Soaring Demand Set to Propel ESG Finance Market to $10752.82 Billion by 2029

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What Is the Expected CAGR for the ESG Finance Market Through 2025?
In recent years, the ESG finance market has expanded dramatically. It is predicted to enlarge from $6347.59 billion in 2024 to $7066.54 billion in 2025, with a compound annual growth rate (CAGR) of 11.3%. The substantial growth during the historic period is due to heightened consciousness about climate change, regulatory advancements, the rise of green bonds, initiatives for corporate sustainability, and evolving consumer preferences.

What's the Projected Size of the Global ESG Finance Market by 2029?
Predictions indicate a swift expansion of the ESG finance market in the coming years, with its worth set to reach $10752.82 billion by 2029, growing at a Compound Annual Growth Rate (CAGR) of 11.1%. This predicted growth throughout the forecast period is primarily due to elements such as the strengthening of regulatory frameworks, a heightened focus on managing climate risks, an increase in corporate sustainability targets, expanding institutional investment, and ongoing global efforts to tackle climate change. Notably, the forecast period will likely see key trends such as improved ESG data and analytics, technological advancements in ESG, enhanced analytic tools, increased application of Artificial Intelligence and further incorporation of blockchain technology.

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Top Growth Drivers in the ESG Finance Industry: What's Accelerating the Market?
Expectations are high that the surge in green bond investments will fuel the expansion of the ESG finance market in the future. Green bonds, which are fixed-income securities specifically designed to gather funds for environmentally sustainable projects and efforts, are seeing a rise in investment. This increase is due to an escalating global understanding of climate change and a craving for investments that are socially accountable. Further, institutional investors such as pension funds and insurance companies are showing a growing interest in investments that meet environmental, social, and governance (ESG) standards. ESG insurance offers both coverage and risk reduction for environmentally sustainable projects, thus boosting investor optimism and making the financing of green endeavours more manageable. For example, The International Finance Corporation, a US-based global financial institution, stated in May 2024 that there is an anticipated annual growth of 7.5 percent in green bond issuance, which could lead it to leap from $135 billion in 2023 to $156 billion by 2025. Therefore, the swell in green bond investments is set to stimulate the expansion of the ESG finance market.

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What Trends Will Shape the ESG Finance Market Through 2029 and Beyond?
Key players in the ESG finance market are prioritizing the use of AI tools, such as AI-driven data analysis and research platforms, in order to make more accurate investment decisions and cater to the rising need for transparency and responsibility in sustainable financing. AI-driven data analytics and research platforms utilize artificial intelligence to examine and understand a wealth of environmental, social, and governance data, offering companies and investors valuable insights and improved decision-making abilities in sustainable finance. For example, ESG Data Services Inc. (ESG Analytics), a Canadian company offering advanced data solutions and insights, launched ESG Analytics, an innovative AI-driven platform for ESG data, analytics, and research, in March 2022. This web-based solution and API utilize a broad range of alternative data sources and artificial intelligence to pinpoint risks and opportunities in the ESG practices of nations, corporations, and ETFs. ESG Analytics' dynamic big data platform delivers real-time insights to researchers, analysts, funds, and businesses, aiding in the inclusion of ESG factors in the processes of investment management and corporate decision-making.

What Are the Main Segments in the ESG Finance Market?
The ESG finance market covered in this report is segmented -

1) By Investment Type: Equity, Fixed Income, Mixed Allocation, Other Investment Types
2) By Investor Type: Institutional Investors, Retail Investors
3) By Transaction Type: Green Bond, Social Bond, Mixed Sustainability Bond, ESG Integrated Investment Funds, Other Transaction Types
4) By Industry Vertical: Utilities, Transport And Logistics, Chemicals, Food And Beverage, Government, Other Industry Verticals

Subsegments:
1) By Equity: Esg-Focused Equity Funds (Green Etfs, Sustainable Equity Funds), Socially Responsible Investing (Sri) Equity Funds, Esg Integration In Corporate Equity Investment, Thematic Esg Equity Funds (Renewable Energy, Clean Technology), Impact Investing Equity Strategies
2) By Fixed Income: Green Bonds (Focused On Environmental Projects), Social Bonds (Focused On Social Impact Initiatives), Sustainable Bonds (Integrating Esg Factors), Esg Bond Funds And Etfs, Green And Social Impact Corporate Debt
3) By Mixed Allocation: Esg Multi-Asset Funds, Esg Diversified Portfolios (Equities, Bonds, And Alternative Assets), Esg Asset Allocation Funds (Combining Equities, Fixed Income, And Real Assets), Balanced Esg Funds, Thematic Esg Funds (Climate Change, Gender Equality)
4) By Other Investment Types: Esg-Focused Private Equity And Venture Capital, Impact Investing Funds, Esg Real Estate Investment Funds (Reits), Esg Commodities And Infrastructure Investments, Esg Alternative Investments (Hedge Funds With Esg Strategies)

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Which Top Companies are Driving Growth in the ESG Finance Market?
Major companies operating in the ESG finance market are JPMorgan Chase & Co., HSBC Holdings plc, Morgan Stanley, BNP Paribas Asset Management S.A., The Goldman Sachs Group Inc., UBS Group AG, Deutsche Bank AG, Fidelity Investments Inc., The Bank of New York Mellon Corporation, BlackRock Inc., State Street Corporation, The Vanguard Group Inc., Franklin Templeton Holdings Ltd., Northern Trust Asset Management, T. Rowe Price Group Inc., Amundi Asset Management Inc., Invesco Ltd., Schroders plc, Pacific Investment Management Company LLC, Allianz Global Investors GmbH, Columbia Threadneedle Investments Inc., AXA Investment Managers S.A., Wellington Management Company LLP, Natixis Investment Managers International, Legal & General Investment Management Limited

Which Regions Will Dominate the ESG Finance Market Through 2029?
Europe was the largest region in the ESG finance market in 2023. North America is expected to be the fastest-growing region in the forecast period. The regions covered in the ESG finance market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.

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