Rabat – Sustainability-Linked Financing in emerging markets stood at 5% of the global rate in 2021, with a 1% contribution from the Middle East and North Africa (MENA) region, according to the International Finance Corporation (IFC), a member of the World Bank Group.
Despite the modest figures, Sustainability-Liked Financing is growing, registering a 327% growth between 2020 and 2021, the IFC document explains.
The growth is offset by the increase in Mexico, China, Turkey, Russia, and Brazil, leading the way with 82% of sustainable funding from non-high-income countries.
Titled “Sustainability-Linked Finance–Mobilizing Capital for Sustainability in Emerging Markets,” the IFC report details that Africa and Latin America are lagging behind with limited market activities to underpin the green finance transition.
The IFC projects that sustainability-linked finance will gain strong momentum over the coming year. The growing appetite for impact investment coupled with increasing public awareness of climate issues and global inequalities are expected to underpin the growth in green financing.
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Debuting in 2017, sustainability-linked financing was set in motion with the aim to encourage investors and stakeholders alike to pursue green targets. Four years later, the green mode of financing has become the fastest-growing financing instrument worldwide.
Some sectors seem to be adopting sustainable financing faster than others, however. Infrastructure, manufacturing/services, and financial institutions are leading the way in the adoption of green financing.
Sustainability-linked financing for infrastructure worldwide stood at an accumulative figure of $359 billion in 2021, gaining momentum over manufacturing/services that was leading the way since 2017, according to Bloomberg data cited in the report.
Sustainability-linked financing for manufacturing and services stood at an accumulative figure of $311 billion followed by financial institutions with accumulative green financing of $139 billion.
Despite the pandemic, sustainability-linked financing accelerated by over 100% between 2020 and 2021.
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