Book Title: Multidisciplinary Research Nexus: Exploring Intersections of Knowledge
Editor: Prof. Amos R
Chapter: 12
DOI: https://doi.org/10.59646/559/12
Authors: Prof. Dr. A. Shameem, and Sathish P
Abstract
Green finance and Environmental, Social, and Governance (ESG) investing have emerged as critical mechanisms for aligning financial systems with sustainable development goals. Green finance focuses on directing capital toward projects and activities that deliver environmental benefits, such as renewable energy, climate adaptation, and resource efficiency, while ESG investing integrates non-financial criteria into investment decision-making to assess long-term risks and value creation. Together, these approaches offer significant opportunities, including enhanced risk management, improved corporate accountability, access to new investment markets, and support for the global transition to a low-carbon and socially inclusive economy. However, their adoption also presents substantial challenges. These include the lack of standardized ESG metrics, data reliability and transparency issues, greenwashing risks, regulatory inconsistencies across regions, and the difficulty of balancing financial returns with sustainability objectives. This review examines the evolving landscape of green finance and ESG investing, highlighting key opportunities, identifying persistent challenges, and discussing future directions for policy, financial institutions, and investors to strengthen credibility and effectiveness in sustainable finance practices.