• Login
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
  • Home
  • News
    • General
    • Political
  • Economy
  • Business
    • Agribusiness
    • Aviation
    • Banking & Finance
    • Energy
    • Insurance
    • Manufacturing
    • Markets
    • Maritime
    • Real Estate
    • Tourism
    • Transport
  • Technology
    • Telecom
    • Cyber-security
    • Cryptocurrency
    • Tech-guide
    • Social Media
  • Features
    • Interviews
    • Opinions
  • Reports
    • Banking/Finance
    • Insurance
    • Budgets
    • GDP
    • Inflation
    • Central Bank
    • Sec/Gse
  • Lifestyle
    • Sports
    • Entertainment
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video
No Result
View All Result
No Result
View All Result
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
No Result
View All Result
Home Economy

Sustainable finance in emerging markets is enjoying rapid growth, but may bring risks

4 years ago
in Economy, highlights, Home, home-news, latest News
4 min read
0 0
0
56
VIEWS
Share on FacebookShare on TwitterShare on Linkedin

Sustainable finance in emerging markets is enjoying rapid growth, but may bring risks

Most of the activity in the rapidly growing world of sustainable finance has been previously concentrated in advanced economies, but emerging markets, while still a small share of the total, saw a surge last year.

As a result, their market share has increased for the first time since 2016, underscoring the growing investor appetite for environmental, social, and governance (ESG) products, but this growing opportunity also poses new risks.

ESG’s rising prominence

Sustainable finance incorporates ESG principles into business decisions and investment strategies, covering issues from climate change to labor practices. It has become more mainstream in emerging markets in part because of pandemic-related financing needs, such as healthcare, as well as Latin America’s surge in climate-related borrowing.

ESG-linked debt issuance more than tripled last year to $190 billion. Sustainability-related equity fund flows also rose, to $25 billion, bringing total assets under management to nearly $150 billion.

chart 1

ESG investments now make up almost 18 percent of foreign financing for emerging markets excluding China, quadruple the average for recent years. This raises questions about possible financial stability risks.

RelatedPosts

EIA Rattles Oil Markets With Reports of Crude Oil, Product Builds

Dams for Development? Unpacking Tensions in the World Bank’s Hydropower Policies

Chart of the Week: Dollar’s Share of Reserves Held Steady in Second Quarter When Adjusted for FX Moves

Expanding across dimensions

The ESG ecosystem in emerging markets has grown not only in size but also broadened across other dimensions. Green bonds remain a core part of this ecosystem, with volumes growing at an average rate of 20 percent.

Read: RMB helps raise $1.2bn for Afreximbank in boost to African trade

However, social and other sustainability-linked instruments are becoming more important, reaching almost half of total issuance in 2019-21, up from about a fifth in 2016-18.

chart 2

This expansion of sustainable finance is also evident in the more active green bond issuance by non-financial firms and government related sectors, a subject we will detail in a forthcoming IMF staff paper.

One key dynamic of the emerging-market ESG world is growth outside of China. Issuance excluding China made up almost half of the total in 2019-21, compared to only about a third during the preceding three years.

Other increasingly important players in the sustainability market are Chile, where ESG issuance has reached nearly 12 percent of gross domestic product over the last five years, as well as Peru and Mexico. Some low-income countries, like Benin and Togo also issued ESG-linked debt in 2021.

Private finance role

Recent gains in ESG markets may be an important opportunity for emerging markets to access more stable funding sources and develop a broader and more mature sustainable finance ecosystem. With many of these nations highly exposed to climate hazards and already facing related transition challenges, private finance will play a crucial role in mitigating these risks and strengthening the financial sector.

But there are also risks that emerging-market policymakers must monitor and challenges they need to address.

  • Financial stability risks include the different investor base relative to more traditional investors and a potentially higher sensitivity to global financial conditions, given the technology-heavy composition of many ESG indices. That’s an important consideration in the current policy environment, with central banks in advanced economies raising interest rates and reducing policy accommodation put in place during the pandemic—a development that is starting to tighten financial conditions around the world.
  • Policymakers should strengthen the climate information architecture to incentivize efficient pricing of such risks and avoid greenwashing, the use of green labels or strategies that are often unverified or deceptive about environmental soundness. Policies should aim at improving the quality, consistency, and comparability of climate data, develop classifications that align investments with climate goals, and enhance global disclosure standards.

While some of these issues are also common in advanced economies, emerging market economies face additional challenges, particularly with respect to the transition to a green economy and to the availability and quality of climate data.

To avoid fragmentation of markets and regulatory approaches, international coordination and the adoption of global standards remain paramount.

Source: IMF
Via: norvanreports
Tags: advanced economiesemerging marketsESG principlesGreen Bondssustainable financeSustainable finance in emerging markets is enjoying rapid growth
No Result
View All Result

Highlights

Sinner Dominates Tien to Secure China Open Title

President Mahama Vows Tougher Action on Cybercrime, Promises Collaboration with Global Partners

Government to Establish Cyber Security Fund to Bolster Digital Defences

Headline Inflation Hits Single-Digit With 9.4% Rate in September 2025

Bank of Ghana Prices 1oz Gold Coin at GHS 49,131.99

Ghana Hosts IGAD Delegation on Land Governance Exchange

Trending

Business

EIA Rattles Oil Markets With Reports of Crude Oil, Product Builds

October 1, 2025

EIA Rattles Oil Markets With Reports of Crude Oil, Product Builds Crude oil inventories in the United...

Dams for Development? Unpacking Tensions in the World Bank’s Hydropower Policies

October 1, 2025

Chart of the Week: Dollar’s Share of Reserves Held Steady in Second Quarter When Adjusted for FX Moves

October 1, 2025

Sinner Dominates Tien to Secure China Open Title

October 1, 2025

President Mahama Vows Tougher Action on Cybercrime, Promises Collaboration with Global Partners

October 1, 2025

Who we are?

NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World

NorvanReports is a unique data, business, and financial portal aimed at providing accurate, impartial reporting of business news on Ghana, Africa, and around the world from a truly independent reporting and analysis point of view.

© 2020 Norvanreports – credible news platform.
L: Hse #4 3rd Okle Link, Baatsonaa – Accra-Ghana T:+233-(0)26 451 1013 E: news@norvanreports.com info@norvanreports.com
All rights reserved we display professionalism at all stages of publications

No Result
View All Result
  • Home
  • Business
    • Agribusiness
    • Aviation
    • Energy
    • Insurance
    • Manufacturing
    • Real Estate
    • Maritime
    • Tourism
    • Transport
    • Banking & Finance
    • Trade
    • Markets
  • Economy
  • Reports
  • Technology
    • Cryptocurrency
    • Cyber-security
    • Social Media
    • Tech-guide
    • Telecom
  • Features
    • Interviews
    • Opinions
  • Lifestyle
    • Entertainment
    • Sports
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video

Welcome Back!

Login to your account below

Forgotten Password?

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
NORVANREPORTS.COM | Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.