Global green finance market grew more than a hundred-fold over the last decade

The research found that only 7% of overall votes on biodiversity proxies were able to provide shareholder reasonings for the decision

Research from TheCityUK, with the support of BNP Paribas, has found that the global green finance market has grown from $5.2bn in 2012 to more than $540bn in 2021. However, the ‘Green finance: a quantitative assessment of market trends’ report, which uses data provided by Refinitiv, states that the share of green finance in the total finance market sits at just above 4% globally.

Green bonds account for the largest share of the green finance market, with issuance increasing from $2.3bn in 2012 to $511.5bn in 2021. Cumulative green bond issuance totalled $1.4trn over 2012-21, representing 93.1% of green finance across the decade.

Elsewhere, green loans have risen from $342m in 2017 to more than $78bn in 2021, a nearly 200-fold increase in just four years.

The research found that China and the US account for the largest share of the green bond market, at 13.6% and 11.6% respectively.

TheCityUK’s chief economist and head of research Anjalika Bardalai said: “For many years green finance has been like a hothouse seedling, much prized and nurtured, but not really a match for old hardy perennials of wider financial markets.

“Although definitional limitations mean that not all green finance activity is currently captured in the data, it is still important to try to benchmark it, and it is clear that even allowing for data limitations, green finance flows are a small fraction of flows in wider financial markets, though they have been surging of late.”

UK focus

The research notes that the UK is “well placed to take advantage of this growth” provided the green finance market is supported by the government and regulators.

In the UK, green bond issuance grew from $1.1bn in 2012 to $37.4bn in 2021.

In the UK, more than 20 sovereign green bonds were issued last year.

The UK’s green gilt package was first confirmed by Chancellor Rishi Sunak in November 2020 and subsequently confirmed at the 2021 Budget speech in March. Then, in July, the price of the UK’s green gilts was set at £15bn by the Treasury.

The UK launched its first green gilt in September. Reuters first reported £90bn in orders – a figure which surpasses all previous records for debt sales by the UK Government or any of the devolved administrations. The UK Government has since confirmed that £10bn has been raised through the sale. 

Then, in October, the second green gilt sale was confirmed. It has raised a further £6bn to fund green projects and, together with last month’s sale, a total of £16bn has been raised for projects such as zero-emissions buses, offshore wind and schemes to decarbonise homes and buildings.

The Government has also confirmed that the order book for this gilt was 12 times oversubscribed.

BNP Paribas’ UK country head Anne Marie Verstraeten added: “The UK has witnessed a surge in climate aligned capital, and London is a global powerhouse when it comes to industry expertise, innovation, and policy making.

“The government’s 2050 net-zero target has created a constructive environment for business to commit to transition, and the recent mandatory reporting of TCFD and transition plans will be further fuel for finance to support companies, investors and stakeholders across the economy in financing the net-zero transition.”

At the start of the year, research from the Climate Bonds Market Intelligence found that 2021 marked the highest annual figure in green finance issuance since the market’s inception. In total, more than $517bn of green bonds were issued by investors last year.

Indeed, the green bonds market grew by more than $500bn in 2021, with investor demand for social and sustainability-linked bonds helping the market for green issuance top $1.5trn globally.

Matt Mace