AI-Powered Sustainable Finance: An Integrative Taxonomy and Framework of AI Applications for Sustainable Investment Decision-Making
2026-05-25 • Computational Engineering, Finance, and Science
Computational Engineering, Finance, and Science
AI summaryⓘ
The authors review how Artificial Intelligence (AI) is changing sustainable finance by helping analyze and use Environmental, Social, and Governance (ESG) factors in investment choices. They create a clear system to categorize AI methods like machine learning, natural language processing, and optimization algorithms, showing how these tools help with predicting ESG scores, detecting controversies, managing portfolios, and analyzing sustainability reports. Their work highlights how AI can solve problems related to ESG data and improve decision-making in sustainable investing.
Artificial IntelligenceSustainable FinanceEnvironmental Social Governance (ESG)Machine LearningNatural Language ProcessingReinforcement LearningPortfolio ManagementESG Score PredictionOptimization AlgorithmsSustainability Reports
Authors
Eduardo C. Garrido-Merchán, Esther Vaquero Lafuente, Elisa Aracil
Abstract
The integration of Artificial Intelligence into sustainable finance represents a transformative paradigm shift in how Environmental, Social, and Governance factors are analyzed, predicted, and incorporated into investment decisions. This review provides a comprehensive taxonomy of AI approaches applicable to sustainable investment decision-making, categorizing methodologies based on their underlying algorithms and their impact on ESG-related financial processes. The proposed AI Taxonomy includes machine learning paradigms -- including supervised, unsupervised, and reinforcement learning -- as well as natural language processing techniques and optimization algorithms, examining their specific applications in ESG score prediction, controversy detection, portfolio management, and sustainability report analysis. By synthesizing findings from the recent literature, a framework emerges on AI-powered sustainable finance that identifies technological applications to overcome ESG data barriers.