A Reality Check on Green Finance

Europe has established itself as a world leader in financing the transition to net zero. By building a transparent and dynamic green finance market, it has mobilised green financing totalling more than €1tn over the last three years and is approaching the annual amounts of investment needed to achieve its 2030 targets. Europe has also made an effective case for why net zero is not just good for the climate, but good for security as well – stressing what happens when countries are dependent on fossil fuels, particularly when those fuels come from third countries like Russia.

This report is the second edition of our reality check on green finance in Europe. It shows that while Europe has mobilised significant amounts of green finance, growth in the green finance market is running out of steam. The value of green capital raising has flatlined over the past few years – and fallen in real terms – while the penetration of green finance as a proportion of all capital markets activity has slipped back. While there is no single reason for this slowdown, we highlight several some significant challenges to green finance that threaten Europe’s net zero goals.


The value, in trillions, of green finance in Europe from corporates, governments, and financials from 2019 to 2023


The penetration of green finance in European capital markets


The ratio of 'bad' company financing to 'good'

Key highlights

Some of the report’s key highlights include:

  • Explosive growth: Green capital raising has more than doubled since 2019 to €378bn and the penetration of green finance has more than doubled to 11% of all capital markets activity. For reference, activity in Europe was nearly double the €200bn in green capital raising in the US last year.
  • Worrying signs: The value of green capital markets activity has flatlined over the past few years and fallen slightly in real terms, and the penetration of green finance also dropped last year. This suggests that Europe has already scored the ‘easy wins’ and that the political backlash against ‘green’ and ‘ESG’ is taking its toll.
  • Business as usual: Europe will need to shift financing en masse from fossil fuels to renewables to meet its net zero goals, however ‘bad’ companies – or those whose day-to-day activities delay the transition – still receive five times as much financing as ‘good’ or ‘green’ companies.
  • Growing green companies: The value of green venture capital investment surged over the last few years and reached 18% of all European venture capital in 2023.
  • Regulatory overload: Regulation has played an important role in shaping Europe’s green finance market, but there is a risk of it becoming too much and too burdensome. There are already efforts to simplify this regulatory regime – a step that could help reverse the slowdown in green finance issuance.