Beyond ESG: Regenerative finance, a new investment paradigm

For two decades, the ESG framework has established itself as the dominant reference for integrating socio-environmental issues into finance. It has helped formalize non-financial criteria in investment decisions, disseminate standards and reporting tools, and institutionally legitimize the idea of sustainable finance. However, a growing body of literature highlights its structural limitations. First, ESG approaches remain largely procedural and compliance-oriented. They prioritize the implementation of policies, codes of conduct, and standardized indicators rather than the effective transformation of biophysical and social systems. Second, they are often used primarily as risk management tools and for optimizing the risk-return trade-off, rather than as levers for transforming economic models. Moreover, the dominant logic remains that of the "least bad." The priority is to reduce negative externalities or slow the degradation of natural and social capital, rather than to produce net positive effects at the ecosystem and community levels. Finally, the rise of ESG ratings and labels is accompanied by significant methodological differences, sometimes weak correlations between scores, and a growing gap between reported performance and concrete results in terms of climate, biodiversity, or inequality. It is in this context that the concept of regenerative finance is emerging, presenting itself not merely as a marginal complement to ESG, but rather as the promise of a paradigm shift in how we approach investment. Describing regenerative finance as a “new paradigm” implies that it is not simply an extension of ESG, but a reconfiguration of fundamental questions. Instead of asking how to minimize ESG risks to protect shareholder value, the question becomes how to allocate capital to sustainably increase the life-sustaining capacity of the systems upon which the economy depends. Rather than simply greening existing portfolios, it is becoming necessary to examine the types of assets, business models, and economic relationships that need to be created to make regeneration financially viable on a large scale. This transition is far from linear. It encounters institutional inertia, misaligned financial incentives, and cognitive habits inherited from decades of financialization. Nevertheless, the accumulation of ecological and social crises is making the economy's profound dependence on living systems increasingly visible. This reinforces the relevance, both academic and practical, of a systematic exploration of regenerative finance.

Track chairs:

Aymen HABIB (habiba@excelia-group.com)

Mohamed OUIAKOUB (mohamed.ouiakoub@univ-lorraine.fr)