SUSTAINABLE FINANCE: Integration of ESG criteria into investment processes

This thesis offers a review of the evolution of sustainable finance, with the purpose of providing a mind map encompassing the role of financial players, market dynamics and the contribution of a regulation fostering the consideration of ESG (Environmental, Social and Governance) factors in financial actors’ decision-making. Starting from the definition of sustainable development and sustainable finance, it describes the evolution of sustainable investing by institutional and retail investors as well as the initiatives by third-party information providers and the ability of financial markets to price sustainable factors. The European Commission 2018 Action Plan and its implementing measures focus on increasing the reliability and comparability of information on sustainability of economic activities and financial products, to increasingly channel financial resources to sustainable activities. The European Commission also intervened on the rules of conduct for intermediaries in the provision of investment services as well as on certain corporate governance features. It is also crucial to promote the application of technology to sustainability, to enhance both the quality and comparability of information and the access to capital markets by sustainability-oriented investors and companies as well as the efficiency of compliance by market participants and supervision by securities markets authorities. Finally, the work analyses how ESG factor bring value to firms.