Financial Sector Growth, Consolidation, and New Technologies Make It a Powerful Actor in Tackling Global Environmental Challenges

Vasily N. Tkachev (), Elizaveta V. Kiseleva () and Olga V. Fedyanina ()
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Vasily N. Tkachev: Moscow State Institute of International Relations (MGIMO University)
Elizaveta V. Kiseleva: Moscow State Institute of International Relations (MGIMO University)
Olga V. Fedyanina: British Embassy Moscow

Chapter Chapter 33 in Industry 4.0, 2021, pp 375-388 from Springer

Abstract: Abstract The research aims to provide a comprehensive review of the current state and prospects for deploying the Industry 4.0 digital technologies, primarily artificial intelligence, by the global financial industry to promote sustainable development and tackle global environmental challenges. Analysis of publications of specialized international organizations, statistical data, and news releases has revealed that the financial sector holds a special place in the modern economy and therefore has to play a key role in confronting environmental challenges by mobilizing financial resources for sustainable activities, providing insurance coverage and helping to manage and hedge ESG-associated risks. However, despite the growing willingness of individuals to invest sustainably, institutional investors now face numerous difficulties when trying to respond to this shift in demand by adapting their investment strategies and offering specialized financial instruments. These difficulties include, among others, the lack of standardized definitions of sustainable activities and instruments; the voluntary and inconsistent nature of corporate ESG disclosure; the complex and long-term character of ESG-related risks. Digital technologies, such as big data and artificial intelligenceartificial intelligence, can contribute to elimination of these difficulties by identifying, collecting, standardizing, and analyzing the vast amounts of inconsistent ESG-related data in order to evaluate sustainability risks and to provide insights on a company’s ESG performance even in the absence of standardized disclosure and at significantly reduced cost in comparison with manual research. However, digital technologies can themselves pose ESG-related risks, producing negative effects on environment, employment, inequality, and raising privacy concerns. It is therefore recommended that national authorities should not only promote the wider use of digital technologies in sustainable finance, but also set up legal frameworks to guard against the associated risks.

Keywords: Sustainable finance; Responsible investment; Climate change; Industry 4.0; Artificial intelligence; O160; O330; Q550 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/978-3-030-75405-1_33

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