PROSPECTS AND RISKS OF GREEN INVESTMENTS

Аннотация

Green investments are becoming increasingly important in the context of the global transition to a sustainable economy, but their effectiveness remains questionable due to the associated risks. This article provides a qualitativeanalysis ofthe prospects and risks of green investmentsbased onareview of academicliterature, reports from international organizations, and financial data. The results show a steady increase in investments and green bond returns, butreveal problems ofmarket volatility, technological uncertainty, and “greenwashing”. Keywords:green investments, sustainable development, renewable energy, risks, returns, greenwashing, regulation. Introduction. Modern global challenges such as climate change, ecosystem degradation and depletion of non-renewable resources highlight the need to transition to sustainable models of economicdevelopment. Green investment, which includes financial investments inrenewable energy projects, energy efficiency, sustainable land management and low-carbon technologies, is seen as one of the key mechanisms for achieving this goal. According to the International Energy Agency (IEA, 2024), clean energy investment in 2023 will amount to US$1.74 trillion, reflecting its growing role in the global economy and efforts to meet the commitments of the Paris Agreement. This growth has been accompanied by increased government support, including subsidies and tax breaks, as well as increased interest from private investors and corporations. However, despite the obvious potential, green investments are associated with significant risks, such as financial market instability, technological uncertainty, and cases of “greenwashing” where the environmental performance of projects is exaggerated. This study aims to systematically analyse the prospects and risks of green investments in order to assess their contribution to sustainable development and identify critical factors influencing theirlong-term performance. To analyze the prospects and risks of green investments, this study used a qualitative approach based on a review of secondary data and a synthesis of existing scientific and practical sources. The main bodyofinformation was collected from three types ofsources: 1) scientific publications, including articles in peer-reviewed journals on economics, ecology andsustainabledevelopment (e.g. Journal ofSustainableFinance & Investment); 2) reports from international organizations such as the International Energy Agency (IEA), the United Nations Environment Programme (UNEP) and the World Bank, providing statistics and cases ongreen investments; 3)data from financial analytical platforms and reports from companies implementing projects inthefield ofrenewable energy and energy efficiency. The analysis process included the following steps: first, systematization of data on the dynamics of green investments, including investment volumes and key sectors (for example, solar and wind energy); secondly, the identification of success factors and risks based on a comparative analysis of successful projects (such as investments in offshore wind farms in Europe) and cases of failure (such as bankruptcies of companies in the biofuels sector). To assess the risks, particular attention was paid to studying the literature on greenwashing and regulatory gaps in the regulation of environmental investments. The analysis was conducted page401 INTERNATIONAL JOURNAL OF ARTIFICIAL INTELLIGENCE ISSN:2692-5206,ImpactFactor:12,23 AmericanAcademicpublishers,volume05,issue05,2025 Journal: https://www.academicpublishers.org/journals/index.php/ijai using qualitative methods such as thematic coding and critical review, which allowed us to identify key trends and contradictions in the development of green investments. A limitation of this approach is the lack of primary empirical data, but the use of authoritative sources ensures thereliability ofthe conclusions. An analysis of the prospects and risks of green investments has revealed both significant potential and significant challenges associated with their implementation. The prospects for green investment are confirmed by the steady growth of financial investments in the sustainable development sector. According to the International Energy Agency (IEA, 2024), global investment in renewable energy in 2023 reached US$1.74 trillion, of which 45% was directed towards solar and wind energy. This growth is accompanied by an increase in the number of projects supported by government subsidies and international agreements such as the Paris Agreement. In addition, long-term returns on green investments have shown positive dynamics: the average yield on green bonds was 4.2% per annum over the period 2019-2023 (Bloomberg, 2024). However, the analysis also identified significant risks that limit the effectiveness of green investments. Among them, market volatility, technological uncertainty and cases of greenwashing stand out. For example, in the biofuels sector, a number of