Governing Sustainable Finance: ESG, SDGs, and Power Dynamics in a Geopolitically Divided World

The fusion of political science and financial studies provides a vitally important conceptual framework to analyze the impact of sustainable development agendas on governance in the credit sector. From the perspective of the sub-discipline of International Political Economy (IPE), the incorporation of Environmental, Social, and Governance (ESG) factors can be seen as part of the larger picture of the evolving relationship between the state and the market, wherein the financial system is increasingly being mobilized to support the achievement of public policy agendas in alignment with the United Nations Sustainable Development Goals (SDGs). From this perspective, the ESG frameworks represent the institutional expression of normative political agendas informed by different variants of the capitalist ideal, ranging from liberal variants of market coordination to more interventionist variants informed by the role of the state. At the same time, the rise of the ESG movement can also be seen as the expression of the evolution of the so-called “regulatory state,” wherein the public sector increasingly relies on indirect means of governance to mobilize the market. From this perspective, banks and other credit intermediaries are not only economic actors but also sites of policy implementation.

Nevertheless, the development of ESG as a governance framework is taking place in an increasingly fragmented and contested geopolitical landscape. From a global governance perspective, the relationship between ESG and the SDGs depends on the robustness of global cooperation and shared norms. However, the geopolitical landscape is characterized by a complex interplay of strategic rivalries, energy transitions, and divergent development models. This may have implications for the institutional foundations of global coordination and may lead to a divergence in ESG standards, which may become not only tools of coordination but also instruments of geopolitical competition.

In this context of geopolitical uncertainty and differing models of development, ESG integration is entangled in a complex array of ideological and political debates. It is viewed in relation to the tension between neoliberal and embedded-liberal or social-democratic traditions of economic governance. The emergence of ESG is further reflected in new forms of green industrial policy and geopolitical strategies, where sustainability is increasingly linked to national competitiveness and security concerns. As a result, ESG is positioned within the broader discourse on global public goods and shaped by national and global politics and power asymmetries.

From a political economy viewpoint, central banks and other supranational agencies play a decisive role in shaping ESG adoption. However, these institutions face challenges related to power asymmetries, financial lobbying, and institutional path dependencies. Heightened geopolitical uncertainty and instability may further contribute to divergent ESG standards, complicating efforts to establish a universally applicable sustainable finance framework.

The empirical evidence suggests that ESG has profound implications for the practice of finance, which includes risk management and credit risk. However, the political importance of these changes lies in their implications for resource distribution, prioritization, and public authority and market autonomy. The success and sustainability of ESG depend on its embedding in a specific political and geopolitical landscape.

Despite rising interest in such interdisciplinary research, significant gaps remain in understanding the political factors that shape ESG-based regulation, as well as its political consequences. Specifically, there has been little consideration of the implications of geopolitical fragmentation for the contribution of financial systems to SDG achievement, as well as the different political regimes’ understanding of ESG principles. Such gaps can only be filled by theoretically engaged, empirically grounded research that draws on the IPE, global governance, and comparative political economy literatures.

This Research Topic aims to bring together a collection of articles that critically examine the political factors shaping ESG integration in the banking sector, as well as the implications of such integration for achieving the SDGs in a geopolitically uncertain world. Authors are invited to submit articles that address issues such as: What role do different political ideologies and models of capitalism play in ESG integration? What are the roles of states, central banks, and international organizations in sustainable finance? How does geopolitical competition shape ESG regulation? What policies can balance sustainability demands with the imperatives of a fragmented world order? The aim is to facilitate dialogue among political scientists, economists, and other interdisciplinary researchers, with a specific emphasis on developing theoretically engaged, policy-relevant research on sustainable finance. Particular emphasis is placed on the political factors, institutional constraints, and normative implications of ESG integration in banking, particularly in the European and global context.


Contributions may address, but are not limited to, the following themes:
- Political ideologies, models of capitalism, and ESG policy design
- The regulatory state and the governance of sustainable finance
- Comparative political economy of ESG implementation across regions
- The role of central banks and supranational institutions in global financial governance
- Legitimacy, accountability, and democratic oversight in ESG frameworks
- Political risk, lobbying, and contestation in sustainable finance transition
- Geopolitics, regulatory competition, and fragmentation of ESG standards
- Data governance, AI, and the politics of ESG monitoring and compliance
- Interdisciplinary approaches bridging political science, law, economics, and finance

Article types and fees

This Research Topic accepts the following article types, unless otherwise specified in the Research Topic description:

• Brief Research Report
• Conceptual Analysis
• Data Report
• Editorial
• FAIR² Data
• General Commentary
• Hypothesis and Theory
• Methods
• Mini Review
• ... View all formats

Articles that are accepted for publication by our external editors following rigorous peer review incur a publishing fee charged to Authors, institutions, or funders.

Article types

This Research Topic accepts the following article types, unless otherwise specified in the Research Topic description:

• Brief Research Report
• Conceptual Analysis
• Data Report
• Editorial
• FAIR² Data
• General Commentary
• Hypothesis and Theory
• Methods
• Mini Review
• Opinion
• Original Research
• Perspective
• Policy and Practice Reviews
• Policy Brief
• Registered Report
• Review
• Study Protocol
• Systematic Review
• Technology and Code

Keywords: ESG integration; Sustainable Development Goals (SDGs); International Political Economy; Sustainable finance governance; Geopolitical fragmentation

Important note: All contributions to this Research Topic must be within the scope of the section and journal to which they are submitted, as defined in their mission statements. Frontiers reserves the right to guide an out-of-scope manuscript to a more suitable section or journal at any stage of peer review.