Sustainable finance

Dirk Schoenmaker*

*Corresponding author for this work

Research output: Chapter/Conference proceedingChapterAcademic

Abstract

Sustainable finance, also called green or environmental finance, refers to allocating investment and lending to sustainable governmental institutions, corporations, and projects. This accelerates the transition to a low-carbon, circular, and inclusive economy. The financial system moves from a traditional investment and lending approach that maximizes financial value subject to risk, often in a narrow and short-term way, toward investing and lending for long-term value creation that optimizes financial, social, and environmental value subject to risk. Sustainable finance thus involves considering environmental and social value, alongside financial value. Traditional finance assumes efficient markets, which means that all available information is incorporated in (stock) market prices. Finance can thus help in making production more sustainable, accelerating ecological modernization. By contrast, a business-as-usual scenario may lead to stranded assets.
Original languageEnglish
Title of host publicationEssential Concepts of Global Environmental Governance
PublisherTaylor and Francis Inc.
Pages253-254
Number of pages2
ISBN (Electronic)9781000171990
ISBN (Print)9780367418700
Publication statusPublished - 31 Aug 2020

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