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Sustainable finance is an approach to financial decision-making that explicitly incorporates environmental, social, and governance (ESG) considerations alongside traditional financial analysis. It aims not only to generate competitive returns for investors but also to contribute positively to society and the environment. This integrated thinking recognizes that long-term economic performance is inseparable from ecological health, social equity, and strong institutional governance.

In a world facing accelerating climate change, widening social inequalities, and governance crises, sustainable finance seeks to reorient capital flows toward more resilient and inclusive economic models. It challenges the narrow focus of conventional finance on short-term shareholder value, offering instead a broader vision of stakeholder capitalism—where returns are measured not only in financial terms but also in the positive impact delivered.

The concept is not entirely new. Ethical investing dates back centuries, with religious institutions historically avoiding investments deemed immoral. What’s different today is the scale, sophistication, and urgency of integrating sustainability into mainstream finance.