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Around the globe, a wave of financial innovation that seeks to create social and environmental benefits while producing attractive returns is shaping the field of sustainable finance.

From investments in publicly listed corporations based on environmental, social, and governance factors, to bonds issued to fund climate and environmental improvements; from micro-credit to small retailers through innovative credit assessments, to parametric insurance products improving the disaster resilience of countries, the world of sustainable finance is growing and becoming increasingly diverse.

In this report, we take a closer look at these innovations and more, highlighting how they are working to mobilize private-sector capital at scale to address social and environmental challenges. We also explore recent developments and potential opportunities in Asia’s four largest economies: China, India, Japan, and Indonesia.

Top Takeaways

  1. Around the globe, sustainable finance is expanding both in terms of the instruments deployed and the issue areas it seeks to target. An ever-growing range of innovations has emerged across private and public equities, bonds, real asset investments, and even insurance, and are being used to address an increasingly diversified array of social and environmental issues.
  2. Financial services providers are increasingly moving into sustainable finance, as it has been shown to produce strong returns and can address risks that have emerged from decades of resource-intensive economic growth—such as those associated with climate change—which threaten their long-term sustainability.
  3. Asia is witnessing a wave of innovation in sustainable finance, demonstrating a strengthening interest in the sector. This momentum sends a strong signal of the potential for sustainable finance to grow in key Asian economies and catch up with more developed markets such as the United States and Europe.
From public equities to bonds, real estate to insurance, venture investing to small-business lending, a wave of financial innovation that seeks to create social and environmental benefits while producing attractive returns is shaping the field of sustainable finance.

This report was developed in partnership with AVPN
with support from The Rockefeller Foundation.