Green Bond Issuance Hits $540 Billion in 2023, Corporate Sector Leads with 64% Share: LSEG Green Economy 2024 Report

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Key Statistics from the Report

1. Market Capitalisation: The market capitalisation of the global green economy reached $7.2 trillion in Q1 2024.
2. Growth Rate: The green economy has a 10-year compound annual growth rate (CAGR) of 13.8%.
3. Revenue Pool: If considered a standalone sector, the green economy would have an annual revenue pool of almost $5 trillion in 2023.
4. Energy Efficiency Sector: Energy Efficiency is the largest green sector, representing 46% of the green economy and covering efficient IT equipment and green buildings.
5. Green Bond Issuance: Green bond issuance reached approximately $540 billion in 2023, with corporate issuers accounting for 64% of new green bond offerings.
6. Outstanding Green Bonds: The amount of outstanding green bonds globally was $2.5 trillion at the end of Q1 2024, representing 2% of the overall bond market.
7. Tech Sector: The Technology sector within the green economy is the largest, with a market capitalisation of $2.3 trillion in 2024.
8. Automobiles Sector: The Automobiles sector has the highest green penetration rate at 42%.
9. US Market: The United States is the largest market for the green economy in 2024, followed by Taiwan and China.
10. Renewable Energy Installations: Solar and wind energy installations increased by 85% and 60% respectively in 2023 compared to 2022.

The London Stock Exchange Group’s report on “Investing in the Green Economy 2024” presents a comprehensive analysis of the growth, composition, and financial performance of the global green economy across various asset classes. The report highlights significant achievements and emerging trends that define the current state and future trajectory of green investments.

Market Capitalisation and Growth Rate

The global green economy has achieved remarkable growth, with its market capitalisation soaring to $7.2 trillion in Q1 2024. This impressive figure underscores the increasing value and influence of green sectors within the global financial markets. The green economy’s robust 10-year CAGR of 13.8% further reinforces its status as a leading investment opportunity, outpacing the broader listed equities market.

Revenue Pool and Sectoral Composition

If considered as a standalone sector, the green economy would boast an annual revenue pool of nearly $5 trillion in 2023, positioning it among the largest sectors globally. Within this economy, the Energy Efficiency sector stands out as the largest, accounting for 46% of the green economy. This sector includes efficient IT equipment and green buildings, highlighting the critical role of energy efficiency in driving sustainable growth.

Green Bond Market

The green bond market has shown resilience and growth, with issuance reaching approximately $540 billion in 2023. Corporate issuers dominate this market, representing 64% of new green bond offerings. The total outstanding green bonds globally amounted to $2.5 trillion at the end of Q1 2024, making up 2% of the overall bond market. These figures reflect the growing investor interest and confidence in green bonds as a viable investment vehicle.

Sectoral Highlights

The Technology sector within the green economy is particularly noteworthy, with a market capitalisation of $2.3 trillion in 2024, making it the largest sector. The Automobiles sector also demonstrates significant green penetration, with 42% of its market attributed to green activities, largely driven by the rapid adoption of electric vehicles (EVs).

Geographical Distribution

Geographically, the United States leads the green economy market, followed by Taiwan and China. The dominance of the US market is attributed to its substantial equity market and major green companies such as Tesla. Taiwan’s position as the second-largest market is driven by its semiconductor industry, while China remains a key player despite recent market fluctuations.

Renewable Energy Growth

Renewable energy installations have surged, with solar and wind energy installations increasing by 85% and 60%, respectively, in 2023 compared to 2022. This growth highlights the expanding role of renewable energy sources in the global energy mix and their contribution to the green economy.

Challenges and Opportunities

Despite these positive trends, the report acknowledges several challenges, including market volatility, geopolitical risks, and overcapacity issues in renewable energy and EV manufacturing. However, the long-term growth prospects of the green economy remain strong, driven by technological advancements and increasing global commitment to sustainability.

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The London Stock Exchange Group’s 2024 report paints a promising picture of the global green economy. With substantial market capitalisation, impressive growth rates, and expanding investment opportunities across various sectors, the green economy continues to emerge as a critical component of global financial markets. Investors and policymakers alike are poised to benefit from the ongoing transition towards a more sustainable and resilient economic system.