Building a Sustainable Financial Future: Exploring Georgia’s Path to Green Finance

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Sustainable finance is becoming a central issue and a critical driver of decision-making for the majority of global investors and policymakers. By taking environmental, social, and governance (ESG) considerations into account, and integrating them into the corporate business strategy, financial institutions are ensuring long-term investments in sustainable economics and contributing to meaningful global change.
However, sustainable goals may conflict with other short-term economic objectives of the institution. Many green projects, such as renewable energy infrastructure and eco-friendly buildings, require large upfront investments, while cost of capital in developing countries is often much higher than in advanced economies. Other challenges, such as regulatory gaps, lack of direct incentives, need for additional competencies, and low awareness, also affect the sustainable finance market. This paper analyses the evolution of sustainable finance over the past decades, and examines the key challenges and prospects associated with sustainable finance in developing countries, particularly in Georgia. The paper also highlights some recommendations that may help address the current challenges and improve the sustainable financial ecosystem in Georgia.