Reading Time: 3 minutes

The leading countries with pioneering green finance policies and their progress:

United States:

• As per BloombergNEF, in 2021, sustainable debt issuance in the US will reach $188 billion, up from $132 billion in 2020.
• As per Opimas research, the SEC’s proposed climate disclosure rules state that ESG assets will account for 50% of total US AUM by 2025.
• According to Moody’s projections, green bond issuance hit a record of $70 billion in 2021 in the US and could surpass $90 billion by 2023.

Europe:

• As per PwC, the EU sustainable finance market is expected to exceed €2.2 trillion by 2025, doubling from 2020 levels.
• As per the forecast by the Climate Bonds Initiative, a record green bond issuance of $149 billion was seen in Europe in 2020 and is expected to grow to over $400 billion by 2023.
• As per the projection by the Global Sustainable Investment Alliance, ESG assets under management in Europe can reach €5–7 trillion by 2025, up from €3.2 trillion in 2020.

China:

• According to government targets, the PBOC aims to raise China’s green finance assets to account for 30% of total banking assets by 2030.
• According to Goldman Sachs, in China, green credit issuance is projected to reach $1.2 trillion by 2025, up 2.5 times from 2020 levels.
• As per Morgan Stanley, total ESG fund assets are forecast by China’s total ESG to grow at 18–25% annually from 2020 to reach $3 trillion by 2030.

Rapid growth in sustainable investing and green finance is projected in major markets, driven by regulations, policy support, and consumer demand.

Let’s scrutinize how the rapid growth of green finance will reshape the above-mentioned countries in the next 10 years:

United States:

• Key sectors such as power, transport, and buildings are decarbonized by green financing mechanisms and disclosure requirements.
• Sustainable investment products are deployed by financial institutions to adapt business models and integrate climate risk analysis.
• Green bond issuance by corporations has been growing, and the state authorities are able to fund climate infrastructure.
• Climate-risk disclosure and stress testing for a norm in financial stability to be monitored by regulators
• ESG factors and carbon performance influence investment flows and corporate valuations.

Europe:

• Taxonomies and standards are fostering transparency on environmental impacts and enabling informed, sustainable investment.
• Assel allocation marked a shift in institutional investors and funds towards companies with strong ESG credentials.
• Net-zero emission transition by 2050 in the European Union, accelerated by green finance flows
• Innovative instruments of leadership such as sustainability-linked bonds, blue bonds, and green securitization
• A unified European green bond market was created to allow scaled financing for green projects.

China:

• High share of sustainable assets and green credit in the overall banking system, as mandated by regulators.
• Domestic green bond markets fund renewable energy investments and infrastructure.
• Global green finance leverages the scale of sustainable investments.
• Agricultural reforms and sustainable land management are driven by green agriculture lending principles.
• Carbon trading schemes are a very ambitious goal to be established, providing impetus to green industries.

As in all, green finance is mainly catalyzing the sustainability transition, spurring innovation, and reinforcing climate leadership in major economies over the next decade.

But how about the economic impact on the countries due to the green finance policy?

United States:

Decarbonization is boosting the competitiveness and growth of American businesses as they are in the transition process. Climate risk analysis will always be a main topic to enhance financial stability. The investments can create quality jobs and upgrade public assets.

Green fintech solutions as a new export strength for the US Environmentally conscious younger investors can increase the movement for more green commitment.

Europe:

A structural change and new green growth enable capital flow, boosting financial integration. Green finance assists a socially inclusive transition in communities impacted by decarbonization. Green taxonomy and transparency to attract global ESG-driven funds to expand capital markets.

China:

Green credit allocation is driving an industrial revolution towards sustainability. Green bonds are scaled with funds for infrastructure for sustainable growth. A low-carbon economy yields energy security, public health, and environmental gains.

Green finance allows China’s capital market to tap into the growing global ESG investment demand. Boosting rural incomes, reducing regional inequality, and enhancing food security through green agriculture

Financial stability is one of the core aspects being covered by green finance, sustaining job creation and export competitiveness in major economies.

Sources:- Fortune business Insights, allied market research