initiatives to provide green finance and expand capital markets for China. This announcement marks another step of cooperation between Singapore and China toward promoting sustainable finance. In conjunction with the People’s Bank of China (PBC), MAS seeks to widen the scope of the Common Ground Taxonomy to include the Singapore-Asia Taxonomy.
   

The sustainable finance market in South Africa is expected to experience significant and promising growth from 2025 to 2034.
 

• Recent publications confirm the issuance of South Africa’s green bonds by both private and public sector actors to finance projects of a sustainable nature. The bank has also promoted novel economic activities, employment creation, and economic growth on the continent which is a positive development towards sustainable finance.
   
• To illustrate, the African Development Bank reported in August 2023 that one of the two primary objectives from its 10-year strategy is the promotion of inclusive growth and transition to a greener economy. The Bank has assisted in improving the overall living conditions and quality of life in Africa by making available water, energy, and food while promoting the responsible use of natural resources.
   

Sustainable Finance Market Share

• Top 7 companies in the sustainable finance industry are UBS, HSBC Group, Morgan Stanley, Goldman Sachs, BNP Paribas, Deutsche Bank AG, and Triodos Bank contributes around 5.6% of the market in 2024.
   
• UBS implements ESG considerations into their wealth and asset management services, considering investing sustainability. Additionally, the bank offers green bonds, impact investing, and advisory services enabling their clients to align portfolios with sustainability goals. Furthermore, the bank partners with The Principles for Responsible Banking and supports net-zero commitments by offering climate-targeted financial products and transition finance solutions.
   
• HSBC has earmarked sustainable financing and investment opportunities to meet low carbon transition targets by 2030, contributing $1 trillion. In addition, green loans, sustainability-linked bonds, and ESG advisory services have also been implemented by the bank to aid in this transition. Not turning a blind eye to innovation, the bank also collaborates with businesses and governments to take decisive action toward climate change. Additionally, they have adopted ESG assessments for lending focusing on lowering carbon and responsible cash flow.
   
• Morgan Stanley sustains its position in the market due to its Global Sustainable Finance Group which drives financed activities further under impact investing, ESG integration, green bond issuing, etc. The firm aids their clientele in managing climate risk situations by employing a carbon transition plan. Also, the firm has made a commitment to achieve net-zero financed emissions by 2050 while promoting the development of sustainable investments and funds such as ESG-oriented mutual funds and sustainability-linked loans.
   

Sustainable Finance Market Companies

Major players operating in the sustainable finance industry are:

• BlackRock
• BNP Paribas
• Deutsche Bank
• Goldman Sachs
• HSBC Group
• Morgan Stanley
• Stripe
• Triodos Bank
• Vanguard Group
• UBS
   

Compliance with regulations alongside adherence to global green taxonomies establish credibility within the sustainable finance market. Trust from investors is increased through utilizing fintech technologies such as AI-enabled ESG analytics and blockchain, which provide transparency. In addition, the collaboration between the government, financial institutions, and corporations facilitating investments made towards sustainability is vital. Finally, education for investors, together with stakeholder engagement, enables the adoption and long-term funding of the sustainable finance solutions.
 

Alongside the issuance of green and sustainability-linked bonds towards funding climate projects, governments and financial institutions are applying an ESG framework to their investment policies. The digital transformation and incorporation of AI powered ESG analytics and blockchain asset tracking increases transparency. Furthermore, banks and asset managers have started integrating ESG factors into their credit risk assessment, as well as incorporating them into their portfolio management diversification strategies which facilitates the sustainable growth of funds.
 

Sustainable Finance Industry News

• Operating an Indian EV firm, Wardwizard Innovations, recently struck a deal with Mufin Green Finance, a non-banking financial institution, in December 2024. This collaboration is intended to rethink the lending practices for the purchase of electric vehicles (EVs) in aid of fostering mobility across India and overcoming the challenges faced in financing EVs.
   
• In addition, the International Finance Corporation (IFC) set a new partnership with Axis Bank in October of 2024, where the bank is set to lend $500 million to broaden blue and green finance in the country. This is the first blue investment of the IFC within the country and the 500-million-dollar loan is the biggest climate finance project, to date, in India. The FCA initiative comes as projections estimate the water and wastewater treatment market to grow from $1.6 billion in 2022 to $3 billion by 2029, alongside anticipated investment in green buildings reaching $1.4 trillion by 2030.
   
• At the Asia Climate Investment Seminar, the Hong Kong Monetary Authority (HKMA) outlined a climate investment partnership with the Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), and the International Finance Corporation (IFC) for November 2024. It was disclosed that over five hundred million dollars would be invested for sustainable projects across Asia which would help enhance climate initiatives in the region.
   
• In March 2025, a grant for the further development of green finance cooperation between Australia and China was awarded by the National Foundation for Australia-China Relations to a research group from the University of Western Australia (UWA) in collaboration with University of Queensland (UQ) and Australian National University (ANU). In total 580 thousand dollars would be allocated in an attempt to help balance decarbonization efforts through sustainable finance systems in both states.
   

The sustainable finance market research report includes in-depth coverage of the industry with estimates & forecasts in terms of revenue ($ Mn/Bn) from 2021 to 2034, for the following segments:

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Market, By Investment

• Equity
• Fixed income
• Mixed allocation
• Others

Market, By Transaction

• Green bond
• Social bond
• Mixed- sustainability bond
• ESG Integrated Investment Funds
• Others

Market, By End Use

• Utilities
• Transport & logistics
• Chemicals
• Food and beverage
• Government
• Others

Market, By Investor

• Institutional investors
• Retail investors

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • UK
  • France
  • Italy
  • Spain
  • Russia
  • Nordics
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • ANZ
  • Southeast Asia
• Latin America
  • Brazil
  • Mexico
  • Argentina 
• MEA
  • UAE
  • Saudi Arabia
  • South Africa