The Future of Green Finance: Artificial Intelligence-Enabled Solutions for a More Sustainable World

Understanding Green Finance And Its Importance

Green finance refers to financial products and services that promote a shift towards an economy that is less reliant on carbon, utilizes resources more efficiently, and is environmentally sustainable. It plays a pivotal role in directing financial resources towards sustainable investments and projects which contributes in climate change mitigation, environmental goals and adaptation (Maria et al., 2023). This technique stands in line with the rising mindfulness of environmental issues and the growing emphasis towards corporate social responsibility. Chang et al., (2022) emphasised the sustainable finance literatures and viewed the value implications of ESG and CSR practices using the discounted cash flow valuation framework, and found that the ESG and CSR have increased the firm value by motivating employees, strengthening customer supplier relationships, boosting long-term growth, increasing dividends, and reducing financing costs. The significance of green finance stems from its ability to foster positive environmental outcomes along-with generating financial returns. It also serves as a catalyst for stimulating private capital towards sustainable initiatives, which is indispensable for attaining global sustainability goals. Moreover, as the sustainable investing gains impetus, the assimilation of environmental, social, and governance (ESG) aspects into investment decisions has become gradually prevalent, contributing a substantial shift in the financial sector towards more accountable and sustainable practices. Businesses and investors can play a vital role in shaping a more buoyant and environmentally sensible economy by adopting green finance, which in turn not only addresses unrelenting environmental concern but also opens new avenues for growth and innovation.