Nature Related Sustainable Finance in China 2025

Global market and China’s status The sustainable funds market continued to expand in 2024, albeit at a slower pace. The total assets with sustainable funds reached $3.2 trillion by the end of 2024 (Figure 6). These funds remain highly concentrated in Europe and the US, representing 84% and 11% of the global market, respectively. The market share of US sustainable funds declined to 11% by 2024 from 15% in previous years, whereas the share of the Although the increasing number and value of sustainable funds indicate continued growth, sustainable funds face a challenging environment. High interest rates, lagging performance, lukewarm demand and rising concerns about greenwashing have all contributed to growing uncertainties in the market. As a result, the number of new launches has continued to decline.rest of the world rose from a minimal 0.7% in 2018 to 3%.25 262.2 Sustainable funds Annual global sustainable fund assets ($ billion) FIGURE 6 2018 2019 2020 2021 2022 2023 202405001,0001,5002,0002,5003,0003,500 Rest of the world United States Europe29,76 41,72.458,30 357,1 166,72.065,50 279,8 1312.482,10 321,42.678,60 345,2 154,8 148,81.470,20 238,1 83,3125 83,3869 476,2 Compared to the green bonds market, China’s ESG funds market is still in the early stages of development. As of 2024, the total assets under management in China’s ESG funds amounted to 1% of the global market (Figure 7). The market still lags significantly behind that of the US (11%) and Europe (84%).In terms of trends, China’s share of the ESG funds market in Asia (excluding Japan) has decreased from around 50% in 2022 to about 35% in 2024. Overall, China still dominates the region in terms of the scale of its ESG funds, despite the rapid growth of other markets such as Thailand and Singapore. This indicates significant growth potential for China’s ESG fund market.27Source: Morningstar Direct. Data as of December 2024. A Brief Review Nature-Related Sustainable Finance in China: 13