Sustainable finance is critical for solving global concerns such as climate change, social inequality, and fostering a circular economy, which seeks to decouple economic progress from resource extraction and waste production. This study explores how sustainable finance tools, such as green bonds, microfinance, and impact investing, can advance financial inclusion and sustainable development in developing countries. Employing a mixed-methods approach that encompasses financial analysis alongside case studies from Sub-Saharan Africa, Asia, and Latin America, the study discerns both successful initiatives and ongoing challenges in reconciling CE objectives with financial accessibility. The results indicate that the global green bond issuance exceeded $575 billion in 2023, while efforts toward financial inclusion have enabled mobile money access for over 70% of the adult population in Sub-Saharan Africa. Nevertheless, the uptake of CE remains constrained, with merely 7.2% of materials within the global economy being classified as circular. These findings emphasize the necessity for integrated policies and innovative financial instruments to dismantle systemic obstacles and amplify sustainable finance solutions in resource-limited contexts. The study contributes to the literature by building on the existing frameworks and offering an integrated approach that provides empirical insights and pragmatic strategies for policymakers and financial institutions to enhance sustainable development and foster equitable economic growth, addressing gaps in traditional finance and regulatory frameworks to support circular economy adoption in resource-constrained nations.

This study examines the effect of international financial flows, including investments and development assistance, on the expansion of renewable energy technologies. It also seeks to investigate the impact of the sectoral economy on the proportion of renewable energy consumption in Ethiopia. This study used an explanatory research design and a quantitative research approach. An autoregressive distributed lag model was applied to explore the long and short-term relationship among variables. A time series of data aggregated and disaggregated ranging from 2000 to 2022 was used. According to this study, sustainable finance programs are essential for advancing and aiding renewable energy projects in the long and short term. Ethiopia’s use of renewable energy will increase as sustainable finance rises. The main economic sectors determining Ethiopia’s consumption of renewable energy in the long and short term include the manufacturing, mining and service industries. This study’s findings imply that policies focusing on providing continuous financial support and fostering international cooperation to promote the development of the manufacturing sector are needed. This could include incentives for adopting renewable energy technologies and investing in renewable energy infrastructure. On the other hand, since the service and mining industries negatively impact renewable energy use, there is a need to diversify renewable energy sources beyond these sectors. This could involve promoting renewable energy projects in other sectors, such as manufacturing, agriculture, construction and trade. Based on the findings of this study, it is suggested that policymakers carefully consider the consequences within each economic sector when formulating decisions related to renewable energy. This study is novel in presenting empirical evidence linking renewable energy use to long- and short-term economic growth.

This study examines how corporate social responsibility (CSR) influences sustainable finance outcomes (SFO) in the Ethiopian Insurance industry through environmental, social, and governance (ESG) practices and institutional challenges (IC). Using covariance-based structural equation modelling (CB-SEM) with data collected from a primary survey, the results show that CSR has both a direct and an indirect positive effect on SFO through ESG. However, the adoption of ESG practices also tends to increase institutional challenges, which in turn negatively influences SFO. This interaction produces a competitive partial mediation effect. The serial mediation path CSR–ESG–IC–SFO is found to be negative, suggesting that enabling and constraining forces operate simultaneously. From a theoretical point of view, the study combines stakeholder, legitimacy, and institutional theories to explain this competitive mediation within a less-studied Sub-Saharan African (SSA) frontier market. On the practical side, the findings highlight the importance of establishing ESG disclosure standards, investing in capacity building, and strengthening governance systems to reduce institutional frictions and make CSR a stronger driver of sustainable finance.

Despite the growing global emphasis on sustainable finance as a driver of the circular economy, the organisational mechanisms through which financial intermediaries translate circular economy financing into tangible sustainable development outcomes remain underexplored, particularly in institutionally constrained environments. This study investigates how microfinance institutions (MFIs) in Ethiopia-a critical case of an institutional void-convert circular economy financing and green finance into perceived SDG-aligned performance, particularly contributing to SDG 1 (No Poverty), SDG 7 (Affordable and Clean Energy), SDG 8 (Decent Work and Economic Growth), and SDG13 (Climate Action). Drawing on the Resource-Based View and Dynamic Capabilities theory, we propose a sequential capability-building pathway, where green innovation and organisational resilience mediate the finance-to-performance relationship. Using survey data from 287 senior managers across 23 licensed Ethiopian MFIs, we employ covariance-based structural equation modelling (CB-SEM) to test the hypothesized relationships. The results reveal that organisational resilience (β = 0.500, p < .001) and green innovation (β = 0.241, p = .003) are the primary direct drivers of perceived SDG-aligned performance. Mediation analysis confirms that circular economy and green finance operate indirectly through green innovation, which in turn fosters organisational resilience (CEF ➔ GI ➔ ORE ➔ SDG: β = 0.142, P < .001). Findings highlight that sustainable finance achieves impact through capability development rather than direct capital allocation, underscoring the need to institutionalize internal adaptive capabilities for effective circular economy transitions.