Probe - Accounting, Auditing and Taxation

Integrating ESG factors into investment strategies from the perspective of sustainable finance

Qi Chong

Global Oasis Climate Fund TX

DOI: https://doi.org/10.59429/paat.v7i1.9446

Keywords: Sustainable finance; Environmental; Social and governance (ESG); Investment strategy; Risk management; Social responsibility investment

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Abstract

With the rapid development of the global economy, environmental, social, and governance (ESG) factors have become an important component of investment decisions. This article explores the importance, challenges, and solutions of integrating ESG factors into sustainable financial investment strategies. Research has shown that investment strategies that incorporate ESG factors not only help investors identify and manage risks, but also improve the long-term stability and returns of investment portfolios. Meanwhile, integrating ESG factors into strategic and operational management can enhance a company’s market competitiveness and achieve sustainable development. From a social perspective, sustainable financial development promotes the sustainable development of society, especially in terms of environmental protection and social welfare. Despite increasing attention to sustainable finance, challenges such as data quality, inconsistent investment standards, and uncertainty in policy environments still need to be addressed. This article proposes suggestions to strengthen the standardization of ESG data, optimize investment strategies to balance long-term and short-term goals, enhance market awareness, and improve policy frameworks to promote the development of sustainable finance.

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References

[1] Henriksson, Roy., et al. “Integrating ESG in Portfolio Construction.” (2019).

[2] Sciarelli, Mauro, et al. “Socially responsible investment strategies for the transition towards sustainable development: the importance of integrating and communicating ESG.” The Tqm Journal (2021).

[3] Jain, Mansi, G. Sharma, and Mrinalini Srivastava. “Can Sustainable Investment Yield Better Financial Returns: A Comparative Study of ESG Indices and MSCI Indices.” Risks (2019).