Artificial Intelligence as a Social Innovation for Advancing Sustainable Finance During the COVID-19 Pandemic

Abstract

Social innovations have played an increasingly prominent role in responding to climate change and systemic crises such as the COVID-19 pandemic. Among these, artificial intelligence (AI) has emerged within the field of sustainable finance, offering novel capabilities for deriving insights, informing decisions, and addressing complex socio-ecological concerns. This dissertation explores whether and how AI, as a social innovation, can contribute meaningfully to sustainable development. Grounded in social innovation theory, this research critically examines both the promise and limitations of AI in addressing the sustainable development goals (SDGs). In parallel, this dissertation engages with environment, social, governance (ESG) practices as an adjacent social innovation, deeply institutionalized but often constrained in their responsiveness to crisis. Through a comparative and critical analysis, this dissertation explores how AI intersects with ESG in supporting firm-level resilience, assessing their respective and combined capacities to support firms navigate periods of crisis. Findings reveal that during the COVID-19 pandemic, AI-generated public sentiment data more strongly correlated with financial returns and market volatility during this crisis than conventional ESG ratings. Moreover, financial interventions (e.g., economic stimulus) proved more effective in stabilizing firm performance than ESG performance. By advancing the theoretical understanding of AI and ESG as distinct yet interreacting social innovations, this research offers new insights into their strategic roles in enhancing organizational resilience and promoting sustainable development. It contributes both academically and practically, bridging sustainability management with emerging technologies, and laying the foundation for future scholarship in a field increasingly shaped by complexity, uncertainty, and techno-solutionist narratives.