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Advancing ESG Portfolio Optimization: Methods, Progress, and Future Directions

Author

Listed:
  • Arisona Lestari Billah

    (School of Business and Management, Institut Teknologi Bandung, Indonesia Author-2-Name: Deddy P Koesrindartoto Author-2-Workplace-Name: School of Business and Management, Institut Teknologi Bandung, 40116 Indonesia Author-3-Name: Taufik Faturohman Author-3-Workplace-Name: School of Business and Management, Institut Teknologi Bandung, 40116 Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)

Abstract

" Objective - The integration of environmental, social, and governance (ESG) criteria into investment portfolios has emerged as a critical field of study, underscoring the interconnectedness between financial markets and global sustainability objectives. Methodology/Technique - This systematic literature review analyzes 157 academic documents, focusing on ESG portfolio optimization methodologies and identifying emerging trends. Key methods reviewed include genetic algorithms, dynamic optimization models, multi-objective optimization frameworks, and machine learning techniques. Findings - Despite considerable advancements, gaps remain, such as the need for broader application across diverse markets and asset classes, improved risk-return assessments, and standardized ESG data reporting. Future research should also investigate the role of central banks and regulators in fostering sustainable finance. Novelty - By addressing these gaps, stakeholders can better align investment practices with sustainability goals, contributing to a more resilient and inclusive global economy. Type of Paper - Review"

Suggested Citation

  • Arisona Lestari Billah, 2024. "Advancing ESG Portfolio Optimization: Methods, Progress, and Future Directions," GATR Journals afr236, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:afr236
    DOI: https://doi.org/10.35609/afr.2024.9.2(2)
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    More about this item

    Keywords

    Sustainable Investment; Sustainable Finance; ESG Portfolio Performance; ESG Risk Management; ESG Portfolio Optimization;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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