SUSTAINABLE FINANCE AND ITS ROLE IN PROMOTING DEVELOPMENT IN DEVELOPING COUNTRIES
Abstract
This article presents an analytical study on the role of sustainable finance in achieving the Sustainable Development Goals (SDGs), with a particular focus on developing countries. It begins with a central problem: the limited effectiveness of traditional financing in addressing environmental and social challenges. Sustainable finance is thus highlighted as a strategic alternative that combines economic efficiency with social and environmental responsibility. Following a conceptual framework and an overview of global and regional challenges, the study examines successful comparative experiences, such as those of the European Union and China, in order to identify factors of success and areas of failure. The article emphasizes the importance of legal and institutional reforms in enabling developing countries to benefit from sustainable finance, and concludes with a set of recommendations to develop efficient, integrated, and context-appropriate models of sustainable finance.
References
Al-Saleh, Y. and Taleb, H. (2020). Sustainable Finance Awareness in the GCC. Journal of Sustainable Finance & Investment, 10(4). Available at: https://doi.org/10.1080/20430795.2020.1739165
Arab Monetary Fund (AMF) (2022). Green Finance in the Arab Region: Challenges and Opportunities. Available at: https://www.amf.org.ae/en/publications
Delmas, M. and Burbano, V. (2011). The Drivers of Greenwashing. California Management Review, 54(1). Available at: https://doi.org/10.1525/cmr.2011.54.1.64
Economic and Social Commission for Western Asia (ESCWA) (2023). Arab Sustainable Development Report: Financing Gaps in the Arab Region. Available at: https://www.unescwa.org/publications
European Commission (2018). Action Plan: Financing Sustainable Growth. Brussels. Available at: https://finance.ec.europa.eu/sustainable-finance/action-plan_en
European Commission (2022). Sustainable Finance: Annual Review 2022. Brussels. Available at: https://finance.ec.europa.eu/sustainable-finance_en
Government of Rwanda (2011). Green Growth and Climate Resilience Strategy. Kigali. Available at: https://www.rema.gov.rw
Green Finance Initiative (GFI) (2022). Skills for Sustainable Finance: Developing Capacity in Emerging Markets. London.
International Monetary Fund (IMF) (2023). Climate Finance and Economic Stability. Available at: https://www.imf.org/en/Publications/Policy-Papers/Issues/2023/04/12/Climate-Finance-and-Economic-Stability-517960
Javadinasab, H. et al. (2019). Sustainable Financing of Health Promotion Services in Selected Countries. Med J Islam Repub Iran, 33. Available at: https://doi.org/10.34171/mjiri.33.52
Lee, J.W. (2020). Green Finance and Sustainable Development Goals: The Case of China. Journal of Asian Finance, Economics and Business, 7(7), pp.577–586. Available at: https://doi.org/10.13106/jafeb.2020.vol7.no7.577
Liu, Z. et al. (2022). Belt and Road Initiative and Green Finance: A Global Perspective. Sustainability, 14(5). Available at: https://www.mdpi.com/2071-1050/14/5/2844
Ministry of Finance Indonesia (2023). Green Sukuk Framework Document. Available at: https://api-djppr.kemenkeu.go.id/web/api/v1/media/B51F74A2-F8BF-47C7-A77F-DA48C2D33067
Raimi, L. and Bamiro, N.B. (2025). Role of Islamic Sustainable Finance in Promoting Green Entrepreneurship and SDGs in Emerging Muslim Economies. International Journal of Social Economics. Available at: https://www.emerald.com/insight/content/doi/10.1108/ijse-05-2024-0408/full/html
Reuters (2024). Indonesia's New Green Investment Rulebook Includes Coal Power Plants. Available at: https://www.reuters.com/sustainability/sustainable-finance-reporting/indonesias-new-green-investment-rulebook-includes-coal-power-plants-2024-02-20
Streimikiene, D., Mikalauskienė, A. and Burbaite, G. (2023). The Role of Sustainable Finance in Achieving Sustainable Development Goals. Economics & Sociology, 16(1). Available at: https://www.ceeol.com/search/article-detail?id=1169886
United Nations Development Programme (UNDP) (2023). Financing the SDGs in Developing Countries: Annual Review. Available at: https://www.undp.org/publications
UNDP Rwanda (2022). Green Gicumbi Project – Resilience Building through Sustainable Development. Available at: https://en.wikipedia.org/wiki/Green_Gicumbi
United Nations (2015). Transforming Our World: The 2030 Agenda for Sustainable Development. UN General Assembly, A/RES/70/1. Available at: https://sdgs.un.org/2030agenda
United Nations Environment Programme – Finance Initiative (UNEP FI) (2021). Principles for Responsible Banking: Annual Report 2021. Available at: https://www.unepfi.org/prb/report
United Nations Framework Convention on Climate Change (UNFCCC) (2024). COP28 Report: Global Climate Finance Gaps and Solutions. Available at: https://unfccc.int/cop28
Weng, Y.C. and Lin, H. (2023). Evaluating the Impact of Green Finance on Urban Environmental Quality in China. Journal of Cleaner Production, 395.
World Bank (2020). Green Finance and Sustainable Development: Challenges and Opportunities. Washington, DC. Available at: https://documents.worldbank.org/en/publication/documents-reports/documentdetail
World Bank (2021). Economic Diversification and Sustainability in the Gulf Cooperation Council. Washington, DC. Available at: https://documents.worldbank.org/en/publication/documents-reports/documentdetail
World Bank (2024). Pioneering Sustainable and Inclusive Finance in Rwanda. Available at: https://www.worldbank.org/en/news/feature/2024/11/14/pioneering-sustainable-and-inclusive-finance
World Commission on Environment and Development (WCED) (1987). Our Common Future. Oxford: Oxford University Press. Available at: https://sustainabledevelopment.un.org/content/documents/5987our-common-future.pdf
World Economic Forum (WEF) (2022). Financing the Transition to Sustainable Economies: Global Challenges and Policy Options. Geneva. Available at: https://www.weforum.org/reports/financing-the-transition-to-sustainable-economies
Ziolo, M., Bak, I. and Cheba, K. (2021). The Role of Sustainable Finance in Achieving SDGs: Does It Work? Technological and Economic Development of Economy, 27(1). Available at: https://doi.org/10.3846/tede.2020.13863
Ziolo, M., Fidanoski, F., Simeonovski, K., Filipovski, V. and Jovanovska, K. (2017). Sustainable Finance Role in Creating Conditions for Sustainable Economic Growth and Development. In: Leal Filho, W. et al. (Eds.), Sustainable Economic Development. Cham: Springer. Available at: https://doi.org/10.1007/978-3-319-45081-0_11
Views:
29
Downloads:
25
Copyright (c) 2025 Amina Khettabet, Hocine Elamine Cheriet, Hakim Hallab
This work is licensed under a Creative Commons Attribution 4.0 International License.
All articles are published in open-access and licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0). Hence, authors retain copyright to the content of the articles.
CC BY 4.0 License allows content to be copied, adapted, displayed, distributed, re-published or otherwise re-used for any purpose including for adaptation and commercial use provided the content is attributed.
