Financing Sustainability

Sustainability thinking is rapidly gaining traction. It offers an inspiring vision for the future of the world and provides significant business and investment opportunities. Based on insights from over 300 empirical studies, this book explores the possibilities in the field of renewable energy finance, carbon trading, and sustainable investing. In addition, it describes innovative finance mechanisms – such as green bonds and peer-to-peer lending – that may further spur environmental and social sustainability. By taking an empirical, fact-based approach, this book aims to provide investors, business executives, and policymakers with a more thorough understanding of how sustainable finance can create value for business and society. Key words: Sustainable finance, renewable energy finance, cleantech, green investing, sustainable investments, responsible investments, carbon trading, carbon finance, ESG, impact investing.

Combining theory, empirical data, and policy this book provides a fresh analysis of sustainable finance. It explains the sustainability challenges for corporate investment and shows how finance can steer funding to certain companies and projects without sacrificing return, speeding up the transistion to a sustainable economy.

This book is among the first to address the issue of assessing the efficiency of sustainable development financing from a theoretical and methodical point of view. The innovative nature of research is expressed through the study of new phenomena in finance including sustainable financial systems, sustainable finance, ESG risk and individual and institutional motivations of financial managers in the sustainability concept. The book aims to draw attention to the significant gap in the existing research.The concept of Sustainable Development, if placed in an economic category, requires a lot of attention, but seeing the cognitive category from the perspective of the discipline of finance, the latter is unsatisfactory, with questions remaining unanswered. At the same time, the rank problem, its strategic dimension and the amount of financial resources allocated and disbursed for the purposes of focusing around sustainable development, identification of financial phenomena accompanying this category is seen as a priority. Most measures financing Sustainable Development and measures of public spending efficiency are measures subject to rigor and rules due to their specificity, which means actions aimed at increasing efficiency are treated as a priority. This book will be of interest to leading representatives of academia, practitioners, executives, officials, and graduate students in economics, finance, management, statistics, law and political sciences.

Long term asset owners and managers, while seeking high risk-adjusted returns and efficiently allocating scarce financial capital to the highest value economic activities, have the essential and formidable role of ensuring the sustainability of return. But generally accepted financial accounting methods are ill-equipped to provide clear signals of the risks and opportunities created by scarce natural and human capital. Hence many investment managers in global financial markets, while performing due diligence on portfolio companies, examine metrics of non-financial performance, especially environmental, social and governance (ESG) indicators. Broken into three sections, this book outlines the rationale for and methods used in six areas where financial acumen has been harnessed to the goal of combining monetary return with long run sustainability. The first section offers an introduction to the role of finance in achieving sustainability, and includes an overview of the six areas—sustainable investing, impact investing, decentralized finance, conservation finance, and cleantech finance. The methods section of the book illustrates analytical tools and specialized data sources essential to those interested in increasing the level of social responsibility embedded in economic activity. The applications section describes and differentiates each of the six areas and their roles in advancing specific measures of sustainability.

This book provides readers with a basic understanding of sustainable finance and impact investing including history, definitions of impact, current trends and drivers, future challenges, and an overview of the key players in the global impact ecosystem. The term impact investing first appeared in 2008. Today the most commonly used definition is investing made with the intention to generate positive, measurable social and environmental impact alongside a financial return. A wide range of individual and institutional investors that have already entered the impact investment marketplace and continued growing enthusiasm can be expected given that feedback from investors indicated that portfolio performance has generally met or exceed their expectations for both social and environmental impact and financial return. Established companies have been compelled to respond to calls by institutional investors to incorporate responsible environmental, social, and governance initiatives into their business models as a condition to continued support in public capital markets. Other companies seeking to demonstrate to impact investors their commitment to environmental and social responsibility have opted for emerging forms of legal entities, so-called social enterprises, which explicitly incorporate sustainability and multi-stakeholder interests into their governance and reporting frameworks. This book provides readers with a basic understanding of sustainable finance and impact investing including history, definitions of impact, current trends and drivers, future challenges, and an overview of the key players in the global impact ecosystem. The book also describes impact investment structures and instruments, social enterprises, and impact measurement and reporting.

The EU Action Plan on Financing Sustainable Growth is the most advanced and comprehensive policy agenda on sustainability in the world. But is it going in the right direction? Acting as a bridge between policy and academia, this up-to-date contribution to the global policy debate brings together some of the leading experts from the European Commission's High-Level Expert Group on Sustainable Finance, to discuss how the financial system needs to be reformed to promote sustainability. Finance has long been criticized for being short-term focused and concerned with maximizing returns to intermediaries, rather than with the interests of savers and borrowers. The financial system must now take into account environmental, social and governance considerations to support a sustainable economy and this volume offers new insights on the way forward. A must-read for anyone working on financial sector policy and sustainability.

More than 120 countries have committed to net zero targets by 2050, requiring systemic economic transitions on an unprecedented scale and with the finance sector playing a leading role. Green finance will power the transition, ensuring capital flows to the firms, investments, projects and technologies looking to create a sustainable, low-carbon world. To achieve net zero, every professional financial decision must take climate change and broader sustainability factors into account. Green and Sustainable Finance provides a comprehensive guide to the application of common green and sustainable principles and practices in banking, investment and insurance to help finance professionals embed these in their daily activities and decision-making. Focusing on the necessity of mainstreaming green and sustainable finance globally, this book includes a clear explanation of the science underpinning climate change. Green and Sustainable Finance covers a wide range of green finance products and services in retail, commercial and corporate banking, insurance, investment and fintech. It provides an overview of emerging regulation and international market frameworks and standards, particularly in relation to climate and environmental risk. Consideration is also given to the ethical dimensions of green and sustainable finance, including how professionals can promote market integrity and take active steps to avoid greenwashing. Endorsed by the Chartered Banker Institute as the core text for the benchmark Certificate in Green and Sustainable Finance, this book is essential reading for finance professionals and students, and individuals working to embed sustainability in business, policy and regulation.

There are many studies confirming the relationship between financial systems and economic development, but there are few which examine the degree to which financial systems a) impact the quality of information, b) influence sound corporate governance, c) ensure effective mechanisms of risk management, d) mobilize savings and f) facilitate trade. In the context of sustainability, there should also be a line of inquiry into how a particular financial system influences the assurance and implementation of sustainable development principles and goals. This book delivers a methodological approach to designing and assessing sustainable financial systems. It provides an original contribution by prioritizing ESG factors in the decision-making process of financial institutions and identifying their impact on sustainable financial systems. The author argues that to achieve financial stability, it is necessary to have in place mechanisms designed to prevent financial problems from becoming systemic and/or threatening the stability of the financial and economic system, while maintaining (or not undermining) the economy’s ability to sustain growth and perform its other functions. The book primarily takes a simulation and experimental approach. It is the first book to take such a comprehensive look at sustainable financial systems as opposed to sustainable finance in general. It will appeal to academics, students and researchers in the fields of economics, finance and banking, business, management and political and social sciences.

Can China’s Belt and Road Initiative (BRI) promote sustainable development, alongside its primary aims of increasing commercial connectivity with China’s partners? In discussions of the BRI the focus has tended to be on the implications for infrastructure construction, connectivity, and economic diplomacy. Rather less attention has been paid to its potential impact on sustainability. The initiative has not only set principles to prevent climate change and promote sustainable development, but also pledged to align with the UN’s environmental objectives. The contributors to this volume describe and evaluate the consequent policy coordination in the areas of green finance, green energy, and sustainable development in the Belt and Road regions. They examine both the challenges and opportunities of these projects, and the role that Hong Kong can play in supporting their assessment, finance, and implementation. With contributions from authors based in mainland China, Hong Kong, Australia, Qatar, the UK, and the US – with experience in corporate social responsibility, international finance, environmental policy, and international relations – this book presents a thorough and rigorous analysis of the green side of the BRI. A valuable resource for scholars of the BRI and its many implications for China, its partners, and the development of sustainable infrastructure.

Over the last decade, socially responsible investments (SRIs) have become paramount to both professionals and academics. In the aftermath of the financial crisis of 2007-8, practitioners have become much more involved in new financial models that integrate returns and positive social and environmental impacts. The authors argue that previous irresponsible financial models are anachronistic, and propose a new relationship between stakeholder and shareholder. Starting from the mainstreaming of SRI, this book recovers the social function of banks and the innovative role of crowdfunding and venture capital models. The book offers a unified perspective for firm and funder, making it a timely and invaluable read for scholars and practitioners interested in sustainable development and social impact finance.