From Policy to Impact: Ranking Green Finance Instruments for Sustainable Development Goals Achievement

Abstract

This study proposes identifying and ranking the most effective green finance strategies to support the achievement of the Sustainable Development Goals, using a multi-criteria analysis method (TOPSIS) applied to environmental, economic, and social performance criteria. The dataset is based on a constructed evaluation matrix that assesses six green finance instruments across five performance criteria: environmental impact, private capital mobilisation, economic efficiency, institutional feasibility, and social equity. Scores were assigned using a scale from 1 to 10, based on recent empirical studies and policy reports. The findings suggest that carbon market mechanisms achieve the highest performance, mainly due to their strong economic efficiency and their ability to mobilise private capital. Green investment funds and guarantee instruments also perform strongly, as they effectively attract resources and reduce investment risks. In contrast, green bonds and financial regulations are moderately effective due to their indirect or limited impact on capital mobilisation. Subsidies remain important for early-stage transitions but raise concerns related to fiscal sustainability. The results suggest that no single green finance instrument is sufficient to address the multi-dimensional challenges of sustainable development. Instead, an integrated approach that combines market-based instruments, public support mechanisms, and regulatory frameworks is required. Such a balanced policy mix allows the strengths of each instrument to complement one another, thereby enhancing overall effectiveness, reducing trade-offs across criteria, and accelerating progress toward the Sustainable Development Goals. UDC: [005.35+336.02+336.52]:502.131.1; JEL: Q56, Q58, G28