Green finance and sustainable investment: an economic comparative study of ESG integration in portfolio management

This study conducts a comparative economic analysis of environmental, social, and governance (ESG) integration in portfolio management within Uzbekistan’s financial markets from 2020 to 2025. Utilizing data from the Republican Stock Exchange «Toshkent» (UzSE), we compare traditional and ESG-screened portfolios across key metrics including returns, volatility, and risk-adjusted performance. Findings reveal ESG portfolios achieved 2.1% higher average annualized returns, 23% lower volatility, and superior Sharpe ratios (0.92 vs. 0.65), with robustness confirmed via CAPM regressions and event studies around national reforms. Sector reallocations toward sustainable agriculture and finance enhanced resilience amid economic transitions. These results affirm ESG’s value in emerging markets, advocating for policy incentives like green bond frameworks to attract FDI. Limitations include data sparsity, suggesting avenues for future multi-asset research. Ultimately, green finance emerges as essential for Uzbekistan’s sustainable growth trajectory.

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