A Study on ESG-Driven Sustainable Finance For Enhanced Societal Value Creation

Authors: Jagannayaki K, Lavanya P

DOI: https://doi.org/10.37082/IJIRMPS.v13.i6.232867

Short DOI: https://doi.org/hbgh7n

Country: India

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Abstract: The growing urgency of climate change, social inequality, and governance accountability has intensified global interest in Environmental, Social, and Governance (ESG) criteria as a foundation for sustainable financial decision-making. Traditional finance models focused primarily on risk and return, whereas contemporary approaches increasingly integrate ESG indicators to ensure long-term value creation and broader societal welfare. This study aims to: (1) examine how ESG criteria are integrated into financial decision-making processes; (2) evaluate the mechanisms through which ESG considerations contribute to the creation of societal value; and (3) identify the challenges that impede effective ESG integration in investment and corporate finance. A systematic qualitative review approach is adopted, drawing upon peer-reviewed research indexed in Scopus and Web of Science, sustainability reporting standards, regulatory frameworks, and industry publications from 2015 to 2024. The study employs thematic content analysis to explore patterns related to ESG integration practices, decision-making frameworks, disclosure quality, and impact measurement tools. The review reveals that ESG integration enhances financial decision-making by incorporating long-term environmental risks, social responsibilities, and governance quality, which collectively improve investment resilience and societal outcomes. Financial mechanisms such as ESG-screened portfolios, sustainability-linked bonds, and impact-weighted financial metrics are increasingly utilized to align capital with sustainable development goals. However, limited standardization of ESG metrics, inconsistent disclosures, rating divergence, and risks of greenwashing continue to challenge credible ESG adoption. The study highlights the need for harmonized ESG taxonomies, robust reporting standards, and improved verification systems to strengthen investor confidence and societal impact. Incorporating advanced analytics, enhancing regulatory compliance, and fostering cross-sector collaboration can further embed ESG principles into financial decision-making. These insights offer valuable guidance for policymakers, financial institutions, and scholars seeking to advance sustainable finance practices.

Keywords: ESG Integration, Sustainable Finance, Responsible Investment, Societal Value, ESG Disclosure, Sustainable Development Goals (SDGs)

Paper Id: 232867

Published On: 2025-12-22

Published In: Volume 13, Issue 6, November-December 2025

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