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Sustainable Finance
[A simplemodel of capital market equilibrium with incomplete information]

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  • Alex Edmans
  • Marcin Kacperczyk

Abstract

Sustainable finance—the integration of environmental, social, and governance (“ESG”) issues into financial decisions—is an increasingly important topic. Within companies, sustainability is no longer an ancillary issue confined to corporate social responsibility departments, but a CEO-level issue fundamental to the core business. Within the investment industry, sustainability used to be the exclusive domain of “socially responsible investors” who had social as well as financial objectives, but is now mainstream and includes investors with purely financial goals. This article introduces the RF Special Issue on Sustainability. It highlights three reasons for the rapid rise in sustainable finance—its financial relevance, its contribution to nonfinancial objectives, and investor tastes. It then summarizes the eight articles in the Special Issue, in particular drawing out their contributions to the literature. Finally, we offer ideas for future research.

Suggested Citation

  • Alex Edmans & Marcin Kacperczyk, 2022. "Sustainable Finance [A simplemodel of capital market equilibrium with incomplete information]," Review of Finance, European Finance Association, vol. 26(6), pages 1309-1313.
    • Handle: RePEc:oup:revfin:v:26:y:2022:i:6:p:1309-1313.
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    File URL: http://hdl.handle.net/10.1093/rof/rfac069
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    References listed on IDEAS

    as
    1. Merton, Robert C, 1987. "A Simple Model of Capital Market Equilibrium with Incomplete Information," Journal of Finance, American Finance Association, vol. 42(3), pages 483-510, July.
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    Citations

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    Cited by:

    1. Kavadis, Nikolaos & Hermes, Niels & Oehmichen, Jana & Zattoni, Alessandro & Fainshmidt, Stav, 2024. "Sustainable value creation in multinational enterprises: The role of corporate governance actors," Journal of World Business, Elsevier, vol. 59(1).
    2. Nilashi, Mehrbakhsh & Ali Abumalloh, Rabab & Keng-Boon, Ooi & Wei-Han Tan, Garry & Cham, Tat-Huei & Cheng-Xi Aw, Eugene, 2024. "Unlocking sustainable resource management: A comprehensive SWOT and thematic analysis of FinTech with a focus on mineral management," Resources Policy, Elsevier, vol. 92(C).
    3. Klinkowska, Olga & Zhao, Yuan, 2023. "Fund flows and performance: New evidence from retail and institutional SRI mutual funds," International Review of Financial Analysis, Elsevier, vol. 87(C).
    4. Andrieș, Alin Marius & Sprincean, Nicu, 2023. "ESG performance and banks’ funding costs," Finance Research Letters, Elsevier, vol. 54(C).
    5. Chollete, Lorán & Hughen, Keener & Lu, Ching-Chih & Peng, Weijia, 2024. "Assessing the volatility of green firms," Finance Research Letters, Elsevier, vol. 64(C).
    6. Beckmann, Joscha & Rogmann, Jennifer, 2024. "Determinants and effects of country ESG controversy," Energy Economics, Elsevier, vol. 131(C).

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    More about this item

    Keywords

    Sustainable finance; ESG; CSR; SRI; responsible business;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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