What does "sustainable finance" refer to?

Sustainable finance refers to financial investments that take into account environmental, social, and governance (ESG) factors. This approach is designed to promote positive social and environmental outcomes alongside financial performance. By integrating ESG factors into investment decision-making, sustainable finance aims to foster long-term economic growth that is inclusive and environmentally sustainable.

This understanding reflects a growing recognition that financial activities are interconnected with broader societal challenges, such as climate change, resource depletion, and social inequity. Sustainable finance encourages investors and institutions to support projects and entities that are aligned with sustainable development goals, thereby contributing to the well-being of society and the planet.

The other choices do not align with the definition of sustainable finance. Investing without consideration for sustainability does not reflect the core principles of sustainable finance. Similarly, investments in traditional industries and loans limited to wealthy individuals do not incorporate the critical ESG factors essential for sustainable finance.