Sustainable Finance vs Traditional Finance (Key Differences Explained) | Sustainable Finance Ep. 2
In this video, Prof LJ explains the key differences between traditional finance and sustainable finance and discusses how financial decision-making is evolving in response to environmental, social, and governance (ESG) considerations.
Traditional finance has historically focused on maximizing short-term financial returns and shareholder value. In contrast, sustainable finance expands this perspective by incorporating long-term environmental, social, and governance risks and opportunities into investment and financing decisions.
This lesson explores how the integration of ESG factors is transforming financial markets and how investors increasingly consider sustainability when evaluating risk, performance, and long-term value creation.
This video is part of the Sustainable Finance Series: Financing the Future (Episode 2), designed to deepen learners’ understanding of how financial systems are transitioning toward sustainability-oriented decision-making.
Topics covered:
• Traditional finance and its core characteristics
• Sustainable finance and ESG integration
• Differences in investment time horizon (short-term vs long-term focus)
• Financial risks vs ESG-related risks
• Climate-related risks and stranded assets
• Evolution of finance toward sustainability
• Real-world examples of ESG investing
• Importance of sustainable finance in global development
This lesson is intended for students in Finance, Accounting, Sustainability, and Business, as well as professionals seeking to understand how financial systems are adapting to global sustainability challenges.
For the full Sustainable Finance series, please access the playlist here: • Sustainable Finance – ESG, Green Finance, ...
References:
Schoenmaker & Schramade (2019)
Zhang et al. (2020)
Monira (2024)
Kennedy (2025)
IMF (n.d.)
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