Abstract

This paper critically examines the dynamic and evolving landscape of sustainable finance, exploring the complex interrelations between key investment strategies such as Socially Responsible Investing (SRI), Environmental, Social, and Governance (ESG) investing, impact investing, and thematic investing, alongside the European Union’s Corporate Sustainability Due Diligence Directive (CSDDD). Through an extensive review of 50 scholarly articles and 25 global corporate reports, the study interrogates the conceptual ambiguities and overlapping elements inherent in these frameworks, revealing notable deficiencies in the ethical principles that underpin them. At the heart of this inquiry lies the concept of the duty of care, which compels investors to consider the broader social and environmental implications of their financial decisions. While these investment approaches purport to address pressing global challenges such as climate change and resource scarcity, the findings suggest that many of them prioritise financial returns over ethical considerations, thus compromising their potential to effect genuine change. The paper advocates for a profound re-evaluation of sustainable finance practices, calling for an ethical recalibration that transcends mere profit maximisation. As part of this reappraisal, the paper proposes a revision of the Typology of Sustainable Finance, as articulated by Schoenmaker and Schramade (2018), to embed the duty of care as a foundational principle, thereby offering a more rigorous framework for understanding and implementing sustainable finance. Moreover, the paper considers the EU CSDDD as a significant regulatory advancement, highlighting its potential to reshape corporate accountability and influence sustainable investment practices. Ultimately, this work seeks to contribute to a more coherent, ethically grounded conception of sustainable finance, one that fosters an investment culture truly reflective of social and environmental responsibility.

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