Assessing the Impact of Green Finance on Sustainability in Emerging Markets: Trends, Challenges, and Future Prospects (2000–Present)
Green finance has emerged as a critical mechanism for driving sustainable development, particularly in emerging markets (EMDEs), which often face unique environmental and socio-economic challenges. This research examines the evolution, impact, and future of green finance in these regions from 2000 t...
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| Format: | Article |
| Language: | English |
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Institute for Scientific Research and Development, Ulcinj, Montenegro
2025-04-01
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| Series: | International Scientific Journal "Monte" |
| Subjects: | |
| Online Access: | https://journalmonte.com/publications/article_2025/N10_1/3288.pdf |
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| Summary: | Green finance has emerged as a critical mechanism for driving sustainable development, particularly in emerging markets (EMDEs), which often face unique environmental and socio-economic challenges. This research examines the evolution, impact, and future of green finance in these regions from 2000 to the present, synthesizing insights from academic research, industry reports, and policy analyses. Green finance encompasses a range of financial instruments, policies, and strategies designed to channel investments into environmentally sustainable projects and initiatives, with the overarching goal of mitigating climate change, promoting resource efficiency, and fostering inclusive growth. The historical trajectory of green finance in EMDEs is marked by significant evolution and increasing sophistication. Starting in the early 2000s with limited adoption and a focus on traditional project finance, it has progressed through the rise of green bonds and policy frameworks (2011-2015) to the era of global commitments and sustainable finance (2016-Present), driven by the Paris Agreement and Sustainable Development Goals. Despite this progress, systemic challenges persist, including data and regulatory fragmentation, significant financing gaps (particularly for nature-based solutions (NbS) and transition finance), institutional misalignment, and integrating social dimensions into green finance initiatives. To accelerate the transition to a sustainable and low-carbon economy, emerging markets must overcome these challenges and leverage emerging opportunities in green finance. This requires scaling nature-based solutions, strengthening regulatory coherence through harmonized green taxonomies and mandated climate-related financial disclosures, fostering technology and innovation, and promoting cross-border collaboration. By integrating climate considerations into all capital allocation decisions, the financial industry can play its role in the long-term process of reallocation of capital needed to support the transition. |
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| ISSN: | 2661-2666 |