Sustainability, climate change and financial innovation: Future research directions

Abstract

In 2015, the United Nations embraced the Sustainable Development Goals (SDGs) as a worldwide appeal to safeguard the Earth, eradicate poverty and hunger, and advance equality and diversity, among other objectives, by 2030. Climate change has led to recent episodes of environmental disasters, coupled with the COVID-19 crisis and geopolitical and economic instability (Heo, 2024). Climate change also poses the greatest risks to vulnerable companies, such as those with the most debt (El Ghoul et al., 2024), thereby exacerbating existing risks and instabilities. Investigating how technology and financial innovation can contribute to achieving the SDGs has become a key policy concern within the realm of sustainable finance.Several countries around the world have adopted new initiatives aiming at a gradual transformation to greening their financial systems by repositioning their investments towards inclusive, net-zero carbon and resilient economies. There is no doubt that funding the transition to a green, sustainable, low-carbon economy is a major challenge. Financial innovation has changed the landscape of financial markets and plays a key role in developing new instruments for critical sustainability solutions (e.g., green, blue, and Social/Sustainabilitybased sustainability-based bonds