Artificial intelligence in sustainable finance and Environmental, Social, and Governance (ESG) performance: A review

Artificial Intelligence (AI) is rapidly changing sustainable finance and Environmental, Social, and Governance (ESG) performance in particular, but the disjointed nature of current studies does not allow us to fully comprehend how machine learning, ESG analytics, responsible AI, and sustainable investing all contribute to financial decision-making and corporate sustainability performance. Although the context of AI-based ESG scoring, green finance, and data-driven sustainability reporting develops rapidly, the literature is spread out among the fields of finance, management, and technology and requires the application of the PRISMA framework to provide a clear picture of transparency and methodological rigor in systematic reviews. The present review examined the intersection of artificial intelligence, sustainable finance, ESG performance, financial technology (FinTech), climate risk analytics, algorithmic governance, and responsible investing. The paper provides an assessment of the effectiveness of artificial intelligence methods, including machine learning, natural language processing, predictive analytics, and modeling the sustainability of big data, in improving ESG measurement, managing portfolio, risk, and disclosure to sustainability. Specific focus is placed on such new themes as AI-enabled ESG ratings, green innovation, ethical AI, regulatory technology (RegTech), and explainable AI in finance that are becoming highly influential in the international financial markets. The results show that AI drastically enhances the ESG performance analysis, sustainable investment plan, and transparency of the companies and also facilitates the real-time tracking of the environmental and social risks. Nevertheless, the literature also singles out endemic data quality issues, algorithmic bias, governance frameworks, and regulatory compliance as recent concerns that require trusted AI and sustainable digital finance ecosystems.