The Rise of Green Finance: How ESG Investments Drive Corporate Sustainability and Profitability

Chairul Suhendra, Muhammad Sani Kurniawan, Nina Marlina

Abstract


The growing prominence of ESG investments has reshaped global financial markets by positioning sustainability as a key factor in corporate profitability. This study explores how ESG integration affects corporate sustainability and financial performance across various regions. Using a qualitative exploratory case study approach, data were collected through interviews and secondary sources, and then analyzed thematically. Triangulation ensured the validity of findings within different industry and regulatory contexts. Results show that companies adopting ESG principles tend to achieve better operational efficiency, risk management, and stakeholder trust, contributing to higher Return on Assets (ROA) and Return on Equity (ROE). North America and Europe lead ESG adoption due to strong regulatory frameworks and investor interest, while other regions face regulatory and structural barriers. However, widespread ESG implementation is still challenged by inconsistent reporting standards, greenwashing risks, and high compliance costs. To overcome these issues, the study recommends harmonizing regulations, increasing transparency in ESG reporting, and leveraging financial technologies to improve disclosure accuracy. These findings offer practical guidance for investors, policymakers, and corporate leaders to enhance ESG strategies and support sustainable, long-term business value creation.

Keywords


ESG Investments; Corporate Sustainability; Financial Performance; Green Finance; Return on Assets

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References


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DOI: https://doi.org/10.15548/al-masraf.v10i1.1675

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