In the evolving world of finance, Environmental, Social, and Governance (ESG) principles are no longer an optional consideration for companies and investors — they are central to financial decision-making and corporate strategy. For university students studying finance, understanding ESG is essential to preparing for a career in this increasingly responsible and regulated financial environment. Teaching staff, too, must adapt to incorporate this vital subject into the curriculum, ensuring students not only grasp the traditional financial concepts but also appreciate the role of sustainability in the global economy.
ESG refers to the set of criteria used to evaluate a company’s environmental impact, social responsibility, and governance practices. Companies today are being scrutinized not just for their financial performance but for their role in promoting sustainability, equality, and ethical governance. As noted in the recent report, Taking Stock of the New Scenarios, the inclusion of ESG in corporate strategy is no longer a “nice-to-have” but a “must-have” in the financial world.
Why ESG matters in finance education
For students in finance, integrating ESG into their learning is crucial, not only to understand the factors that drive investment decisions but also to appreciate how financial markets interact with broader societal issues. Sustainability and social impact are no longer niche areas of interest but are increasingly driving investment flows. Large institutional investors now routinely incorporate ESG metrics into their portfolios, looking for companies that are resilient, transparent, and committed to sustainable practices.
Finance curricula must reflect these changes by teaching students how to assess ESG factors and incorporate them into financial analysis. This involves more than understanding balance sheets or profit and loss accounts — it means learning to evaluate a company’s carbon footprint, its commitment to diversity and inclusion, and the transparency of its governance structure. Students must become adept at identifying how environmental risks, such as climate change or resource scarcity, can affect a company’s operations and long-term viability. Equally important is analyzing a company’s social impact, including labor practices, community engagement, and supply chain ethics, which are increasingly linked to both brand loyalty and regulatory scrutiny. Governance, too, plays a crucial role; students need to assess not just financial oversight but the overall ethical framework within which companies operate, including board diversity, executive compensation, and anti-corruption measures. These elements are no longer peripheral to financial performance — they are integral to assessing a company’s risk profile, long-term profitability, and its ability to attract investment. This holistic approach is becoming critical for shaping the next generation of responsible investors and financial analysts who must balance traditional financial metrics with sustainable, ethical considerations in an increasingly complex global market.
From theory to practice: embedding ESG in the classroom
One of the key educational benefits of teaching ESG is its ability to combine theoretical knowledge with real-world applications. Students can learn not just about the financial metrics that underpin ESG but also about the challenges and opportunities companies face in aligning with ESG standards. For example, examining case studies of companies that successfully implement ESG strategies, or those that fail to meet these standards, can offer invaluable lessons in how ESG impacts business performance and market perceptions.
Moreover, integrating tools like ESG disclosure platforms or sustainability reporting frameworks — such as the Global Reporting Initiative (GRI) or the EU’s Corporate Sustainability Reporting Directive (CSRD) — into classroom discussions can provide students with practical skills that are immediately applicable in the workplace. These tools help students learn how to evaluate ESG reports and understand the compliance frameworks that shape modern business practices.
The future of finance education: beyond profitability
ESG also provides educators with an opportunity to discuss the broader societal role of finance. This is where ESG transcends pure profitability and moves into discussions about the responsibility of finance professionals in addressing global challenges, such as climate change or social inequality. By emphasizing the growing importance of sustainability in corporate and financial decision-making, students are better prepared to become leaders who will drive positive change in the global financial system.
As ESG continues to reshape the financial landscape, universities must ensure that their curricula keep pace. By embedding ESG into the core of finance education, both students and educators will be equipped to navigate this new era of responsible finance.
