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Sustainable Finance and ESG Investment
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Sustainable Finance and ESG Investment

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Sustainability and Finance".

Deadline for manuscript submissions: closed (31 December 2025) | Viewed by 19370

Special Issue Editors

Prof. Dr. Yiuman Tse

E-Mail Website
Guest Editor
College of Business Administration, University of Missouri, One University of Blvd, St. Louis, MO 63121, USA
Interests: international financial markets and investments; market microstructure; time series analysis; futures and options; corporate finance; risk management
Special Issues, Collections and Topics in MDPI journals
Dr. Weiqiang Tan

E-Mail Website
Guest Editor
Department of Social Sciences, Education University of Hong Kong, 10 Lo Ping Road, Tai Po, Hong Kong, China
Interests: corporate finance; corporate governance; bank loan contracting; CSR and sustainable finance; China financial market; institutional investor behavior; household finance
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

Sustainable finance refers to financial services that take environmental, social, and governance (ESG) considerations into investment decisions to promote sustainable economic growth and long-term financial stability. Finance managers and investors are increasingly incorporating sustainability risks in their investment processes. Investors use ESG to evaluate a company’s long-term corporate sustainability and risk-return profile. Companies that have high ratings on environmental factors (e.g., climate change and resource use), social factors (e.g., inequality and inclusiveness), and governance (e.g., board and management diversity and execution remuneration) may have lower financial risks and higher longer-term financial stability.

This Special Issue encourages papers examining, but not limited to, the following topics:

  • The role of public policy in motivating investment in sustainability;
  • The relations between ESG scores and firm performance;
  • The complex relations between ESG issues and financial markets;
  • Metrics of ESG scores;
  • Investor and manager motivations for ESG investing;
  • Challenges and opportunities of ESG impacts through financial services;
  • Country cultural differences in ESG investment;
  • Shareholder activism on ESG issues;
  • Sustainable finance that considers the investment chain, asset classes, and different business expertise;
  • Fintech in sustainable finance;
  • Current government regulations and politics of sustainable finance and ESG.

This Special Issue publishes empirical and theoretical research articles that greatly impact Sustainable Finance and ESG.

Prof. Dr. Yiuman Tse
Dr. Weiqiang Tan
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 250 words) can be sent to the Editorial Office for assessment.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1600 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • sustainable finance
  • ESG
  • investment in sustainability

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Further information on MDPI's Special Issue policies can be found here.

Published Papers (9 papers)

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Research

33 pages, 2940 KB  
Article
Sustainability Uncertainty and Green Asset Volatility: Evidence from Decentralized Finance and Environmental, Social, and Governance Funds
by Sirine Ben Yaala and Jamel Eddine Henchiri
J. Risk Financial Manag. 2026, 19(3), 194; https://doi.org/10.3390/jrfm19030194 - 6 Mar 2026
Viewed by 498
Abstract
This study investigates the impact of sustainability-related uncertainty (SRU)—captured via the Sustainability-related Uncertainty Index in equal-weighted (ESGUI_EQ) and GDP-weighted (ESGUI_GDP) forms—on the volatility of green financial assets, focusing on decentralized finance (DeFi) protocols and Environmental, Social, and Governance (ESG)-focused Exchange-Traded Funds (ETFs). Employing [...] Read more.
This study investigates the impact of sustainability-related uncertainty (SRU)—captured via the Sustainability-related Uncertainty Index in equal-weighted (ESGUI_EQ) and GDP-weighted (ESGUI_GDP) forms—on the volatility of green financial assets, focusing on decentralized finance (DeFi) protocols and Environmental, Social, and Governance (ESG)-focused Exchange-Traded Funds (ETFs). Employing a fuzzy logic framework, complemented by 3D surface visualization, Rule Viewer analysis, diagnostic validation, and Granger causality tests, the study uncovers non-linear, asymmetric, and time-varying responses of these assets to sustainability ambiguity. Empirical results reveal a structural divergence: DeFi protocols amplify volatility due to fragmented governance, speculative investor behavior, and sensitivity to policy-driven signals, often exhibiting bidirectional predictive feedback with SRU, whereas ESG ETFs maintain stability through diversification, regulatory oversight, and rigorous ESG screening, primarily absorbing sustainability shocks. These findings extend sustainable finance theory by integrating governance, technology, and policy dimensions, and illustrate the value of fuzzy logic combined with Granger causality in modeling complex, ambiguous markets. From a practical standpoint, the study provides actionable guidance for investors, fund managers, and policymakers, emphasizing the importance of technology-informed governance, standardized ESG disclosures, regulatory sandboxes, and continuous monitoring of SRU. Full article
(This article belongs to the Special Issue Sustainable Finance and ESG Investment)
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20 pages, 632 KB  
Article
To Reward or Not to Reward? Stock Market Reaction to Renewable-Energy Project Awards
by Ines Belgacem and Leila Louhichi
J. Risk Financial Manag. 2026, 19(2), 139; https://doi.org/10.3390/jrfm19020139 - 12 Feb 2026
Viewed by 451
Abstract
This study investigates whether equity markets in a hydrocarbon-based emerging economy react to corporate participation in large-scale renewable-energy investments. Focusing on Saudi Arabia’s National Renewable Energy Program (NREP) during 2017–2024, we examine stock market responses to public announcements of utility-scale solar and wind [...] Read more.
This study investigates whether equity markets in a hydrocarbon-based emerging economy react to corporate participation in large-scale renewable-energy investments. Focusing on Saudi Arabia’s National Renewable Energy Program (NREP) during 2017–2024, we examine stock market responses to public announcements of utility-scale solar and wind project awards involving listed firms. Using an event-study design, we analyze cumulative abnormal returns (CARs) for 42 firm–event observations linked to 21 projects. Expected returns are estimated using the market model, with robustness checks based on market-adjusted and CAPM specifications incorporating the Saudi Interbank Offered Rate (SAIBOR) as the risk-free rate. The results show statistically significant abnormal returns around award announcements, with stronger effects in short event windows. Cross-sectional analyses indicate that market reactions are more pronounced for domestic Saudi firms and increase with project size, suggesting that institutional context and project salience shape investor responses. Overall, the findings provide evidence that renewable project awards are valuation-relevant events in Saudi Arabia’s capital market and contribute to the event-study and green-finance literature in a hydrocarbon-dependent economy undergoing transition under Vision 2030. Full article
(This article belongs to the Special Issue Sustainable Finance and ESG Investment)
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42 pages, 4696 KB  
Article
Analysing South Africa’s King IV Report on Achieving Sustainable Development Goals Through Enhanced Transparency and Sustainability Practices
by Munyaradzi Duve and Benjamin Marx
J. Risk Financial Manag. 2026, 19(2), 137; https://doi.org/10.3390/jrfm19020137 - 11 Feb 2026
Viewed by 2017
Abstract
The study examines the compliance of South African JSE-listed companies with the King IV Report principles on corporate governance and their contribution to Sustainable Development Goals (SDGs). To achieve this, integrated reports were downloaded from the websites of the top 22 JSE-listed companies [...] Read more.
The study examines the compliance of South African JSE-listed companies with the King IV Report principles on corporate governance and their contribution to Sustainable Development Goals (SDGs). To achieve this, integrated reports were downloaded from the websites of the top 22 JSE-listed companies representing six different economic sectors. Using content analysis of the 22 top-performing companies, this study assesses transparency in governance as well as SDG disclosure practices. Results show high compliance with King IV Report principles, especially good performance, legitimacy, and effective control, though full disclosure is not yet achieved. Similarly, while SDG-aligned reporting is robust, only a small percentage of listed companies provided full disclosure on all SDG themes. For regulators, the findings are supportive of stricter reporting and possibly mandatory disclosures aligned with King IV and SDGs. The study’s findings validate the views of stakeholder theory and the triple bottom line framework. Full article
(This article belongs to the Special Issue Sustainable Finance and ESG Investment)
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26 pages, 4700 KB  
Article
Reconciling the Energy-Exposure and Sectoral-Risk Hypotheses: Spillover Effects of Oil Shocks to Clean and Dirty Chinese Stocks
by Eddie Y. M. Lam, Yiuman Tse and Joseph K. W. Fung
J. Risk Financial Manag. 2026, 19(2), 130; https://doi.org/10.3390/jrfm19020130 - 9 Feb 2026
Viewed by 666
Abstract
This paper develops a new direction of study oil-shocks with two competing hypotheses: (i) the Energy-exposure hypothesis, which posits that clean stocks with less direct reliance on fossil fuel should be less sensitive to oil shocks; and (ii) the Sectoral-risk hypothesis, which argues [...] Read more.
This paper develops a new direction of study oil-shocks with two competing hypotheses: (i) the Energy-exposure hypothesis, which posits that clean stocks with less direct reliance on fossil fuel should be less sensitive to oil shocks; and (ii) the Sectoral-risk hypothesis, which argues that dirty stocks are less sensitive to oil shocks because they exhibit more defensive characteristics and can act as safe-haven assets during oil-induced market stress. Our study constructs clean and dirty portfolios based on firm-level carbon intensity for stocks in the Hang Seng Stock Connect China A 300 (HSCA300) Index, decomposes oil shocks into supply, aggregate demand, and oil-specific demand components, and measures return and volatility spillovers with the connectedness framework. The results show that directional spillovers from all three types of oil shocks to the clean portfolio generally exceed those to the dirty portfolio in both returns and volatility, supporting the sectoral-risk hypothesis. However, volatility spillovers from oil-specific demand shocks are stronger for the dirty portfolio, aligning with the energy-exposure hypothesis. Full article
(This article belongs to the Special Issue Sustainable Finance and ESG Investment)
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29 pages, 1709 KB  
Article
The Impact of Corporate Biodiversity Information Disclosure on Green Investment Confidence and Willingness of Retail Investors in China: The Moderating Roles of Risk Aversion and Climate Risk Awareness
by Zhibin Tao
J. Risk Financial Manag. 2025, 18(12), 715; https://doi.org/10.3390/jrfm18120715 - 15 Dec 2025
Viewed by 1134
Abstract
The growing emphasis on environmental sustainability and green finance has intensified the need for effective corporate disclosures, particularly regarding biodiversity. Despite the increasing relevance of biodiversity in global investment strategies, there remains a significant research gap in understanding how corporate biodiversity information disclosure [...] Read more.
The growing emphasis on environmental sustainability and green finance has intensified the need for effective corporate disclosures, particularly regarding biodiversity. Despite the increasing relevance of biodiversity in global investment strategies, there remains a significant research gap in understanding how corporate biodiversity information disclosure influences retail investors, particularly in emerging markets such as China. Based on this, in order to fill this research gap, this study conducts an empirical analysis using valid sample data from 464 retail investors in China and the structural equation modeling method. The results indicate that: (1) Corporate biodiversity information disclosure (CD) has a positive impact on investors’ investment confidence (IC) and investment willingness (IW). (2) Investors’ IC positively influences their IW. (3) Risk aversion (QA) weakens (negatively moderates) the effect of CD on enhancing investors’ IC. (4) QA also weakens (negatively moderates) the effect of CD on promoting investors’ IW. (5) Climate risk awareness (CA) positively moderates the effect of CD on enhancing investors’ IC. (6) CA also positively moderates the effect of CD on promoting investors’ IW. This study enriches relevant theories by emphasizing how psychological factors influence investment behavior and provides important insights for companies, policymakers, and financial intermediaries to promote sustainable investment practices. Full article
(This article belongs to the Special Issue Sustainable Finance and ESG Investment)
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26 pages, 327 KB  
Article
Corporate GHG Emissions and Financial Performance: A Cross-Country Panel Analysis of Sectoral Heterogeneity in Advanced and Emerging Economies
by Marco Hernandez-Vega
J. Risk Financial Manag. 2025, 18(10), 583; https://doi.org/10.3390/jrfm18100583 - 15 Oct 2025
Viewed by 1647
Abstract
As the urgency to address climate change intensifies, understanding the financial implications of corporate greenhouse gas (GHG) emission reduction has become critical. This study examines the relationship between emission reductions and corporate financial performance (CFP) in 468 companies across advanced and emerging market [...] Read more.
As the urgency to address climate change intensifies, understanding the financial implications of corporate greenhouse gas (GHG) emission reduction has become critical. This study examines the relationship between emission reductions and corporate financial performance (CFP) in 468 companies across advanced and emerging market economies (EMEs) from 2010 to 2022. Using a standardized emissions score to mitigate inconsistencies in greenhouse gas (GHG) reporting, we analyze how sectoral and regional dynamics influence financial outcomes using a panel fixed-effects model. The results are mixed: emission reductions are positively associated with CFP in advanced economies and low-emitting sectors. However, companies in high-emitting industries experience a negative relationship between emission reductions and CFP. The findings underscore the need for policies and corporate strategies calibrated by sector and country development status, as the emissions–profitability relationship varies across contexts. Full article
(This article belongs to the Special Issue Sustainable Finance and ESG Investment)
16 pages, 933 KB  
Article
Decoding ESG: Consumer Perceptions, Ethical Signals and Financial Outcomes
by Stacie F. Waites
J. Risk Financial Manag. 2025, 18(7), 361; https://doi.org/10.3390/jrfm18070361 - 1 Jul 2025
Cited by 2 | Viewed by 3774
Abstract
This study investigates how consumers respond to firm communications emphasizing Environmental, Social and Governance (ESG) dimensions. Through experimental design, how consumers distinguish among ESG components and how each affects behavioral finance outcomes, including purchase intentions, willingness to buy and brand trust is assessed. [...] Read more.
This study investigates how consumers respond to firm communications emphasizing Environmental, Social and Governance (ESG) dimensions. Through experimental design, how consumers distinguish among ESG components and how each affects behavioral finance outcomes, including purchase intentions, willingness to buy and brand trust is assessed. Results confirm that consumers perceive the ESG dimensions as distinct from a non-ESG control message. However, the Social and Governance dimensions are perceived as closely related. Importantly, all three dimensions—Environmental, Social, and Governance—significantly improved behavioral outcomes, supporting the persuasive power of ESG messaging. Mediation analyses reveal that perceived ethicality drives these effects across all dimensions, while perceived authenticity plays a stronger mediating role for social messaging. These findings contribute to finance literature by illuminating the consumer-level mechanisms through which ESG communication influences firm value and offer strategic insights for both practitioners and investors seeking to leverage ESG as a market signal. Full article
(This article belongs to the Special Issue Sustainable Finance and ESG Investment)
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22 pages, 3010 KB  
Article
Carbon Intensity, Volatility Spillovers, and Market Connectedness in Hong Kong Stocks
by Eddie Y. M. Lam, Yiuman Tse and Joseph K. W. Fung
J. Risk Financial Manag. 2025, 18(7), 352; https://doi.org/10.3390/jrfm18070352 - 25 Jun 2025
Cited by 2 | Viewed by 3450
Abstract
This paper examines the firm-level carbon intensity of 83 constituent stocks in the Hang Seng Index, constructs two distinct indexes from the 20 firms with the highest and lowest carbon intensities, and analyzes the connectedness of their annualized daily volatilities with four key [...] Read more.
This paper examines the firm-level carbon intensity of 83 constituent stocks in the Hang Seng Index, constructs two distinct indexes from the 20 firms with the highest and lowest carbon intensities, and analyzes the connectedness of their annualized daily volatilities with four key external factors over the past 15 years. Our findings reveal that low-carbon stocks—often represented by high-tech and financial firms—tend to exhibit higher volatility, reflecting their more dynamic business environments and greater sensitivity to changes in revenue and profitability. In contrast, high-carbon companies, such as those in the utilities and energy sectors, display more stable demand patterns and are generally less exposed to abrupt market shocks. We also find that oil price shocks result in greater volatility spillovers for low-carbon stocks. Among external influences, the U.S. stock market and Treasury yield exert the most significant spillover effects, while crude oil prices and the U.S. dollar–Chinese yuan exchange rate act as net volatility recipients. Full article
(This article belongs to the Special Issue Sustainable Finance and ESG Investment)
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25 pages, 5249 KB  
Article
The Impact of Public Environmental Concern on Corporate ESG Performance
by Tsun Se Cheong, Shuaiyi Liu, Ning Ma and Tingting Han
J. Risk Financial Manag. 2025, 18(2), 82; https://doi.org/10.3390/jrfm18020082 - 5 Feb 2025
Cited by 7 | Viewed by 4592
Abstract
Utilizing an advanced machine learning algorithm, particularly the Artificial Neural Network (ANN) framework, this study reveals a significant nonlinear and even cyclical relationship between public concern about environmental issues and the ESG performance of Chinese A-share listed companies, covering the period from 2004 [...] Read more.
Utilizing an advanced machine learning algorithm, particularly the Artificial Neural Network (ANN) framework, this study reveals a significant nonlinear and even cyclical relationship between public concern about environmental issues and the ESG performance of Chinese A-share listed companies, covering the period from 2004 to 2020. The findings highlight the effectiveness of the Self-Organizing Map (SOM)-ANN framework in elucidating the empirical relationship between these variables. We contend that robust public monitoring can enhance companies’ ESG initiatives, and we recommend that policymakers implement a series of measures to safeguard and promote public involvement in decision-making processes. Furthermore, our analysis of the combined effects of public concern and various performance metrics on firms’ ESG outcomes indicates that the diversity among firms is crucial for determining the most appropriate level of public participation in their sustainable development efforts. Therefore, managers and policymakers should focus on firm-specific attributes instead of adopting a “one-size-fits-all” approach to maximize the benefits of public engagement. Full article
(This article belongs to the Special Issue Sustainable Finance and ESG Investment)
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