Sustainable finance and ESG

Published on July 30, 2024 by Prasanna Kumar

M&A and capital markets are likely to be dominated by ESG and sustainable finance in 2024. Also, Private equity firms are focusing on impact investing.

Sustainable finance and ESG trends to watch for in 2024

Sustainable debt markets were resilient in 2023, and dynamics are expected to remain favourable in 2024. The sustainable bond market is lucrative, and the sustainable debt market would continue to focus on green bonds. In Europe, sustainable funds are attracting higher capital commitment than are conventional equity funds, supported by a favourable regulatory and political environment for ESG. With continued new fund regulations in place, more investment in ESG is expected in 2024.

In particular, private equity firms are focusing on impact investing, seeking to increase fund allocations towards sustainability themes. Stakeholder pressure is increasing across sectors, particularly energy, to drive decarbonisation strategies, and M&A presents an opportunity to achieve this goal in 2024. This is evidenced by M&A volumes in the renewable energy space increasing for a fourth consecutive year amid an otherwise subdued 2023. ESG disclosures are becoming increasingly essential for M&A deal closure across sectors and are impacting the due diligence process.

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