Nexus between Impact Investing and Green Finance in Driving Sustainable Development

Abstract

Purpose: This study explores the intersection of impact investing and green finance, focusing on their contributions to sustainable development and how they reshape financial markets. Research Design and Methodology: Using a qualitative approach, a systematic literature review is conducted to analyze how institutional investors incorporate environmental, social, and governance (ESG) factors into their strategies. Findings and Discussion: The research highlights a shift towards sustainability among institutional investors, moving beyond traditional financial-only returns. Key regulations like the EU’s SFDR and the TCFD recommendations support transparency, driving the adoption of sustainable practices. A positive link between robust ESG performance and financial returns illustrates the compatibility of environmental responsibility with profit objectives. Implications: The findings emphasize the necessity of integrating sustainability into investment decisions to foster a resilient and equitable economic future. It suggests that continued policy support is essential to encourage private investment in sustainable projects, advocating for systemic changes across financial markets to embrace sustainable and inclusive growth.