The Rise of Sustainable Finance: Green Investing, ESG and Impact on Finance Careers (2024)

The move to a more sustainable world has affected every industry, and finance is no exception. Environmentally conscious investing is on the rise. As investors’ priorities shift, companies are held to new standards of accountability, and finance professionals are looking toward a more sustainable future.

In this article, we’ll cover the ins and outs of sustainable finance and discuss how an online master’s in finance can kick-start your career.

Sustainable finance is a relatively new term referring to the process of investing in sustainable or environmentally conscious companies.¹ The goal of sustainable finance is to facilitate the world’s transition to net-zero emissions. By investing private money into green initiatives, investors support the growth of sustainable companies and incentivize sustainability.

Most experts agree that the growth of sustainable finance is inevitable. However, poor definitions, greenwashing (when environmental or sustainability claims are overstated or misleading), and a lack of regulation create roadblocks for green investing strategies.²

ESG stands for environmental, social, and governance. This term refers to a set of criteria used to define ethical or socially responsible investments.³ You might hear “ESG investing” used interchangeably with “green investing.” While these concepts are similar, they aren’t quite the same thing—ESG investing also accounts for a company’s social and environmental projects and governance policies.

Here’s an example of some ESG criteria an investor might look for.

Environmental:

• Limits carbon emissions
• Publishes a transparent sustainability report
• Uses renewable energy

Social:

• Has no connections to potentially exploitative labor practices
• Supports social justice initiatives
• Pays fair wages to both domestic and overseas employees

Governance:

• Has a diverse board of directors
• Holds fair and staggered board elections
• Does not have the CEO serve as chair of the board

In the past few years, ESG stocks have outperformed their industry peers.⁴ Many firms and robo-advisors offer tools to facilitate ESG investing, helping emerging investors find stocks that align with their values.

Financial institutions have played a role in sustainable development since the early 1990s.⁵ In the past 30 years, trends have come and gone, but the impact of sustainable finance has truly become undeniable in the past decade. Today, the demand for ESG investments is higher than ever.

According to a 2021 survey, the majority of ESG investors started prioritizing ESG practices within the past five years, and most plan to continue investing in ESG companies.⁶ The survey also showed that millennial investors are more interested in ESG investing than older generations. This rise in demand for ESG investments has led to a range of new products, strategies, and careers geared toward sustainable finance.⁷

ESG’s impact on the finance industry is inescapable. Professionals entering the sector today must have a basic understanding of ESG investment strategies, regardless of whether they want to specialize in green investments.

Here are a few key ways ESG and green investments impact careers in the finance sector.

Green finance and careers go hand in hand. An emerging professional with a sustainable finance education can pursue a career in corporate sustainability, ESG consulting, regulation and standardization, responsible investing, and more. The drive for more sustainable investments has opened up a range of new paths and opportunities for educated professionals.

ESG metrics help investors hold companies accountable for their practices. Finance professionals, including accountants and consultants, are now responsible for developing and reporting on ESG standards. Investors are more likely to spend time researching a company’s ESG metrics today than in the past—which means firms and investment platforms will allocate more resources to ESG education and green investing tools.

Sustainability impacts all business practices in the finance sector. Without a thorough understanding of the future of sustainable finance, finance professionals risk being left behind. A sustainable finance education gives young professionals a competitive boost at the start of their career. Likewise, professionals who go back to school or pursue an online degree in sustainable finance can secure their career paths and access new opportunities.

ESG’s impact on finance will continue to grow in the coming years as more young investors enter the market. As the threat of climate change becomes ever more urgent, the sector can expect steep growth in green investing practices and products.

That said, sustainable finance also faces some roadblocks. Some of the most pressing issues for the future of green investments include:

• A lack of ESG standardization
• Misinformation and corporate greenwashing tactics
• Unreliable data
• Regulatory gaps
• Low incentives for corporations to meet climate goals⁸

Fortunately, these challenges present an opportunity—a chance for innovative, educated professionals to pursue careers in sustainable finance. With improved data and reporting, standardization, regulation from third-party organizations, and other innovations, sustainable finance can hold companies accountable and foster a greener future.

A sustainable finance education is one of the best ways to gain a competitive edge in the finance sector today. The rising demand for ESG investments has created new career opportunities—with the right education, you can launch a successful career in finance and have a positive impact on the world.

If you’re passionate about finance and the environment, consider the Online Master of Science in Finance from William & Mary’s Raymond A. Mason School of Business. The program is designed to foster innovative thinking and educate students on ESG and sustainable investment practices. The Online MSF program prepares future CFOs with the quantitative and leadership skills necessary to identify value-creation opportunities and assess risk, navigate global challenges, foster change and create value in an ethical manner.

Schedule a call with an admissions outreach advisor today to learn more about launching your career in sustainable finance.