Teaching ESG and investment risk: transforming finance education for a sustainable future

This article explores the critical evolution of modern finance education, arguing for the systematic integration of Environmental, Social, and Governance (ESG) factors into traditional investment risk curricula. Through a reflective pedagogical lens, the study highlights a growing disconnect between conventional financial models—such as the Modern Portfolio Theory (MPT), beta estimation, and regression outputs—and the complex realities of contemporary global markets, where corporate governance failures, environmental crises, and social controversies act as core determinants of firm value. The analysis reveals a paradigm shift in student expectations and market demands, moving away from pure profit maximisation toward ethical and sustainable investing. Ultimately, the paper posits that contemporary risk should no longer be defined merely through statistical volatility, but rather through structural, regulatory, and ethical vulnerability. It calls for a fundamental transformation in training future financial professionals, positioning ESG variables not as peripheral topics, but as internal, non-diversifiable components of comprehensive financial risk assessment.