The Impact of Artificial Intelligence on Sustainable Finance: Opportunities and Challenges

Abstract

This article examines the transformative role of artificial intelligence (AI) in sustainable finance, focusing on its applications in green investment screening, risk assessment for ESG (Environmental, Social, and Governance) factors, and portfolio optimization. Drawing on recent empirical studies and theoretical frameworks, it highlights how AI enhances transparency and efficiency while addressing ethical and regulatory challenges. Through a review of literature and a novel table-based analysis of AI-driven ESG performance metrics, the study reveals that AI adoption can improve sustainable investment returns by up to 15% but requires robust governance to mitigate biases. The findings underscore the need for interdisciplinary approaches to balance innovation with accountability in the evolving landscape of sustainable finance.