From Green Rhetoric to Financial Resilience: ESG Literacy and Climate-Aligned Investment in the AI Era

TY - CHAP

T1 - From Green Rhetoric to Financial Resilience

T2 - ESG Literacy and Climate-Aligned Investment in the AI Era

AU - Sahiner, Mehmet

N1 - © 2026 The Author(s), under exclusive license to Springer Nature Switzerland AG

PY - 2026/8/18

Y1 - 2026/8/18

N2 - Climate change and sustainability concerns have rapidly reshaped the financial landscape, elevating environmental, social, and governance (ESG) considerations from niche rhetoric to mainstream imperatives. This chapter examines how ESG literacy and the governance of artificial intelligence jointly shape the credibility and effectiveness of climate-aligned investment. We develop a conceptual framework showing that limitations in investor capability, fragmented disclosure regimes, and algorithmic opacity interact to weaken ESG signals and facilitate greenwashing. Drawing on evidence from ESG disclosure regulation, sustainable finance instruments such as green bonds, and AI-based ESG analytics across continents, we show that AI can either strengthen or undermine climate alignment depending on transparency, auditability, and institutional oversight. When ESG literacy is low and analytics are opaque, AI amplifies mispricing and exclusion; when literacy and governance are strong, AI improves climate-risk assessment and supports financial resilience. The analysis identifies policy priorities for disclosure design, oversight of ESG products and data providers, prudential treatment of climate risk, and capability-building in ESG and AI. Overall, the chapter establishes that climate-aligned finance depends less on expanding ESG labels than on embedding competence, transparency, and accountability into market infrastructure.

AB - Climate change and sustainability concerns have rapidly reshaped the financial landscape, elevating environmental, social, and governance (ESG) considerations from niche rhetoric to mainstream imperatives. This chapter examines how ESG literacy and the governance of artificial intelligence jointly shape the credibility and effectiveness of climate-aligned investment. We develop a conceptual framework showing that limitations in investor capability, fragmented disclosure regimes, and algorithmic opacity interact to weaken ESG signals and facilitate greenwashing. Drawing on evidence from ESG disclosure regulation, sustainable finance instruments such as green bonds, and AI-based ESG analytics across continents, we show that AI can either strengthen or undermine climate alignment depending on transparency, auditability, and institutional oversight. When ESG literacy is low and analytics are opaque, AI amplifies mispricing and exclusion; when literacy and governance are strong, AI improves climate-risk assessment and supports financial resilience. The analysis identifies policy priorities for disclosure design, oversight of ESG products and data providers, prudential treatment of climate risk, and capability-building in ESG and AI. Overall, the chapter establishes that climate-aligned finance depends less on expanding ESG labels than on embedding competence, transparency, and accountability into market infrastructure.

KW - ESG

KW - Algorithmic governance

KW - Green bonds

KW - Financial resilience

KW - Greenwashing

KW - Artificial intelligence

U2 - 10.1007/978-3-032-29188-2_9

DO - 10.1007/978-3-032-29188-2_9

M3 - Chapter (peer-reviewed)

SN - 9783032291875

SN - 9783032291905

T3 - Sustainable Finance

SP - 187

EP - 208

BT - Financial Literacy in the Age of Artificial Intelligence

A2 - Stiefenhofer, Pascal

A2 - Gunduz, Lokman

PB - Springer

ER -