Exploring the Ethical Perspectives of Sustainable Finance

Abstract

This chapter examines some of the ethical views around sustainable finance and provides an overview of recent empirical research on whether one can expect better investment returns from pursuing sustainability. Using empirical approaches, this chapter explores the relationship between corporate sustainability and financial performance, providing evidence-based perspectives of the ethical considerations and pragmatic implications evidenced in sustainable finance. This chapter aims at full ethical exposition of sustainability practices and its interaction with firm's profitability. They include the effect of corporate sustainability practices on financial performance, findings on ESG investment returns in the literature, and explanations, which could explain these findings. The chapter also speaks to the normative role of investor preferences, risk considerations, as well as regulatory imponderables in the evolution of sustainable financial ethics. The chapter examines a number of studies that examine the connection between investment returns and ESG issues.