Emerging markets risk falling further behind in the global sustainability transition as they face a $3.7tn annual Environmental, Social and Governance financing gap, according to a new report by Dun & Bradstreet.
The report, titled “ESG Funding in Emerging Markets,” examines how data, regulation, and financial innovation can accelerate sustainable capital flows across South Asia, the Middle East, and Africa.
The global data and business intelligence firm said the shortfall represents the annual funding required for developing economies to meet the UN Sustainable Development Goals by 2030, highlighting a widening divide between developed and emerging markets in accessing sustainable capital.
“ESG finance has grown into a $3tn global market, with investment flows accelerating as governments, corporates and institutions commit to climate and social impact targets,” the report noted.
It added that an estimated $1.6m flows into sustainable funds every minute, and by 2025, one in three investment dollars worldwide will be ESG-linked. “But despite this momentum, the vast majority of capital continues to flow into developed markets, leaving emerging economies at the margins of the sustainability transition,” it said.
Dun & Bradstreet attributes this imbalance to structural constraints. Although emerging markets generate 60 percent of global GDP and account for 75 per cent of global emissions, they remain disadvantaged by higher capital costs, limited long-term financing, weak disclosure standards, and fragmented regulation—factors that heighten investor risk perception and restrict cross-border ESG flows.
Africa remains the smallest participant in the global green bond market, accounting for less than one per cent of total issuances in 2023. Europe continues to dominate, supported by stringent disclosure rules, carbon-pricing frameworks, and strong institutional demand.
Despite the challenges, pockets of progress are emerging. Saudi Arabia is using its Green Financing Framework to channel capital toward low-carbon projects aligned with Vision 2030. Thailand issued Asia’s first sovereign sustainability-linked bond in 2024, while South Africa’s Just Energy Transition Partnership is backed by $5.1bn in EU commitments to support its coal-to-renewables shift.
However, Dun & Bradstreet noted that these positive signals remain small compared to the scale of global needs.
The report identifies regulatory alignment as the most decisive factor for unlocking ESG capital. China, India, Singapore, and South Africa are moving toward mandatory ESG reporting, anti-greenwashing rules for funds, and national taxonomies—steps that reduce information gaps and strengthen investor confidence.
Nigeria, by contrast, remains at an early stage with voluntary reporting frameworks and broad sustainable-finance guidelines. Analysts warn that without stronger enforcement and aligned standards, Nigerian corporates and financial institutions risk missing out on the growing pool of sustainability-linked capital needed to meet the country’s climate and development ambitions.
Dun & Bradstreet recommends coordinated taxonomies, blended-finance structures to de-risk early projects, stronger ESG data systems and deeper engagement from domestic banks and corporates.
The report concludes that the most transformative investment opportunities lie in emerging markets, where funding gaps are deepest, and the impact of scalable ESG finance is greatest.
