ESG Investing Market Size, Share & Industry Analysis, By Asset Class (Stocks, Bonds, and Commodities), By Investment Type (Equity Investments, Fixed-Income Investments, Private Equity, Real Estate, and Hedge Funds), By Investor Type (Institutional Investors, Retail Investors, and Corporate Investors), By End User (Utilities, Financial Services, Chemicals, Food & Beverage, Government, Transport & Logistics, and Others), and Regional Forecast, 2025 – 2032

The global ESG investing market size was valued at USD 33.64 trillion in 2024. The market is projected to grow from USD 39.08 trillion in 2025 to USD 125.17 trillion by 2032, exhibiting a CAGR of 18.1% during the forecast period.

As concerns about environmental and social issues continue to grow, companies are safeguarding their reputations by actively embracing ESG principles within their strategic and operational strategies. This commitment is often demonstrated through periodic ESG disclosures, such as sustainability reports, which adhere to globally recognized standards. Such transparency enhances trust between companies and their investors and fosters stronger relationships with other stakeholders.

The ESG (Environmental, Social, and Governance) investing space is transforming significantly. Once viewed as a niche market, ESG funds have emerged as a major force in global finance, attracting trillions of dollars in Assets Under Management (AUM). According to PwC’s Global Investor Survey, 79% of investors consider ESG risks and opportunities when making investment decisions. The ESG investment landscape is entering a new phase, influenced by political shifts, regulatory changes, and market maturation. Industry experts project that global ESG AUM is expected to exceed trillions by 2030.

Players in the market, including BlackRock, Vanguard, Amundi, and Invesco, among others, are engaging with governments and regulators to shape sustainable finance frameworks and stay ahead of compliance.

IMPACT OF GENERATIVE AI

Increasing Demand for Generative AI for Transforming Banking to Boost Market Growth

Generative artificial intelligence is transforming the ESG investing landscape by enhancing the way financial institutions collect, analyze, and report environmental, social, and governance-related data. GenAI models analyze companies’ sustainability reports, regulatory filings, and investor presentations to extract relevant ESG factors such as emission data, gender diversity, or human rights compliance faster than traditional methods.

Furthermore, generative AI enables the creation of personalized ESG investment products. Retail and institutional investors increasingly demand portfolios that reflect their values, such as low-carbon investments, gender equality, or biodiversity. Generative AI models integrated into robo-advisors or ESG screening platforms can help design and adjust these portfolios dynamically by filtering assets based on client-specific ESG preferences and the latest data. For instance, a wealth management app could use generative AI to suggest a sustainable portfolio by matching the client’s values with companies that have a proven track record in reducing carbon emissions.

Gen AI serves as a powerful engine that enhances data quality, accelerates ESG reporting, enables personalized investment solutions, and enforces accountability in ESG Investing.

ESG Investing Market Trends

Popularity of Blended Finance is Accelerating Market Growth

Blended finance is playing a crucial role in accelerating the growth of the market by mobilizing private capital toward sustainable development projects that might otherwise be considered too risky or low-return. Blended finance refers to the strategic use of public or philanthropic funds to de-risk investments, encouraging private sector participation in ESG-aligned initiatives such as renewable energy, affordable housing, climate resilience, or healthcare access in underserved regions.

Development Finance Institutions (DFIs), such as the International Finance Corporation (IFC), World Bank, and regional development banks, often provide first-loss capital, guarantees, or technical assistance to make ESG-oriented projects more attractive to institutional and commercial investors. As per estimates, around USD 3.9 trillion per year is required to achieve the Sustainable Development Goals (SDGs), and blended finance can attract a portion of the USD 100 trillion of unused private and institutional capital seeking returns annually.

Therefore, the popularity of blended finance is driving the ESG investing market growth.

MARKET DYNAMICS

Market Drivers

Increasing Corporate Commitment to Net Zero and ESG Reporting is Boosting Market Growth

In recent years, companies in various sectors, including manufacturing, energy & utilities, financial services, and technology, have pledged to achieve net-zero carbon emissions in line with global climate goals. Net-zero pledges now cover 92% of GDP and 88% of emissions globally. As of 2024, around 6,000 companies globally have made net-zero commitments, with many targeting carbon neutrality by 2050. Major firms such as Microsoft, Unilever, Apple, and Nestlé have announced net-zero ambitions and aligned their capital raising, resource allocation, and supply chain strategies accordingly.

Companies are increasingly adopting ESG-linked financial instruments, such as green bonds, social bonds, and sustainability bonds. In 2023, sustainability-linked bond issuance reached over USD 160 billion, a significant increase from USD 10 billion in 2019. This trend reflects a growing commitment among companies to invest in ESG-related financing. In 2025, the European Union mandates publicly traded companies to disclose ESG-related risks and opportunities. As a part of the Corporate Sustainability Reporting Directive (CSRD), the impact of these companies' activities on people and the environment is analyzed to enhance the quality and comprehensiveness of sustainability reporting. Therefore, increasing corporate commitment to net zero and ESG reporting is boosting market share.

Market Restraints

Lack of ESG Investment Opportunities in Emerging Countries Restricts Market Growth

Lack of ESG investment opportunities remains a critical factor that is restraining market growth globally. Developed economies such as the U.S., the U.K., and EU countries have built a robust ecosystem for ESG financing, driven by regulatory mandates, sustainability disclosures, and mature capital markets. However, emerging countries often lag due to structural and institutional gaps. In many developing regions across Africa, South Asia, Latin America, and parts of Southeast Asia, there is a shortage of bankable ESG-aligned projects. The lack of clearly defined ESG frameworks, weak enforcement of environmental and labor laws, limited financial transparency, and inadequate project pipelines often discourage international investors from deploying capital in these regions.

Market Opportunities

Rising Investor Preference for Sustainable and Ethical Investments to Create Profitable Opportunities in Market

The awareness related to environmental degradation, social inequality, and governance failure is rising, and investors are increasingly aligning their portfolios with these values. This shift is especially witnessed among GenZ and millennial investors as they prioritize sustainability, transparency, and ethical practice in their financial decisions. According to Morgan Stanley, over 85% of individual investors and nearly 95% of millennials are interested in sustainable investing. This trend is also reflected among institutional investors, including pension funds, endowments, and sovereign wealth funds, which are actively seeking ESG-compliant instruments to meet agent duty and stakeholder expectations.

This leads to a surge in demand for ESG-aligned financial products, including green bonds, sustainability-linked loans, ESG equity indices, and impact investing. Therefore, the market players are launching a wide range of sustainable investments and integrating ESG criteria into their investment strategies. For example, BlackRock and Vanguard have significantly expanded their ESG fund offerings to cater to the growing demand.

SEGMENTATION ANALYSIS

By Asset Class

Surge in Individuals’ Awareness about Broader Impact of Investments on Environment Boosted Stocks Segment Expansion

Based on asset class, the market is divided into stocks, bonds, and commodities.

Stocks dominated the market in 2024. In recent years, investors, including individuals to large institutional asset managers, have become increasingly aware of their investments’ broader impact on the environment, society, and governance structures. This shift is fueled by rising awareness of climate change, social inequality, data privacy issues, and unethical corporate behavior. As a result, investors are actively seeking to align their financial goals with their personal or institutional values by directing capital toward companies and funds that demonstrate strong ESG performance. Therefore, the demand for ESG-related stocks is increasing.

The bonds segment is estimated to grow with the highest CAGR during the forecast period. The growing demand for ESG bonds, including green, social, and sustainability-linked bonds, is being driven by the global transition toward more sustainable economies, increasing regulatory pressure, and investor preference for responsible finance.

By Investment Type

Equity Investments Led Market Due to Their Stronger Operational Efficiency

By investment type, the market is classified into equity investments, fixed-income investments, private equity, real estate, and hedge funds.

The equity investments segment dominated the market in 2024 as ESG-focused equity portfolios often outperform or match traditional equity portfolios, particularly in volatile markets. Companies with strong ESG scores tend to manage risks better, have more loyal customers, and showcase stronger operational efficiency, all leading to higher valuations and stable returns.

The hedge funds segment is expected to grow with the highest CAGR during the forecast period. These funds can provide portfolio diversification and downside protection in an increasingly complex and volatile global financial environment.

By Investor Type

Institutional Investors Dominated Market by Focusing on Long-Term Risk Management

By investor type, the market is further segmented into institutional investors, retail investors, and corporate investors.

In 2024, the institutional investors segment dominated the market. Institutional investors, including pension funds, insurance companies, endowments, and sovereign wealth funds, are significantly increasing their exposure to ESG investing as part of a broader shift toward sustainable, resilient, and modern investment strategies.

The retail investors segment is expected to grow with the highest CAGR during the forecast period. The retail investors are increasingly investing in ESG-related funds due to regulatory trends and government incentives such as green tax benefits or ESG-linked retirement schemes.

By End User

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Financial Services Led Market, Driven by Strategic ESG Integration

By end user, the market is categorized into utilities, financial services, chemicals, food & beverage, government, transport & logistics, and others.

In 2024, financial services dominated the market and are expected to grow with the highest CAGR during the forecast period. Financial service players are increasingly integrating ESG criteria into lending, underwriting, and investment processes to meet evolving stakeholder expectations and regulatory requirements. The financial services sector recognizes that aligning with ESG trends enhances brand reputation, investor trust, and long-term resilience.

ESG Investing in Government is growing at a significant pace owing to regulatory policies, climate change mandates, and regulatory pressure. Increasing global commitments, issuance of green bonds for sustainable infrastructure, and investment in renewable energy are all driving the market for ESG Investing in the Government sector.

ESG INVESTING MARKET REGIONAL OUTLOOK

The market is geographically studied across North America, South America, Europe, the Middle East & Africa, and Asia Pacific, and each region is further studied across countries.

Europe

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In 2024, Europe dominated the ESG investing market share with around USD 14.84 trillion in ESG assets under management. This growth is fueled by a rising demand from investors for financial products that offer returns and align with sustainability goals. Key financial instruments, such as ESG-focused Exchange Traded Funds (ETFs), green bonds, and sustainability-linked loans, have gained significant popularity across Europe. Green bonds, in particular, have experienced strong growth, largely due to frameworks including the EU Green Bond Standard, which provides issuers and investors with clear guidelines for financing environmentally friendly projects.

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The U.K. market is projected to experience significant growth during the forecast period. Since 2022, the U.K. has mandated climate-related financial disclosures for large companies and pension funds based on TCFD guidelines. Asset owners and managers in the U.K. are increasingly embedding ESG in investment mandates due to growing demand from institutional and retail investors. As per RFI Global, 21% of U.K. consumers currently hold at least one sustainable finance product.

Asia Pacific

The Asia Pacific region is expected to grow with the highest CAGR during the forecast period. Asia Pacific’s economic development presents significant opportunities for ESG investment. According to several flow reports, demand for ESG investment products has been rising significantly. As per the Global Sustainable Investment Alliance, the sustainable investment assets continue to grow in most regions, with Japan experiencing a 34% growth, followed by Australia (25% growth).

North America

North America is expected to exhibit significant market growth during the forecast period. ESG investing is gaining popularity as investors seek to balance financial performance with broader societal and environmental impacts.

The U.S. is expected to dominate the market in North America as a result of government policy initiatives, growing demand from investors, and adoption of ESG-aligned frameworks. The market is projected to witness growth in the country as a result of stringent regulatory policies, rising awareness, and a shift in investment strategies.

Middle East & Africa

The Middle East & Africa region is expected to experience steady growth during the forecast period. The region is highly vulnerable to climate change. Rising temperatures, water scarcity, and extreme weather events drive awareness about environmental risks. Sovereign wealth funds and large institutional investors in the region are aligning with ESG standards to attract foreign capital.

South America

South America is likely to register steady growth during the forecast period. The region is investing in companies that offer renewables, creating ESG-aligned investment opportunities. Brazil’s CVM introduced mandatory ESG disclosure for listed firms in line with TCFD and SASB.

Competitive Landscape

Key Market Players

Market Players Opt for Merger & Acquisition Strategies to Expand Their Presence

Key players in the market are adopting various business strategies to enhance their market presence and capitalize on emerging opportunities. Companies are forming alliances to strengthen their ESG capabilities and market presence, and are collaborating with NGOs, DFIs, or regulators to set up green finance frameworks. Players are expanding to new regions or markets with more ESG Investing regulations or demand.

Long List of ESG Investing Companies Studied

• BlackRock (U.S.)
• Vanguard (U.S.)
• State Street Global Advisors (U.S.)
• Fidelity Investments (U.S.)
• Amundi (France)
• UBS Asset Management (Switzerland)
• Allianz Global Investors (Germany)
• Schroders (U.K.)
• J.P. Morgan Asset Management (U.S.)
• Goldman Sachs Asset Management (U.S.)
• Bloomberg (U.S.)
• S&P Global ESG (U.S.)

….and more

KEY INDUSTRY DEVELOPMENTS

• May 2025 – SSGA launched the opt-in Sustainability Stewardship Service to offer tailored ESG engagement and proxy voting options for institutional clients.
• March 2025 – UBS Asset Management launched two new UCITS ETFs that provide exposure to the Nasdaq 100 and the Nasdaq-100 Sustainable ESG Select National Indexes.
• March 2025 – Goldman Sachs Asset Management launched the Goldman Sachs Biodiversity Bond Fund, which invests in a global portfolio of bonds that contribute to the UN Sustainable Development Goals focused on biodiversity conservation and restoration.
• July 2024 – Fidelity International revised its sustainable investing framework and launched a new three-tiered system that categorizes funds based on their level of ESG integration.
• December 2023 – Amundi launched the Asia Income ESG Bond, which invests across all Asian fixed income segments, focusing on credit and local rates markets.

REPORT COVERAGE

The market research report provides a detailed market analysis and focuses on key points, such as leading companies, offerings, and applications. Besides this, the report offers an understanding of the latest market trends and highlights key industry developments. In addition to the above-mentioned factors, the report contains several factors that have contributed to the growth of the market in recent years.

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