Sustainable Finance
Arab Academy for Science, Technology and Maritime Transport
Faculty of Business – First Year
Principles of Management
Presented to: Dr. Hams
Group Members:
- Menna Mostafa
- Marin Hanna
Contents of the Presentation
- What Is Sustainable Finance
- Main Objective in Sustainable Finance
- Advantages of Sustainability in Finance
- Disadvantages of Sustainability in Finance
- Key Areas of Sustainable Finance
- The Role of Companies and Institutions in Sustainability and ESG Reporting
- The Importance of Transparent ESG Reporting
- Importance of Sustainable Finance
- Conclusion
- References
What Is Sustainable Finance
Sustainable finance is defined as investment decisions that take into account the
environmental, social, and governance (ESG) factors of an economic activity or project.
Main Objective in Sustainable Finance
Sustainable finance plays a pivotal role in directing capital towards projects and businesses
that have a positive environmental and social impact. This approach helps achieve goals like
carbon neutrality, preserving biodiversity, and fostering inclusive economic development.
Advantages of Sustainability in Finance
- Encourages long-term growth
- Enhances reputation and brand value
- Builds investor and stakeholder trust
- Improves risk management
- Aligns business practices with global sustainability goals
Disadvantages of Sustainability in Finance
- Higher Upfront Costs: Green technologies and audits can be costly.
- Complex Reporting Requirements: ESG data collection and standardization is challenging.
- Greenwashing Risk: Some firms falsely claim sustainability.
- Short-Term Trade-offs: Benefits may not be immediate.
- Lack of Standardization: ESG ratings vary across agencies.
Key Areas of Sustainable Finance
1. Green Finance: Focuses on environmental sustainability.
Goal: Reduce emissions, protect biodiversity, promote a low-carbon economy.
2. Social Finance: Aims for positive social impact.
Goal: Address poverty, inequality, and access to services.
3. Corporate Governance: Ensures ethical, responsible management.
Goal: Build trust, ensure accountability, support long-term value.
The Role of Companies and Institutions in Sustainability and ESG Reporting
Companies increasingly embed ESG factors into strategies for success, compliance, and
reputation. Those that do so perform better and gain trust.
The Importance of Transparent ESG Reporting
Transparent reporting helps stakeholders make informed decisions. According to the World
Economic Forum (2020), it enhances trust and investment.
Key ESG Frameworks:
- GRI (Global Reporting Initiative)
- SASB (Sustainability Accounting Standards Board)
- TCFD (Task Force on Climate-related Financial Disclosures)
Importance of Sustainable Finance
- Directs capital to positive-impact projects
- Supports social equity and transparency
- Helps mitigate climate change
- Facilitates transition to net-zero emissions
Conclusion: Sustainability in Finance
Sustainable finance is essential for modern business. Integrating ESG practices leads to risk
reduction, long-term value, and positive societal outcomes.
References
- Harvard Extension School: https://extension.harvard.edu/blog/what-is-sustainable-
finance-and-why-is-it-important/
- Heinrich Böll Foundation: https://il.boell.org/en/2024/03/09/sustainable-finance-
explained-concepts-advantages-and-practical-implementations
- European Commission: https://finance.ec.europa.eu/sustainable-finance/overview-
sustainable-finance_en
- OECD (2022). Greenwashing and Sustainability Reporting
- Harvard Business Review: The Comprehensive Business Case for Sustainability
- McKinsey & Company (2019): Five Ways that ESG Creates Value
