The Latest Sustainable Finance Industry Statistics Explained
Only 39% of the largest banks have made sustainable finance pledges.
The statistic “Only 39% of the largest banks have made sustainable finance pledges” suggests that a relatively low percentage of the largest banks have publicly committed to promoting sustainable finance practices. Sustainable finance typically involves incorporating environmental, social, and governance (ESG) considerations into financial decision-making. The fact that a substantial majority of the largest banks have not made such pledges may indicate a lag in adopting more environmentally and socially responsible practices within the banking sector. This statistic underscores the importance of encouraging financial institutions to prioritize sustainability in their operations, investments, and lending practices to contribute to a more sustainable future.
The sustainable debt market grew by 29% in 2020 to reach a record high of $732 billion.
The statistic that the sustainable debt market grew by 29% in 2020 to reach a record high of $732 billion signifies a substantial increase in investments targeting environmental and social sustainability. This growth indicates a growing investor interest in financing projects that have positive impacts on the environment and society. The significant rise in the sustainable debt market reflects an increasing awareness and commitment to sustainable practices among businesses and investors globally, demonstrating a shift towards more responsible and ethical investment strategies.
By 2025, ESG assets are expected to constitute one-third of the $140 trillion in total global assets under management.
This statistic indicates that Environmental, Social, and Governance (ESG) assets, which are investments that prioritize ethical and sustainable business practices, are projected to represent a significant portion of the total global assets under management by the year 2025. Specifically, it is estimated that ESG assets will make up approximately one-third of the $140 trillion in total global assets under management by that time. This trend suggests a growing shift towards socially responsible investing and an increased recognition of the importance of considering environmental and social factors in investment decisions. The statistic highlights the increasing integration of ESG principles into investment strategies and the potential for significant growth in sustainable investing practices in the coming years.
77% of institutional investors plan to stop purchasing non-ESG products by 2022.
The statistic that 77% of institutional investors plan to stop purchasing non-environmental, social, and governance (ESG) products by 2022 signifies a significant shift towards sustainable investing practices within the financial industry. This trend reflects an increasing awareness and prioritization of ESG factors in investment decision-making, as investors aim to align their portfolios with values such as environmental stewardship, social responsibility, and ethical governance practices. The move towards ESG investing is driven by a growing recognition of the materiality of ESG risks and opportunities in driving long-term financial performance and mitigating systemic risks. As such, this statistic highlights a clear indication of the increasing integration of ESG considerations into mainstream investment strategies among institutional investors.
Global sustainable investment reached $30.7 trillion at the start of 2018, a 34% increase in two years.
The statistic indicates that global sustainable investment, which refers to investments made with consideration of environmental, social, and governance (ESG) factors, amounted to $30.7 trillion at the beginning of 2018. This represents a significant 34% increase from the level recorded two years prior. The growth in sustainable investment underscores a growing trend among investors to take into account not just financial returns but also the impact of their investments on the environment and society. It suggests a greater awareness and prioritization of sustainable and responsible investment practices as investors seek to align their financial goals with broader societal and environmental objectives.
$250 billion worth of green bonds were issued globally in 2019.
This statistic indicates that a total of $250 billion worth of green bonds were issued worldwide in 2019. Green bonds are a type of fixed-income financial instrument specifically designated to fund projects or assets that have environmental benefits. The issuance of such a substantial amount of green bonds reflects the increasing focus on sustainable and environmentally friendly investments by governments, businesses, and individuals. This trend shows a growing commitment to addressing climate change and promoting sustainable development through investment in projects that have a positive impact on the environment.
In 2019, the European Bank for Reconstruction and Development (EBRD) committed €1.1 billion in green economy financing.
The statistic ‘In 2019, the European Bank for Reconstruction and Development (EBRD) committed €1.1 billion in green economy financing’ indicates that during the year 2019, the EBRD allocated a significant amount of financial resources, specifically €1.1 billion, towards projects and initiatives focused on promoting environmental sustainability and mitigating climate change impacts within the regions it operates. This commitment reflects the EBRD’s strategic intention to support sustainable development efforts in various sectors such as renewable energy, energy efficiency, waste management, and green infrastructure. By prioritizing investments in the green economy, the EBRD aims to foster eco-friendly practices, reduce carbon emissions, and advance the transition towards a more sustainable and resilient economy in line with global environmental objectives.
It has been forecasted that the volume of underwriting of green, social, and sustainability bonds will exceed $1 trillion by 2023.
The statistic suggests that there is a strong and growing trend towards underwriting green, social, and sustainability bonds, with the projected volume of issuance expected to surpass $1 trillion by 2023. This indicates a significant increase in the financing of projects that aim to have a positive impact on the environment, society, and sustainable development. The forecasted growth in these types of bonds highlights a shift towards more responsible and ethical investing practices, as investors seek opportunities that align with their values and objectives for creating a more sustainable future. This statistic underscores the increasing importance of environmental, social, and governance considerations in investment decision-making processes.
33 out of 50 asset managers believe ESG incorporation leads to better risk-adjusted returns.
In a survey of 50 asset managers, 33 of them stated that they believe incorporating Environmental, Social, and Governance (ESG) factors leads to better risk-adjusted returns. This statistic suggests that a majority of the asset managers surveyed perceive a positive relationship between ESG integration and financial performance. ESG considerations are becoming increasingly important in the investment world as they are seen as indicators of a company’s long-term sustainability and resilience. The belief that ESG incorporation can enhance risk-adjusted returns reflects a growing trend in the investment community towards responsible and sustainable investing strategies that take into account a broader set of factors beyond just financial performance.
In Q3 2020, sustainable funds attracted $80.5 billion, a 14% increase compared to Q2 2020.
In the third quarter of 2020, sustainable funds experienced a notable increase in investor interest, with a total of $80.5 billion flowing into these funds. This represents a significant 14% growth compared to the previous quarter, Q2 2020. The growing popularity of sustainable investing reflects a broader trend towards environmental, social, and governance (ESG) considerations in investment decision-making. Investors are increasingly prioritizing sustainability factors alongside financial returns, driving capital towards companies and funds that are aligned with responsible and ethical practices. The substantial inflow of funds into sustainable investments in Q3 2020 suggests an increasing recognition of the importance of sustainability in the investment landscape.
Approximately 86% of millennials are interested in sustainable investing.
The statistic that approximately 86% of millennials are interested in sustainable investing indicates a strong trend among young adults towards incorporating environmental, social, and governance (ESG) considerations into their investment decisions. This high level of interest suggests that millennials prioritize investing in companies that align with their values and seek to make a positive impact on society and the environment. The growing popularity of sustainable investing among millennials may also reflect a broader shift towards socially responsible practices in the financial industry, as individuals increasingly seek to support companies that prioritize sustainability and ethical practices. This statistic highlights the potential for sustainable investing to become a significant driver of investment decisions among the younger generation.
Markets in Canada, Europe, and Australia/New Zealand have maintained growth rates in sustainable investments above 15%.
The statistic indicates that the sustainable investment markets in Canada, Europe, and Australia/New Zealand have experienced consistent growth with rates of over 15%. This suggests that investors in these regions are increasingly seeking out and supporting companies or projects that prioritize environmental, social, and governance (ESG) factors. The sustained growth in sustainable investments could be driven by a variety of factors such as increasing awareness of sustainability issues, government policies promoting sustainable practices, and a shift in consumer preferences towards ethical and sustainable products/services. The statistic implies that there is a growing interest and commitment among investors in these regions towards incorporating sustainability considerations into their investment decisions, potentially signaling a broader adoption of sustainable investing practices in the financial markets.
By 2040, it’s expected that $53 trillion of investments will incorporate climate risk.
The statistic “By 2040, it’s expected that $53 trillion of investments will incorporate climate risk” suggests that a significant shift is anticipated in the way investments are managed with regards to climate concerns. This figure indicates that a substantial portion of the global investment market is projected to consider the impact of climate change on financial performance and incorporate strategies to mitigate associated risks. As awareness of the environmental and financial implications of climate change grows, investors are expected to increasingly prioritize sustainability and resilience in their investment decisions. This statistic highlights the growing recognition of the materiality of climate risk and the need for proactive measures to address these challenges in the investment landscape.
The issuance of green bonds grew by 50% from $170 billion in 2018 to $255 billion in 2019.
This statistic indicates that the total value of green bonds issued worldwide increased significantly by 50% from $170 billion in 2018 to $255 billion in 2019. Green bonds are a type of debt instrument specifically issued to fund environmentally friendly projects or initiatives. The notable growth in green bond issuance suggests a rising global interest in sustainable investing and corporate responsibility in addressing environmental challenges. This trend highlights the increasing efforts by governments, corporations, and investors to support projects that aim to mitigate climate change and promote a more sustainable future.
Return on Equity (ROE) of companies with robust sustainability practices was found to be 5%-19% higher on average.
The statistic indicates that companies that prioritize and implement robust sustainability practices tend to achieve higher Return on Equity (ROE) compared to those that do not. Specifically, the data shows that the ROE of such sustainable companies is, on average, 5%-19% higher than companies that do not prioritize sustainability. This suggests that integrating sustainability into business strategies and operations can lead to improved financial performance and efficiency, potentially enhancing shareholder value. These findings highlight the potential benefits of adopting sustainable practices not only for environmental and social impact but also for long-term profitability and competitiveness in the market.
Companies with higher ESG ratings are more profitable and trade at lower earnings multiples.
The statistic suggests that companies with higher environmental, social, and governance (ESG) ratings tend to be more profitable and trade at lower earnings multiples compared to companies with lower ESG ratings. This implies that companies that prioritize sustainability, social responsibility, and good governance practices may enjoy stronger financial performance and evaluation by investors. This relationship could be driven by various factors, such as lower operational risks, better long-term strategic planning, potentially lower cost of capital, and a positive reputation among stakeholders. Investors might perceive these companies as more sustainable and resilient, leading to higher profitability and lower earnings multiples in the market. Overall, the statistic highlights the potential financial benefits associated with strong ESG performance in the corporate world.
Conclusion
As evidenced by the statistics presented in this blog post, the sustainable finance industry is experiencing significant growth and momentum. The increasing investment in environmentally and socially responsible initiatives signifies a shift towards more sustainable and ethical practices within the financial sector. To continue this positive trend, it is imperative for organizations and investors to prioritize sustainability in their decision-making processes and actively support initiatives that promote a more sustainable future.
References
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3. – https://www.www.ebrd.com
4. – https://www.www.bain.com
5. – https://www.www.gsi-alliance.org
6. – https://www.www.climatebonds.net
7. – https://www.www.pwc.com
8. – https://www.www.environmental-finance.com
9. – https://www.www.morningstar.co.uk
10. – https://www.markets.businessinsider.com
11. – https://www.www.bloomberg.com
12. – https://www.www.unpri.org
13. – https://www.www.cnbc.com
14. – https://www.www.actuaries.digital
