Skip to main content
Disciplines
Automotive Business IT + Informatics Construction + Real Estate Electrical Engineering + Electronics Energy + Sustainability Insurance + Risk Finance + Banking Management + Leadership Marketing + Sales Mechanical Engineering + Materials
Events
DE
EN
Books
Journals
Topic Page
Marketing
Start single access now
Access for companies
EXTENDED SEARCH
Log in
Top

2022 | Book

Why Sustainable Finance? Why Now? Read chapter Read first chapter

Sustainable Finance

Using the Power of Money to Change the World

Author: Prof. Molly Scott Cato

Publisher: Springer International Publishing

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik" , Springer Professional "Wirtschaft"

Login to get access
insite
SEARCH

About this book

This book provides a detailed yet succinct overview of sustainable finance, with a specific focus on its origins, its policy focus and the practitioner dimension. With fossil fuel companies still attracting investment and subsidy across the world, the book describes how we can reverse these incentives, using the power of finance to tackle the climate and ecological crises. The world of finance is moving beyond the era of ethical investment and into a future where all financial companies will have to report the climate impact of their investments. This is the first stage towards full-scale ESG reporting (Environmental, Social and Governance). Since financial reporting depends on information provided by companies who receive investment, this has huge implications for non-financial reporting by all large companies. The timeline for these legal changes is short for what will be a transformation of financial accounting and investment. The book also covers the related issues of climate finance and the role of central and public banks in funding the transition to sustainability, and how we can ensure accountability for countries bearing the brunt of the impact from those with the largest responsibility for historic emissions. This book will enable those working in these fields to update their knowledge and skills, and brings together the author’s practical experience as an MEP with her academic insight as the first professor of green economics.

Table of Contents

Frontmatter
Chapter 1. Why Sustainable Finance? Why Now?
Abstract
After the failure of the UN climate talks in Copenhagen in 2009 a small group of finance experts decided to find ways to use the power of finance to tackle the climate emergency. Through developing ideas like ‘stranded assets’ and ‘carbon bubble’ they managed to convince financiers and bankers of the risks of not addressing the climate and environmental crises. This was the birth of the sustainable finance agenda. But it coincided with citizen efforts to channel finance away from destructive activities, especially through divestment from fossil fuels and avoiding banks that were investing in destructive activities.
Molly Scott Cato
Chapter 2. What Puts the Sustainable into Sustainable Finance
Abstract
This chapter offers a basic introduction to the existing financial system: how does capital flow through the financial system and why does this create negative environmental and climate impacts? It explores who are the different actors and how they are motivated and where are the relevant points of potential change, with a special focus on the insurance industry. Market trends and how to interpret them are explained, followed by consideration of what we mean by a green bond and an account of the green bond market since its inception. Finally, we consider how to shift large-scale investment towards sustainable sectors by a combination of socially responsible investment and pro-sustainability investment indices.
Molly Scott Cato
Chapter 3. The Chequered History of Climate Finance
Abstract
Because it is the largest and most urgent crisis facing humanity, it is appropriate that climate change—and how to finance our response—has its own chapter in a book on sustainable finance. Here we consider what climate justice can tell us about how the balance of investment should be shared between the countries that have exploited fossil resources to grow rich and those that have fewer resources but are suffering more immediate and more severe impacts from the climate crisis. This, known as ‘the loss-and-damage agenda’ in UN negotiations, has been the source of repeated conflict at the UNFCCC process. The chapter also considers and compares climate investment packages from a range of the world’s largest economies, known variously as Green New Deal or green stimulus. I then explore the link between colonial history and the need for reparations and routes to funding the loss-and-damage agenda. And I conclude by considering more radical proposals for using the credit-creation facilities of the IMF to produce the money to solve the climate crisis.
Molly Scott Cato
Chapter 4. Sustainable Finance: The Policy Framework
Abstract
Rather than tackling climate change, most governments are still subsidizing fossil fuels. The EU has taken a global lead on developing a legislative framework for sustainable finance that is introduced here, while developments in Japan and the US as also covered. The next section considers policy responses to the urgent need to put a price on carbon and make polluters pay. There is widespread agreement that addressing climate change means putting a rising price on carbon but no agreement on how best to achieve this, whether by agreeing on a carbon tax on a global basis—or within smaller communities of nations—through a carbon trading scheme. I explore a proposal to use the regulatory and legislative powers of policy-makers to eliminate unsustainable assets from the global economy. Finally, we explore how the financial system needs to change to address the biodiversity crisis.
Molly Scott Cato
Chapter 5. Defining, Measuring, and Reporting Sustainability
Abstract
Increasingly, reporting the bottom line—i.e. the finances—is not enough. This chapter explains the developing legislation requiring non-financial reporting, especially accounting for Environmental, Social, and Governance (ESG) impacts. This includes the growth in scope and complexity of private-sector guidelines for reporting as well as consideration of the UN Taskforce on Carbon-Related Financial Disclosure and the new EU mandatory disclosure regime. Finally, the chapter looks at the issue of greenwashing and how the EU taxonomy might be able to define what is sustainable in a way that limits or eliminates greenwashing.
Molly Scott Cato
Chapter 6. The Role of Central and Public Banks
Abstract
The chapter begins by considering why, in a climate emergency, banks are still investing in fossil fuels, and provides an account of who are the big players in this dirty market. Central Banks have been operating until recently within extremely restricted mandates, largely focused on low inflation and with an eye on unemployment. Growing demands for the sustainability transition to become part of the mandate of central banks were answered for the Bank of England in the budget in March, setting the pace for other countries. This chapter will also cover the issues of carbon stress tests and credit guidance, as well as exploring the role of public development banks such as the German KfW in financing the sustainability transition. It ends with a brief note about the role of the world’s bank, the IMF.
Molly Scott Cato
Backmatter
Metadata
Title
Sustainable Finance
Author
Prof. Molly Scott Cato
Copyright Year
2022
Electronic ISBN
978-3-030-91578-0
Print ISBN
978-3-030-91577-3
DOI
https://doi.org/10.1007/978-3-030-91578-0