Over the past decade, sustainable finance has evolved from a niche theme into a material component of global financial markets and regulatory agendas. What began as a largely voluntary orientation toward environmental and social considerations is now increasingly embedded in market pricing, supervisory frameworks and corporate financing decisions. Climate- and nature-related risks are increasingly being treated as sources of credit risk, valuation uncertainty and balance sheet exposure. Policy initiatives ranging from mandatory sustainability disclosures to prudential oversight are reshaping information flows and incentives across global economies. Despite these developments, financial markets continue to exhibit heterogeneous responses to sustainability-related information. The coexistence of expanding market activity, intensifying policy intervention and uneven pricing outcomes defines the current sustainable finance landscape. This setting highlights the need for analytically grounded perspectives that connect markets, policy and financial decision-making.Against this backdrop, the scale of sustainable finance has continued to expand, particularly within regulated asset management markets. As illustrated in Figure 1, assets managed through sustainable investment funds have grown steadily over recent years, reaching a level that is no longer marginal in relation to broader capital markets. It is important to note that this expansion has been geographically uneven. Europe accounts for the dominant share of sustainable fund assets, reflecting both earlier market adoption and the role of regulatory frameworks in shaping disclosure and product classification. By contrast, sustainable fund markets in the United States and other regions remain comparatively smaller, despite increased policy attention and investor awareness. The resulting regional concentration indicates the importance of institutional and regulatory contexts in determining how sustainability considerations are integrated into financial markets and cautions against interpreting aggregate growth figures as evidence of uniform market behavior.As sustainable finance markets have expanded, policy intervention has become more structured and increasingly binding. This evolution has been shaped by broader international policy agendas, most notably the Sustainable Development Goals (SDGs). The SDGs have provided a common framework for linking financial activity to environmental and social objectives at the global level. They have informed national strategies, regulatory priorities and supervisory expectations. In turn, this has created a reference architecture through which sustainability considerations have progressively entered financial decision-making. In this context, sustainability-related frameworks have evolved from largely voluntary guidance toward formalized disclosure and supervisory regimes, particularly in advanced economies. In the European Union, the introduction of the Corporate Sustainability Reporting Directive and the associated European Sustainability Reporting Standards has expanded the scope, granularity and comparability of sustainability disclosures at the firm level. At the international level, the emergence of baseline reporting standards under the International Sustainability Standards Board reflects parallel efforts to improve the consistency of sustainability-related financial information across jurisdictions. Beyond corporate reporting, sustainability considerations are increasingly incorporated into prudential and supervisory frameworks, including climate stress-testing exercises and supervisory expectations articulated by central banks and financial authorities. Together, these developments signal a shift from aspiration to institutionalization, as sustainability objectives aligned with the SDGs are progressively embedded within the formal rules and infrastructures governing financial markets.What emerges from these developments is a more demanding decision environment for financial actors. Sustainability-related information is now widely available, but its role in financial analysis remains uneven and often ambiguous. Investors, firms and supervisors are confronted with expanding disclosure requirements and growing datasets while continuing to diverge in how such information is interpreted, prioritized and translated into pricing, risk assessment and capital allocation choices. In many cases, compliance has advanced faster than decision integration. This has brought greater transparency, but it has also exposed limitations in the comparability, materiality assessment and operational use of sustainability data. The distance between disclosure practices and decision usefulness has therefore become more visible across markets and institutions. Under these conditions, the central question facing sustainable finance is no longer whether sustainability considerations belong within financial markets, but how they are evaluated, combined with traditional financial metrics and used to inform real economic and financial outcomes. This question defines the analytical space within which the contributions of the Sustainable Finance Review are situated.In financial practice, sustainability considerations enter decision-making through concrete analytical choices rather than abstract objectives. Investors, lenders and firms incorporate such considerations within valuation models, risk assessments and allocation rules that remain primarily financial in nature. Sustainability rarely operates as a standalone signal. It is instead weighed alongside cash-flow expectations, risk premia, cost of capital and balance sheet constraints. In some cases, it affects assumptions about future revenues or costs. In others, it alters perceptions of risk, uncertainty or downside exposure. These integration points differ across decision contexts, but they share a common feature: sustainability influences outcomes only to the extent that it is translated into financial variables that decision-makers recognize and act upon. Figure 2 provides a schematic representation of this integration process within financial decision-making.Decision outcomes diverge because investors, lenders and firms operate under different constraints, incentives and interpretive frameworks. Judgments about materiality vary across investors, lenders and firms, as do the time horizons over which sustainability-related risks and opportunities are assessed. Portfolio mandates, risk tolerance and performance benchmarks further shape how sustainability signals are weighted within financial decisions. Institutional settings also matter. Differences in governance structures, compensation schemes and strategic priorities influence whether sustainability considerations are treated as sources of risk adjustment, return enhancement or long-term optionality. As a result, similar sustainability inputs can lead to distinct pricing, allocation and financing choices across otherwise comparable decision contexts.The way sustainability considerations are incorporated into financial analysis has tangible consequences for capital allocation and market outcomes. Uneven weighting of sustainability-related factors leads to variation in financing conditions and perceived risk across firms and investment contexts. As a result, capital may be directed toward certain activities, while similar sustainability profiles receive weaker financial support elsewhere. This pattern shapes firm-level performance and influences the broader capacity of sustainable finance to affect real economic outcomes. This places the financial treatment of sustainability at the core of debates on the effectiveness and credibility of sustainable finance.The analytical challenges we have outlined above motivate the establishment of the Sustainable Finance Review. Our aim is to provide a dedicated forum for examining how sustainability considerations shape financial markets, institutions and decision-making. As sustainable finance moves from a peripheral concern to a structural feature of the financial system, there is a growing need for research that goes beyond descriptive trends or compliance-oriented analysis. The journal is positioned to address this need by focusing on the interaction between financial mechanisms, policy frameworks and sustainability objectives, with explicit attention to the SDGs as a unifying reference point. Sustainable Finance Review approaches sustainability as an integral component of financial analysis, risk assessment and capital allocation. In doing so, the journal aims to provide a space for work that is analytically rigorous, empirically grounded and directly relevant to both academic inquiry and financial practice.The scope of the Sustainable Finance Review reflects the breadth of issues through which finance interacts with sustainability objectives. The journal welcomes research that examines financial markets, institutions and instruments as channels for mobilizing capital toward environmental and social outcomes aligned with the SDGs. This includes work on corporate finance, asset management, banking and financial intermediation, as well as studies of emerging instruments and market practices. Contributions may address firm-level behavior, investor decision-making or system-level dynamics, provided that the analysis remains grounded in financial logic. Rather than privileging any single domain or methodology, the journal emphasizes coherence between sustainability objectives and financial mechanisms. This focus allows for a broad thematic reach while maintaining a clear anchoring in finance.Contributions to the Sustainable Finance Review may draw on diverse analytical traditions as long as they engage directly with financial reasoning. The editorial board does not privilege any single method or disciplinary entry point. What matters is how sustainability considerations are examined within financial decisions, models and institutional settings. Empirical studies should be transparent in their design and careful in their interpretation. Conceptual work should clarify mechanisms rather than assert positions. Policy-focused analyses are relevant where they shed light on financial behavior or market outcomes. We aim to publish manuscripts that emphasize how sustainability interacts with risk, valuation, performance and capital allocation and why these interactions matter for financial practice and research.The contributions included in this inaugural issue engage directly with the decision-level challenges outlined above and illustrate the range of contexts in which sustainability considerations intersect with financial processes. They span asset management, real assets, corporate valuation and policy-relevant financial channels and employ a variety of empirical and analytical approaches. The first issue highlights multiple pathways through which sustainability considerations influence financial behavior, pricing and capital allocation. This set of contributions reflects the journal's focus on mechanisms, context and decision relevance in the study of sustainable finance.Sabbaghi (2026) examines sustainability-related risk within sustainable investment funds by analyzing the relationship between unmanaged environmental, social, and governance risks and idiosyncratic risk in mutual funds and exchange-traded funds. Using component-level ESG risk measures and asset pricing models, the study shows that environmental and governance risks are associated with higher asset-specific risk, while social risk displays a different relationship. The analysis highlights that sustainability risk is not uniform across ESG dimensions and that aggregate ESG scores may obscure financially relevant variation. This evidence reinforces the importance of decomposing sustainability risks when assessing portfolio-level risk exposure. Vasiliu (2026) approaches sustainability risk through physical climate exposure by examining Canadian real estate investment trusts. Employing a granular multi-hazard exposure index linked to portfolio-level data, the study documents material effects on operating performance, particularly rental revenues and operating metrics, while market-based measures show more limited adjustment. The findings suggest that physical climate risks affect cash-flow generation before they are fully reflected in market indicators. This contribution underscores the role of asset-level exposure and operational channels in shaping financial risk under climate stress.Pop et al. (2026) address the credibility of sustainability-related information by examining the evolution of greenwashing practices in the academic literature. Using a large-scale bibliometric analysis of publications indexed in the Web of Science, the study documents a sharp increase in research attention to greenwashing, particularly in the post-pandemic period. The analysis highlights how growing regulatory pressure, heightened stakeholder scrutiny and persistent gaps in verification mechanisms have contributed to the proliferation of misleading sustainability claims. By mapping thematic clusters, citation patterns and geographical trends, the paper shows that greenwashing has shifted from a marginal concern to a central issue in sustainability discourse. The findings highlight that weaknesses in disclosure standards and assurance practices can distort the informational environment faced by investors and regulators, limiting the effective use of sustainability disclosures in financial analysis and capital allocation decisions.Tonin et al. (2026) examine how stakeholder engagement conditions the relationship between ESG performance and firm market value in emerging economies. Using a sample of listed firms from Mexico, Indonesia, Nigeria and Turkey, the study combines fixed-effects panel regressions with fuzzy-set qualitative comparative analysis to assess both linear effects and configurational pathways. The results indicate that ESG performance is associated with higher market value, but this relationship strengthens when firms exhibit active engagement with stakeholders. Stakeholder engagement does not operate as an independent value driver in isolation; its contribution emerges when aligned with substantive ESG practices. By highlighting multiple pathways through which ESG performance and stakeholder engagement interact, the study shows that valuation effects depend on how sustainability initiatives are embedded within broader relational and institutional contexts in emerging markets.Angeletopoulou et al. (2026) analyze the role of financial and policy factors in shaping sustainable construction activity across the European Union. Using LEED certification points as an indicator of green building investment, the study examines how environmental taxation, public financing, financial development, human capital and energy-related variables influence sustainable construction outcomes. The findings show that targeted public environmental finance, renewable energy development and human capital are positively associated with green building activity. By contrast, broader financial development alone does not consistently support sustainable construction in the absence of complementary policy instruments. The analysis emphasizes that financial systems contribute to sustainability transitions most effectively when aligned with sector-specific incentives and public policy frameworks, particularly in capital-intensive industries such as construction.The contributions in this inaugural issue illustrate the range of financial channels through which sustainability considerations operate, from asset-level risk to sectoral transformation. They also point to persistent challenges in translating sustainability objectives into consistent financial signals. These challenges motivate the research priorities outlined in the following section.The preceding sections reflect that sustainable finance is now firmly embedded in financial markets. Its interpretation and application, however, remain uneven. The next phase of sustainable finance research must therefore move beyond questions of scale, adoption or formal compliance. Against this background, the central challenge lies in how sustainability dimensions are evaluated and utilized. Despite the growing availability of data, uncertainty persists around materiality, weighting and relevance in different financial contexts. Sustainability indicators are typically assessed together with conventional financial metrics. This joint evaluation takes place under imperfect and often noncomparable information, leaving open questions about its effects on pricing, risk and capital allocation. Addressing this gap requires a closer examination of judgment, interpretation and trade-offs within financial decision processes.Progress on these questions requires research designs that move beyond documenting correlations between sustainability indicators and financial outcomes. Greater emphasis should be placed on identifying transmission mechanisms and specifying how sustainability-related factors enter valuation models, risk assessments and allocation rules. Issues of timing, nonlinearity and interaction with conventional financial variables deserve more attention. Continued reliance on composite scores or binary classifications often obscures these dynamics and weakens interpretability. Future research would benefit from decomposing sustainability dimensions and making modeling assumptions explicit. Methodological diversity is appropriate, but analytical coherence and financial reasoning should remain central.These analytical challenges also highlight the importance of context in shaping the relevance of sustainability considerations. Financial effects do not emerge independently of institutional settings, sectoral characteristics or regulatory conditions. Identical sustainability signals can carry different implications across industries, jurisdictions and stages of market development. In some contexts, sustainability considerations influence prices. In others, they affect quantities, financing conditions or access to capital. There are also cases where transmission remains weak or absent. Clarifying these boundaries requires research that is attentive to institutional variation and explicit about the conditions under which sustainability considerations become financially relevant.Within this evolving research landscape, Sustainable Finance Review aims to serve as a forum for work that engages directly with financial reasoning while remaining attentive to sustainability objectives. We would like to prioritize research that is explicit about assumptions, clear about mechanisms and grounded in the realities of financial decision-making, with implications that speak to how financial actors operate in practice. The journal also recognizes that the field will continue to evolve as markets, data availability and regulatory environments change. The research agenda outlined here is therefore not fixed. It reflects an ongoing commitment to analytical rigor, contextual awareness and the production of insights that remain relevant for both academic inquiry and practice.Sustainable Finance Review is launched at a time when sustainability considerations are increasingly integrated into finance, while their analytical implications continue to evolve. The contributions in this inaugural issue reflect both the progress that has been made and the questions that remain open. By providing a space for careful, finance-oriented inquiry into these questions, the journal seeks to support cumulative research. The trajectory of sustainable finance will be shaped over time through evidence, debate and refinement. This journal is intended as one forum in which that process can unfold.
Hasnaoui et al. (Tue,) studied this question.