Sustainable finance – redirecting global financial flows

Our present social and economic system is not sustainable. The Earth’s critical limits are already exceeded – be it as a result of climate change, biodiversity loss, land-use change or human interventions in biogeochemical cycles. Humanity is consuming its environmental capital.

A key lever influencing the shift towards better climate protection and sustainable management of global resources is transformation of the financial system. For on the one hand, massive investment is necessary worldwide in order to achieve the United Nations’ Sustainable Development Goals. According to information from the OECD, the World Bank and the International Energy Agency, several billion US dollars a year need to be directed into health, education, renewable energies, food security and environmental protection.

On the other hand, vast sums are incessantly being poured into investment funds, stocks, bonds and other financial products which meet few environmental and ethical criteria, if any. Many investors still consider these as lucrative as ever and speculate on high returns.

A redirection of global financial flows thus represents a powerful lever if the aim is to release money for sustainable investments and at the same time withdraw the resources that underpin environmentally or socially harmful undertakings.