Sustainable Finance and Investment: The Intersection of Profitability and Environmental Impact

Abstract

This paper reviews the evolving field of sustainable finance and investment, focusing on the intersection between profitability and environmental impact. It aims to assess how financial institutions and investors integrate sustainability considerations into their decision-making processes, and the extent to which these practices align with long-term profitability and environmental goals. The paper draws on stakeholder theory, environmental, social, and governance (ESG) criteria, and the triple bottom line (TBL) approach, which emphasizes the balance between economic, social, and environmental performance. These frameworks help analyze the role of finance in fostering sustainable development without compromising financial returns. A systematic literature review is conducted, examining peer-reviewed articles, case studies, and industry reports on sustainable finance. The paper that firms with strong ESG performance are more likely to attract investors and achieve resilience in the face of environmental risks.  The study offers valuable insights for policymakers, financial institutions, and investors on aligning investment strategies with global sustainability goals. Practically, it suggests pathways for enhancing transparency, standardizing ESG reporting, and promoting investments that generate both financial returns and positive environmental impacts. Socially, the findings highlight the role of finance in advancing environmental sustainability and mitigating climate risks.