Quantifying green finance is a very inexact science, but the attempt to do so reveals some unambiguous trends and raises important questions.
the green finance market has grown from $5.2bn in 2012 to
global green bond issuance increased from $2.3bn in 2012 to
green bonds accounted for fully
of total green finance globally over 2012-21
the UK financial sector issued
worth of green bonds over the past decade
UK green bond issuance grew from $1.1bn in 2012 to
Europe accounted for around
of global green lending over 2017-21
green IPOs globally over 2012-21
over the past decade 23 UK companies received green private equity investment and 28 UK private equity investors invested in green business
Green finance remains heavily dominated by green bond issuance; green bonds accounted for fully 93.1% of total green finance (using our definition) globally over 2012-21. Global green bond issuance increased from $2.3bn in 2012 to $511.5bn in 2021. Global green lending has grown rapidly since 2017 (the first year for which comprehensive data are available); nevertheless, green loan activity remains limited and is concentrated in the syndicated loan market. Global green IPO activity has been volatile in both volume and value terms over the past decade. Meanwhile, green private equity market activity was stronger in the second half of the decade under consideration than in the first half, and was dominated by pure venture capital activity.
When considering global green finance markets, the world’s largest economies (the US and China), with their outsize capital markets, tend to have the most green finance activity in absolute terms. Although our alternative assessment examining green finance penetration mathematically favours smaller countries with smaller capital markets, some European countries—notably Sweden and Germany—stand out as having significant green finance activity in the context of their relatively smaller size.
In the UK, green finance has similarly grown rapidly from a low base. Going forward, activity may be spurred by the inaugural green gilt issuance of 2021. Moreover, the UK’s global financial and related professional services ecosystem and its nearly unrivalled position as an international financial centre means that it is well-placed not only to offer the whole range of green finance products and services, but also to demonstrate and promote this proposition through collaboration between the government, financial and related professional services firms, and the wider corporate sector.