Global ESG assets predicted to hit $40 trillion by 2030, despite challenging environment, forecasts Bloomberg Intelligence

• Despite geopolitical and macro challenges, the ESG market matures and anchors capital markets – exceeding 25% of projected global assets under management
• Enhanced scrutiny and regulations to bolster the ESG market credibility
• Europe is set to remain the largest in ESG assets with over $18 trillion in 2030
• Investor appetite remains resilient as asset managers plan to boost ESG AUM

London, 8 January 2024 – Global ESG assets surpassed $30 trillion in 2022 and are on track to surpass $40 trillion by 2030 — over 25% of projected $140 trillion assets under management (AUM) according to a latest ESG report from Bloomberg Intelligence (BI). 

Despite polarized sentiment, macro challenges, and a potential 70% growth reduction to 3.5%, the ESG market is set to mature and align with global regulation by the end of this decade. In addition, BI expects enhanced scrutiny and regulations to bolster the ESG assets credibility. 

Europe is set to remain the most significant contributor, while the US may stagnate amid the presidential elections and ESG backlash. Emerging themes and small, but expanding markets like Japan, Canada and Australia could also support gains.

BI’s projections[1] are based on an interactive scenario model combining regional growth decomposition, historical trends and macroeconomic expectations, leveraging data from the Global Sustainable Investment Alliance’s (GSIA) 2022 report, where a methodology change halved US ESG AUM to $8t trillion. This led to total assets declining from $35 trillion in 2020 to $30 trillion in 2022. Europe rebounded to $14 trillion while Japan surged 50% to $4 trillion.

The latest 2030 forecast further reflects BI’s inaugural ESG Market Navigator study[2], which was conducted at the end of last year and canvassed the views of 250 executives and 250 investors. Among many findings, this study found that a majority of investors (85%) reported that ESG leads to better returns, resilient portfolios and enhanced fundamental analysis.

Adeline Diab, Global ESG Research and Strategy Director at Bloomberg Intelligence, said: “While ESG has had a challenging few years, we see the market entering a necessary consolidation phase, characterized by slower growth and gaining maturity. ESG assets are set to reach over $40 trillion by 2030 in line with our inaugural BI ESG Market Navigator study, which revealed that investor appetite remains resilient with over 85% of asset managers planning to boost ESG AUM. Greater regulatory harmonization in and across regions will also be essential to bolster credibility and sustain advances in ESG funds.

“BI’s 3.5% growth forecast is 70% below 2016-20’s rate as we expect the market to mature and gain credibility with rising scrutiny and regulation. This is following a previous surge which also led to greenwashing risk and inconsistent ESG approaches.”

In terms of European ESG assets, BI’s forecasts show that Europe is set to remain the largest in ESG assets with over $18 trillion in 2030, preserving its 45% global share and CAGR keeping pace with the 3.5% global rate, dipping from 8% in 2014-22.

The US may decelerate further to a 1.5% projected CAGR, resulting in $9.5 trillion in assets and a global share below 25% by 2030, as the upcoming elections, ESG backlash and high fund market concentration limit its growth potential. 

Japan, Canada and Australia are small, fast-growing regions, led by Japan where assets increased 50% to $4.3 trillion in 2020-22. While they may continue to expand faster than the global rate, we expect their CAGR to stabilize at 6% as regulation and rising scrutiny lead to market consolidation. 

Adeline Diab added: “Outside of the US and Europe, Japan’s global share could exceed 15% by 2030, with nearly $7 trillion in assets, as a result of a supportive economic backdrop and government support. However, funds are likely to undergo a consolidation phase in the near term as the market adjusts to regulatory changes and client demand for differentiated products.”

Notes to Editors

1. BI’s ESG Asset Forecast Model delivers global and regional ESG asset projections to 2030, leveraging data in GSIA’s 2022 report. The model is developed in three stages. First, we analyze the historical growth trend in total ESG assets and its regional breakdown, leading to insights on expected CAGR rates during different stages of maturity in different ESG markets. Second, we combine the historical information with our macro expectations and ESG views at the global and regional level to derive each region’s expected CAGR for the remainder of the decade. Finally, we scale our CAGR projection for each region upwards or downwards to produce the bull and bear case projections, respectively.
2. The ESG Market Navigator, a survey of 250 C-suite executives and 250 senior investors from around the world, was developed by Bloomberg Intelligence for release in collaboration with the Bloomberg New Economy. Questions covered five topics: Context, Practice, Communication, Climate and 2024 Outlook. The online questionnaire was carried out by GLG in October. The distribution of respondents was 35% in each of the US and EMEA, and 30% from APAC, across industries.

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Bloomberg Intelligence
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