THE MARKET OF SUSTAINABLE INVESTMENT: THEORETICAL PRINCIPLES AND SPECIFICS OF DEVELOPMENT

Abstract

The article examines the theoretical foundations of the sustainable investment market in contemporary economic relations. The study emphasizes that sustainable investments are financial allocations that integrate environmental, social, and governance (ESG) factors into decision-making processes, combining economic returns with positive environmental and social impacts. The research outlines the evolution of approaches to sustainable investment, from the emergence of “green bonds” and ecological finance instruments to the current multidimensional ESG-based paradigm, which reflects the growing role of responsible finance in shaping global capital markets. A classification of sustainable financial instruments is presented, including green, blue, social, and mixed instruments, as well as sustainability-linked products tied to performance indicators. The article highlights that the key criterion for distinguishing sustainable instruments is their functional orientation (ecological, social, or integrative), while sectoral orientation (green, blue, transitional, etc.) reflects specific areas of application. The international regulatory environment is analyzed, with special attention given to the EU framework (Taxonomy, SFDR, CSRD), the United States (SEC disclosure rules), and China (state-led green finance taxonomy and incentives). It is shown that the EU applies a strong regulatory model with mandatory disclosure and harmonized standards, the United States relies on market activism driven by institutional investors supported by regulatory disclosure reforms, and China uses centralized state coordination combined with large-scale private capital mobilization. The paper also explores challenges of sustainable investment development in Ukraine, where the market remains at an early stage. Barriers include insufficient transparency, lack of unified standards, institutional uncertainty, and limited investor confidence. Nevertheless, steps have been taken at the legislative level, such as the possibility of issuing green bonds, recommendations for project selection by the National Securities and Stock Market Commission, and the adoption of strategic climate policy documents. Based on a systemic and comparative analysis of international practices, the article concludes that Ukraine must establish a national taxonomy of sustainable investments harmonized with European standards and adopt specialized legislation to enhance investor trust and facilitate integration into global sustainable finance flows. The findings confirm that sustainable investments play a fundamental role in modernizing economic processes, redirecting capital from traditional polluting sectors toward sustainable industries, stimulating innovation, creating new jobs, raising standards of corporate governance, and reinforcing the interconnection between state and business in the pursuit of long-term resilience and sustainable development.