Sustainable Finance as a New Financial Model

Sustainable Finance as a New Financial Model

Tanishka Gupta

Galgotias university

ABSTACT

The financial world is undergoing a major transformation as sustainability becomes central to investment strategies. This research examines Sustainable Finance as an emerging investment approach that blends financial returns with environmental, social, and governance (ESG) principles. In light of increasing global concerns like climate change, inequality, and corporate accountability, ESG-focused investing is gaining momentum as both a responsible and potentially profitable alternative to traditional models.

This study uses a comparative, simulation-based analysis, drawing from secondary data sources such as Bloomberg, MSCI, and academic research. Two hypothetical portfolios—one aligned with ESG principles and one based on conventional investment practices—are evaluated across key performance indicators, including average returns, volatility, and risk-adjusted returns (Sharpe ratio) over the period 2019 to 2023. The results suggest that ESG-integrated portfolios offer better risk-adjusted performance and greater resilience during market disruptions.

Beyond portfolio analysis, the research explores how regulatory initiatives like SEBI’s BRSR, the TCFD, and SFDR shape investor behavior and confidence. It also addresses ongoing challenges in the ESG space, such as inconsistent rating standards, lack of transparency, and concerns about greenwashing. By identifying gaps in the literature—especially within emerging markets like India—the study provides a structured foundation for evaluating ESG investing as a sustainable and strategic financial model.