Exploring the Nexus of Sustainable Finance

Abstract

The rising demand for Environmental, Social, and Governance (ESG) disclosure by stakeholders has spurred a wave of sustainability reporting, including a focus on Sustainable Development Goals (SDGs). This surge in interest has led to the development of carbon accounting, ESG disclosure measures, and regulations to enhance the credibility of ESG information globally. The chapter aims to analyze the risks and opportunities of ESG practices and the impact of different stakeholders on the tools and frameworks used across various sectors to report sustainability performance. The study finds that transparent ESG information allows business leaders to engage more effectively with investors and stakeholders. Additionally, global, national, and organizational leaders have a legal and ethical responsibility to achieve sustainable outcomes for their communities. The research reveals a correlation between higher ESG scores and reduced stock price collapse risk. This work contributes to the broader discourse by highlighting ESG's economic impact, particularly its protective role against stock price downturns. It also adds to the literature on factors determining stock price collapse risk and underscores the practical implications of promoting ESG to mitigate financial risks and guidelines.