Financial Literacy in Promoting Sustainable Finance

Abstract

. In an era marked by heightened environmental awareness and concerns about the long-term health of our planet, sustainable finance has gained significant traction as a means to align financial activities with environmental, social, and governance (ESG) principles. At the heart of this transformation lies the pivotal role of financial literacy, empowering individuals and institutions to make responsible, ethical, and sustainable financial decisions. Drawing on a comprehensive review of existing literature and empirical evidence, we dissect the various ways in which financial literacy influences sustainable finance with its intricate symbiotic interplay between them, unravelling how financial literacy plays a vital role empowering individuals, institutions, and communities to advance sustainable, responsible, and ethical financial decisions. The findings of this research reveal that a straight correlation exists amid financial literacy and adoption of sustainable financial practices basis the historical literature review in the subject of study. Persons with advanced levels of financial literacy are more likely to capitalize in sustainable funds, make eco-conscious consumption choices, and engage in responsible savings practices. Moreover, we also propose, a linear regression equation, a mathematical model called as FLaSE Model that determines the efficacy of financial literacy in promoting sustainable finance. Finally, we discuss as how this synergy amongst the financial literacy and sustainable finance serves as a linchpin that empowers individuals to become active participants in battle against climate change & promotion of sustainable practices that respects and supports the principles of ESG.