Bridging the ESG funding divide: Turning barriers into catalysts for emerging markets

Dun & Bradstreet has released a new report, “ESG Funding in Emerging Markets,” highlighting that emerging economies face an annual shortfall of USD 3.7 trillion in Environmental, Social, and Governance (ESG) finance; funds needed to meet the UN Sustainable Development Goals (SDGs) by 2030. While global ESG investment reaches USD 3 trillion and continues to grow, emerging markets struggle due to inconsistent policies, weak regulations, and limited innovation, despite rising interest from investors worldwide.

Globally, Europe leads ESG funding, raising USD 405 billion in 2023, whereas Africa accounts for less than one percent of global green bond issuances, reflecting not only financial gaps but differences in governance and transparency.

Despite these challenges, several emerging markets are making progress. Early-stage countries such as Pakistan, Kenya, and Nigeria, with Green Bond-to-GDP ratios of 0–0.5%, are building awareness about sustainable finance. Scaling markets, including Thailand, the Philippines, and South Africa, with ratios of 0.5–1.0%, are expanding through sustainability-linked bonds and clean energy projects. Advanced markets above 1.0%, like Saudi Arabia, have fully integrated ESG goals into national strategies such as Vision 2030.

Key milestones include Thailand’s launch of Asia’s first sovereign Sustainability-Linked Bond in 2024 and South Africa’s Just Energy Transition Partnership, supported by USD 5.1 billion in EU commitments.
Regulation emerges as the key driver for ESG growth. Countries such as China, India, and Singapore are advancing through clear reporting rules and sustainable finance frameworks, yet inconsistent policies across regions continue to deter investors. Aligning national and global standards, supported by transparent data and digital verification, can unlock wider access to sustainable finance.

To accelerate ESG growth, emerging economies should align global and local standards to strengthen investor confidence, develop blended-finance models that combine public and private capital, enhance ESG knowledge and data transparency, and integrate sustainability into core business and banking decisions.

“The ESG opportunity for emerging markets is both urgent and transformative,” the report states. “For policymakers and business leaders, the path forward is clear: align standards, strengthen governance, and innovate finance. Investors will find the greatest potential where the gaps are widest.” The full report explores how data, policy, and innovation can drive sustainable capital flows across South Asia, the Middle East, and Africa.