Financial literacy and its role in promoting sustainable investment
Authors: Glenda M Senaya  
Published: October 2024

Introduction: A recurrent trend has been financial literacy to play a significant role in enhancing effective and sustainable investment decision making, and stability of the economy. This paper explores the complex connection between financial literacy, how it links to sustainable finance, and investments, with much emphasis on the importance of increasing people’s understanding of finance so that they make more sustainable decisions on how to use their money. The challenge gives the research a broad context by demonstrating how financial literacy increasingly influences personal savings, corporate actions, and global economics in general, and how it will impact these dynamics further, especially with the emergence of growing environmental, social and governance (ESG) factors. Materials and Methods: This paper provides a review of extant literature from multiple disciplines, government and policy documents, and research articles. The approach adopted in the research entails identification of relevant premier scholarly articles, financial sector reports, and economic data to achieve a conceptual understanding of the subject. A number of databases and sources have been employed to collect information regarding initiatives in financial literacy, trends of sustainable investment products and their economic impact within the demographical and geographical context. Results: This study also show positive significant relationship between financial literacy levels and sustainable investment behaviour. A study established that people with an improved level of understanding of financial matters will likely plan financially, demonstrate concern in sustainable investments, and make the right decisions consistent with ESG standards. At corporate level, firms with financial literacy executives show improved capability in addressing rigorous sustainable finance odd and incorporating ECG factors in their strategic operations. Additionally, this work recognizes crucial shortcomings in financial literacy of adults and demonstrates internal findings concerning imbalance in financial literacy in relation to the socioeconomic status and the need for focused educational programs. Discussion: In this respect, it becomes evident that financial literacy is a prerequisite on which the future pillars of economic development depend. In particular, the study examines the difficulties in delivering contextual and practical money management content and opportunities for improvement through the development of financial education as a field as well as the use of technology and other engaging methodologies of financial education. It also addresses the strategy of developing a financially responsible society along with policy makers, financial institutions and educational systems to contribute towards sustainable investment. Conclusion: In the following sections, this research will add to the existing literature examining the combinations of financial literacy and sustainable financing. Thus, while presenting the results of the analysis of the effects of financial education on investments and the corresponding financial results, the present study offers methodical knowledge for the policymakers, educators, and financial specialists. The results speak for the need to establish special and specific measures to improve personal financial management in order to create effective solutions for improving investment practices for economic stability and environmental perspectives.