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Sustainable Finance: Tools, Effectiveness, and Challenges

Author

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  • Caroline Flammer

Abstract

This article provides an overview of recent research on sustainable finance, focusing on the effectiveness, limitations, and challenges of key instruments used in green finance, biodiversity finance, blended finance, and impact investing. Drawing on empirical evidence and conceptual frameworks, this article highlights how these tools can contribute to environmental and social goals. It also examines the role of shareholders and corporate practices in advancing sustainability. In addition, this article discusses the Asian context, where institutional and economic conditions can create distinct opportunities and challenges for sustainable finance. Finally, the article concludes by emphasizing the need for interdisciplinary research given the complex nature of sustainability challenges. JEL Classification: G30, G32, M14, Q01, Q56

Suggested Citation

  • Caroline Flammer, 2026. "Sustainable Finance: Tools, Effectiveness, and Challenges," Asian Economic Policy Review, Japan Center for Economic Research, vol. 21(1), pages 14-19, January.
    • Handle: RePEc:bla:asiapr:v:21:y:2026:i:1:p:14-19
    DOI: 10.1111/aepr.70007
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    More about this item

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • 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

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