The Technological Landscape of AI and Sustainable Finance: An Exploration

Mahfooz Alam (), Zaid Ahmad Ansari () and Syed Hasan Jafar ()
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Mahfooz Alam: University of the People
Zaid Ahmad Ansari: Qassim University
Syed Hasan Jafar: Woxsen University

Chapter Chapter 3 in Green Horizons, 2025, pp 37-53 from Springer

Abstract: Abstract This chapter explores the dynamics of Artificial Intelligence and sustainable finance. With the enormous adoption of AI across industries, particularly in the financial domain, evaluating the role of AI in promoting Environmental, Social, and Governance (ESG) principles assumes significance. Moreover, with the rising events of the climate crisis, geopolitical risks and health concerns such as the COVID-19 pandemic, investors increasingly seek opportunities aligned with sustainability goals to mitigate the market risks. In recent times, AI has emerged as a powerful tool that assists in anticipating extreme events, thereby revolutionizing the financial decision-making process. Owing to its wider adaptability and evolving nature, there is a noticeable surge in the relevance of AI in the fast-paced global economy. The rise of AI enables investors to make more informed, sustainability-aligned choices by analyzing vast datasets with precision. Machine learning algorithms provide the ability to identify patterns in ESG practices, offering insights that support socially responsible investing. Furthermore, AI-driven sentiment analysis uncovers public opinion on environmental issues, influencing business and investment strategies. In such a short span, AI has shown enormous potential in sustainable finance. Using AI, sentiment analysis can determine public opinion on environmental issues, which can impact business decisions and investment strategies. Moreover, AI facilitates risk management in sustainable finance by analyzing climate-related data and predicting extreme weather events. This empowers investors to mitigate risk and allocate capital toward resilient and sustainable businesses. AI-driven systems can track the performance of renewable energy projects and automate loan approvals; promoting the flow of funds toward sustainable infrastructure development and fostering transparency. Despite its growing importance, ethical considerations remain paramount. The chapter discusses potential biases within AI algorithms and the need for responsible development to ensure AI serves as a tool for positive environmental and social impact.

Keywords: Artificial intelligence; Sustainable finance; ESG; Climate risks (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/978-981-96-6495-5_3

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