A Framework for Sustainable Finance
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 funding 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).
|sustainable development, environmental, social and governance (ESG) risks, sustainable finance, corporate governance, short-termism|
|Portfolio Choice; Investment Decisions (jel G11), Banks; Other Depository Institutions; Mortgages (jel G21), Externalities; Redistributive Effects; Environmental Taxes and Subsidies (jel H23), Public Goods (jel H41), Agricultural and Natural Resource Economics; Environmental and Ecological Economics: Sustainable Development (jel Q01)|
|Organisation||Rotterdam School of Management (RSM), Erasmus University|
Schoenmaker, D. (2018). A Framework for Sustainable Finance. Retrieved from http://hdl.handle.net/1765/109091