A study by financial institution TheCityUK, supported by BNP Paribas, has revealed that the global green finance market has grown from $5.2 billion in 2012, to more than $540 billion by 2021.
However, the report “Green finance: a quantitative assessment of market trends,” which uses data provided by Refinitiv, states that the share of green finance in the total financial market stands at just above 4% globally.
These bonds account for the largest share of the green finance market, with issuance increasing from $2.3 billion in 2012 to $511.5 billion in 2021. Cumulative green bond issuance amounted to $1.4 trillion between 2012 and 2021, representing 93.1% of green financing over the entire decade.
On the other hand, green lending has grown from $342 million in 2017, to over $78 billion in 2021, a nearly 200-fold increase in just four years.
The research revealed that in cumulative terms over the period 2012-2021, China and the United States had the largest green bond markets in the world, accounting for 13.6% and 11.6%, respectively, of total green bond issuance over that period. France and Germany were also major players, accounting for 10.3% and 10.1%, respectively.
Anjalika Bardalai, Chief Economist at TheCityUK and head of the research, said, “For many years, green finance has been like a seedling, highly prized and nurtured, but unable to compete with the old, hardy plants of the financial markets.”
“Not all green finance activity is currently captured in the data, but it is still important to try to compare it, and it is clear that, even allowing for data limitations, flows in green finance are a small fraction of flows in the broader financial markets, although they have increased recently,” emphasized Bardalai.
Earlier this year, research by Climate Bonds Market Intelligence found that 2021 marked the highest annual figure for green finance issuance since the market’s inception. In total, investors issued more than $517 billion in green bonds last year.
In fact, the green bond market grew by more than $500 billion in 2021, with investor demand for social and sustainability-linked bonds contributing to the green issuance market surpassing $1.5 trillion globally.
To access the report, click here
