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2019 | Buch

Financing Sustainable Development

Key Challenges and Prospects

herausgegeben von: Magdalena Ziolo, Bruno S. Sergi

Verlag: Springer International Publishing

Buchreihe : Palgrave Studies in Impact Finance


Über dieses Buch

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.


Chapter 1. Introduction
Current extensive and in-depth challenges are shaping the way modern economic systems work and establishing a novel approach to the analysis of economic phenomena. Environmental and socials risk in assessing general transaction risk are growing because of the impact and the role of such a factors as: increasing climate change, aging of societies, social exclusion, and polarization, changes in the model of consumption, globalization as well as the automation of industrial processes. The criteria for assessing the risk of transactions change under the influence of economic changes. This is clear in the conditions of “greening” the economy and social inclusion. These two phenomena, referring to the environmental and social pillars of sustainable development, strongly weigh on the necessity of extending the risk assessment criteria used by financial institutions for Environmental Social Governance (ESG) risk (environmental, social, corporate governance). The demand for extending the risk assessment methodology with ESG components is emphasized by the Environmental Program Financial Initiative (UNEP FI), and the state of implementation of this postulate by financial institutions, depending on the country and institutions, is still at various levels of development. Investigating the economy moving on a greener path, the sharing economy, industry 4.0, and banking 3.0 are just preferred contexts of these changes that are setting the stage for a fresh look at the economy and the ways it is financed, broadly considered. In the context of environmental and social challenges that are continuously affecting modern states, the sustainability concept is receiving increasing recognition as a means to counter the effects of negative externalities.
Bruno S. Sergi, Magdalena Ziolo
Chapter 2. Sustainability in Finance and Economics
The chapter aims to draw attention to the significant gap in the existing research, along with the issues of sustainable development (SD). The concept of SD, if placed in an economic context, requires much attention, but seeing the cognitive class from the perspective of the discipline of finance, the latter is unsatisfactory, with questions remaining unanswered. At the same time, it is important to draw attention to the amount of financial resources allocated and disbursed to focus on SD. Identification of financial phenomena is seen as a priority. The manuscript deals with two research questions that have been formulated as follows: (1) how to include multidimensional, holistic, and long-term perspectives of SD into finance; and (2) how sustainable finance (SF) impacts on the efficiency of financing of SD. A few suggestions can be made to solve the research problem and include the SD perspective in finance: (1) internalisation of externalities in the calculation of an investment (i.e. in a company’s present value); (2) assigning a long-term horizon to investments, also as a necessity for maintaining the prospect of safeguarding financial capital for the future; (3) progressive substitution of financial ratios with sustainability ratios; and (4) a changing perspective on the connotation of financial profits.
Diana-Mihaela Țîrcă, Anișoara-Niculina Apetri, Mirela Ionela Aceleanu
Chapter 3. Sustainable Development Versus Green Banking: Where Is the Link?
The chapter aims to define the role of green banking in the implementation of environmental sustainability, identify the green financial products and point out the role of green banking networks. There is a great deal of interest globally in green finance. Green innovations are desirable for companies, and financial institutions are happy to help finance such projects. Thanks to new technologies, ecological trends and the need to save the planet, banks will increasingly offer green products and services. The concept of green banking is a relatively new one. Green banking promotes environmentally friendly attitudes. Green banks are also called balanced banks, because they are trying to implement a sustainable development policy. Banks, wanting to maintain a high competitive advantage on the financial markets, in their financing policy launch tools that are focused on the protection of the natural environment. In addition to pro-ecological policy support, banks focus on supporting elements related to environmental investments, but also shape pro-ecological attitudes among their clients. The green banking trend leads to environmental responsibility.
Magdalena Ziolo, Marta Pawlaczyk, Przemysław Sawicki
Chapter 4. Sustainability, Innovation, and Efficiency: A Key Relationship
Sustainability has become the emerging goal for countries, companies, and people. Sustainability usually refers to the need to develop models necessary for both human beings and our planet to survive. However, sustainability is not a short-term problem; it is above all a long-term issue, posing intergenerational equity problems. Moreover, sustainability requires efficiency. The efficient use of energy and of natural, material, and informational resources is vital for sustainability and sustainable development, which should be the major goal of every country, as established in Rio in 1992, and reaffirmed at Rio+20 in 2012. But any strategy aiming at sustainability and efficient use of resources must focus on innovation and technological progress. Consequently, innovation is fundamental to making sustainability possible and improving efficiency. Yet innovation for sustainability must be environmentally friendly (e.g., green technologies). The principle behind such a strategy is better instead of more. This chapter aims at highlighting the key relationship among sustainability, innovation, and efficiency. First, it examines the concept of sustainability, looking at the neoclassical literature on sustainability and its relationship with innovation. Then, it analyzes different theoretical approaches and discusses the policy issues for sustainability where innovation, natural capital, human capital, population, and institutions are fundamental factors.
Daniele Schilirò
Chapter 5. Socially Responsible Financial Markets
Financial markets have started to take into account aspects of sustainable development. They mobilise capital in order to provide economic, social and environmental benefits. The aim of this chapter is to present socially responsible financial markets. A socially responsible financial market should influence business, the market and the economy to take into account sustainability issues in order to deliver economic, social and environmental benefits. The consequence of this decision is that financial markets have changed their structure, established new laws and regulations, introduced innovative instruments, and obtained supervision and transparency. Even though financial markets introduce financial innovations and regulations and engage in sustainability issues, there is still room for development of those markets in the direction of fully socially responsible practice.
Dejan Jednak, Sandra Jednak
Chapter 6. Institutional Investments and Responsible Investing
This chapter is designed to provide insights on the pertinence of responsible investing in both developed and developing economies in light of the international deliberations on sustainability and sustainable development. Responsible investing presents a strong business case for institutional investors to merge ethics with profitability. However, to develop a strong business case, it is imperative to dive deeply into the various forms of responsible investing, and the recent trends, drivers and barriers associated with it. Institutional investors pertain to various environmental, social and corporate governance (ESG) evaluation methodologies, subject to the type of financial instruments and availability of ESG data. These assessments help investors to undertake informed decisions and lead to ESG integration in several asset classes such as listed equity, fixed income, hedge funds and private equity. Although the extent of integration varies considerably across geographical domains and asset classes, there is an increasing recognition of better returns from ESG diversified portfolios. Several asset management companies (AMCs) are adhering to varied ESG integration approaches in developed economies. These approaches clearly cater to different application, research and management levels to be categorized as fundamentalist, believer, cautionary, discretion, statistician and transition-focused. Despite the rising signatories to the United Nations Principles for Responsible Investment (UNPRI), there are several deterrents which affect the growth of responsible investing. The reflective and exploratory approach undertaken in this chapter is likely to benefit students, academicians and professionals working in the domain.
Ria Sinha, Manipadma Datta
Chapter 7. Patronage in the Financing of Social and Sustainable Projects
Traditionally, many companies have contributed, altruistically, to the generation of crowdfunding platforms as a space of knowledge and innovation where entrepreneurs develop their projects independently or in collaboration. The companies considered these platforms as an investment whose rate of return was transformed into a profitable improvement of its brand image. However, these platforms have evolved, in recent times, to generate real ecosystems of technological innovation, oriented to the propulsion of business projects of marked social trend, seeking to promote alternatives for social inclusion and green projects aimed at improving sustainability and the environment. These projects not only help improve both parameters, but also manage to generate beneficial externalities for the social economy and even for the sponsoring company itself.
Manuel Nieto-Mengotti, Carmen Gago-Cortés
Chapter 8. Sustainable Capital Market
This chapter aims to discuss the role played by the capital market in promoting sustainable development. The capital market proves to be a very flexible tool that is able to meet the evolving economic, social and environmental needs. Even though it has been shown that society as a whole has not fully internalized the need for socially responsible behavior, the capital market has done so because it has understood that sustainable development presents exciting opportunities. The adjustment of the capital market to the sustainability paradigm did not stop at conceptual strategies or approaches, but led to the creation of new environmental asset classes and innovative funding solutions such as green bonds. In this context, the capital market becomes a leading promoter of the structural reform of traditional businesses from carbon-intensive to climate-friendly projects. However, despite an encouraging start, the financing needs of sustainable development are far higher compared with the current size of green financial markets. Therefore, governments, international institutions, companies and the civil society itself should take a larger proactive role in this transformation by developing and supporting sound climate policies, green infrastructure projects and sustainable businesses.
Andreea Stoian, Filip Iorgulescu
Chapter 9. Sustainable Public Finance and Debt Management
Sustainability is a leading criterion in the decision-making process in sustainable finance concerning financial markets and private entities as well as in public finance. State and self-governing entities play a key role in implementing and supporting the sustainable finance concept. There is some empirical evidence that a positive association exists between higher public revenue (as a percent of GDP) and income inequality reduction, as well as the key role of public social spending on human development. The chapter presents a theoretical approach to public debt management from the perspective of balanced finances. Differences in the understanding of sustainable public debt management in the traditional and stable financial paradigm are pointed out. The chapter uses a critical analysis of literature, the method of induction and deduction, a method of comparisons and generalizations, and a synthesis method. Because of the conducted analyses, it is shown that balanced finance in a comprehensive manner describes and explains the complexity of the public debt management category in terms of the traditional finance paradigm.
Isabel Novo-Corti, Xose Picatoste
Chapter 10. Environmental, Social and Governance Risk versus Company Performance
Environmental, social and governance risks (ESG risks), which do not include a financial structure, are risks that are externally accepted and can directly affect the performance of the economy. The risks of ESG can cause investors to face and fight financial challenges as well as financial difficulties. Investors who plan to overcome these challenges with the least amount of damage implement various strategies to improve risk management. An investment that harms the environment creates a social risk by disturbing the ecosystem and attracting a negative public reaction. Permitting such investments creates the perception that there is a lack of governance in the society and the risk of governance arises. As can be seen, the risks of ESG are interrelated. For this reason, the chapter aims to explain the risk factors of ESG and to present suggestions to shed light on the issues for policy decision-makers.
Türker Şimşek, Halil İbrahim Aydın, Bartosz Oliwa
Chapter 11. Sustainable Financial Systems
The financial system is crucial to the functioning of any economy. Without it, efficient resource allocation could not take place and goods and services could not be distributed. An advanced economy requires a sophisticated financial system of markets and institutions. The financial systems—banking, insurance and stock markets—have been and continue to be in a period of transition. In recent decades dramatic and far-reaching changes took place in the world of finances, for example in the regulatory environment. A key objective in the financial sector and in the financial system will be sustainability, stability and safety. The purpose of this chapter is to present some theoretical topics and other important aspects of contemporary financial systems. The additional aim of the study is to outline the relations between regulation, deregulation and reregulation of the financial sector. Recently, the structure of the finance industry has changed fundamentally. The events of recent years have proven that risk-taking in finance can bring significant costs for the economy. A safer and more sustainable financial system would mean restricted lending services and prove a stumbling block to economic growth. The study proves that a change in the finance sector regulation paradigm is necessary. In the years to come, the development of finance sectors will depend on curtailing political uncertainty, improving cooperation between regulators and financial intermediators, and introducing more efficient regulations. It is of utmost importance for the economic future of businesses.
Stanisław Flejterski
Chapter 12. Green Finance Concept: Framework and Consumerism
Sustainability has begun to receive more attention from the international community as a crucial pillar for economic growth and an active driver for protection of the environment. Therefore, financial institutions have become more aware of their responsibility to contribute to sustainable development. To fulfill this responsibility, several financial institutions have adopted the concept of green finance. This research consists in outlining the green finance concept and assessing the level of knowledge and awareness among consumers about green finance products and services via an exploratory analysis. The main findings of this research are that most of the respondents were aware of environmental problems, however many of them had limited knowledge about sustainability and remarkably no knowledge about green finance. Moreover, despite the green finance concept facing big challenges related to data protection and security maintenance, it has several opportunities to be improved and widely applied.
Marwa Ben Ghoul
Chapter 13. Public–Private Partnerships as a Mechanism of Financing Sustainable Development
While the obstacles to supporting sustainable development include financial barriers, the goals of sustainable development are being pursued by separate small-scale and narrow private entrepreneurial initiatives within corporate responsibility and own commercial interests and by strictly limited (due to a deficit of financial resources) and ineffective (due to the inflexibility of management) national initiatives in the public interest. Our working hypothesis is that public–private partnership is a perspective mechanism of financing sustainable development, as it allows for harmonizing private and public interests, unifying entrepreneurial and government investments, and developing highly effective and full-scale implementation of initiatives in the sphere of sustainable development. We substantiate and develop practical recommendations for successful usage of public–private partnership as a mechanism of financing sustainable development. Flexibility and variability of the mechanism of public–private partnership ensures its applicability to any project in the sphere of sustainable development. A proprietary conceptual model of financing sustainable development by public–private partnership offers practical solutions to become a conceptual basis and framework practical guide for application of public–private partnership as a mechanism of financing sustainable development.
Bruno S. Sergi, Elena G. Popkova, Kseniya V. Borzenko, Natalia V. Przhedetskaya
Chapter 14. Social Reporting of Egyptian Islamic Banks: Insights from the Post-Revolution Era
This chapter presents a case study exploring the social reporting practices of Egyptian Islamic banks (IBs) following two revolutions in Egypt. The two Egyptian Arab uprisings in 2011 and 2013 threatened the social legitimacy of IBs. Thus, this study aims at investigating the social reporting strategies employed by Egyptian IBs to defend their social legitimacy following two uprisings. The case is framed within legitimacy theory, arising from the notion of a “social contract” between company and society. It adopts content analysis of annual reports and websites, and interviews with different stakeholders, to explore motivations for social reporting in the new era. The findings reveal that Egyptian IBs used different communication strategies to legitimise themselves after the two uprisings; however, they failed to do so. This research concludes with different implications for policy makers in IBs in Egypt and Arab Spring countries.
Mohamed Nagy Osman
Financing Sustainable Development
herausgegeben von
Magdalena Ziolo
Bruno S. Sergi
Springer International Publishing
Electronic ISBN
Print ISBN