Rapid growth will be observed in the sustainability-linked finance market as per the publication of a new report titled “Global Sustainability-linked Finance Market – Forecasts from 2021 to 2026” by Knowledge Sourcing Intelligence. The global sustainability-linked finance market is expected to reach a market size worth US$17,311.992 billion by 2026. The increasing need for reducing the carbon footprint of different stakeholders and the favourable structural characteristics of the instruments are some of the key factors driving the Sustainability-linked Finance market growth.
Sustainability-linked financing refers to the performance-based financial instruments that put no restrictions on the use of financing provided through sustainability-linked channels and allow the issuer or borrower to utilize the funds for any specified purpose. The process allows companies to improve their sustainability performance and provides an opportunity to leverage sustainability disclosures to access a rapidly growing credit market funded through sustainability-linked financing.
The market growth is largely facilitated by the interest of the youth population towards products and services offered by environmentally sustainable companies, support by financial institutions to provide sustainability-linked finance, adoption of the Equator Principles as a primary tool for managing ESG risks, UN Principles for Responsible Investment incorporating ESG issues into investment practice, and other factors such as a change in demand and supply of climate reporting, the push to better climate change risk management, and advances in reporting and risk analysis.
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Key highlights from the sustainability-linked finance market study:
- Sustainability-linked loans accounted for a major market share in the year 2019 while sustainability-linked bonds are expected to skyrocket by 2026 owing to the increasing adoption of sustainability-linked finance by all stakeholders.
- External ESG rating is expected to have a notable market share because of the inclining focus of corporates on sustainability fueled by the resultant positive effect on brand image.
- The adoption of sustainability-linked finance in the utility sector is estimated to grow to attribute to its pollution-causing activities, which are not sustainable in the longer run.
- Europe is anticipated to dominate the market owing to favourable initiatives and policies from various regional governments.
The analysis is sophisticatedly incorporated with more than 80 data tables and figures. For conclusive research on the recently emerged market, the historical perspective, current trends, ongoing developments, regional insights, and competitive prospects have been taken into consideration. The study also details the impact of COVID-19 on the sustainability-linked finance market. The company profiles for all three stakeholders – borrowing and lending companies, financial institutions, and third-party organizations involved in the market have been exhaustively covered.
This analytics report segments the sustainability-linked finance market as follows:
- By Instrument Type
- Sustainability-linked loans
- Sustainability-linked bonds
- By Performance Metric
- External ESG Rating
- Internal KPIs
- By Sector
- Transport and Logistics
- Food and Beverage
- By Geography
- North America
- South America
- Nordic Region
- Middle East and Africa
- Asia Pacific
Key Stakeholders Profiled:
– Issuing and Borrowing Companies
Anheuser Busch Inbev
– Financial Institutions
HSBC Holdings PLC
Goldman Sachs Group Inc.
Nordea Bank ABP
– Third-Party Organizations
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