A Framework for Sustainable Finance

Dirk Schoenmaker

No 12603, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: To guide the transformation towards a sustainable and inclusive economy, the United Nations has developed the Sustainable Development Goals (SDGs). Sustainable development is an integrated concept with three aspects: economic, social and environmental. This paper starts by reviewing the environmental and social challenges that society is facing. Why should finance contribute to sustainable development? The main task of the financial system is to allocate capital to its most productive use. Financial institutions have started to avoid unsustainable companies from a risk perspective, which we label as Sustainable Finance 1.0 and 2.0 in our new framework. The frontrunners are now increasingly investing in sustainable companies and projects to create long-term value for the wider community (Sustainable Finance 3.0).

Keywords: Sustainable development; Environmental; Social and governance (esg) risks; Sustainable finance; Corporate governance; Short-termism (search for similar items in EconPapers)
JEL-codes: G11 G21 H23 H41 Q01 (search for similar items in EconPapers)
Date: 2018-01
New Economics Papers: this item is included in nep-cfn, nep-env and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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