06/27/2022

Building Back Better – Sustainable Financing

Money makes the world go green

Sustainable or green financing, or even impacting investment, are the terms used to describe the process of addressing environmental, social and governance (ESG) considerations in the financial sector when making investment choices, driving more long-lasting investments in sustainable businesses, technologies and projects. Climate change mitigation, preservation of biodiversity, inequality, inclusiveness, investment in human capital and communities, management structures and employee relations can all fall under the umbrella of ESG considerations.

Put simply, the focus in finance is transferred from acquiring pure financial profit to prioritizing the planet and the people by injecting cash to green energy projects, for example, or investing private money in companies that demonstrate social values such as social inclusion or good governance. According to the European Union, "sustainable finance delivers on the policy objectives under the European Green Deal by channeling private investment into the transition to a climate-neutral, climate-resilient, resource-efficient and fair economy, as a complement to public money."

According to Professor Cary Krosinsky, co-founder at the Sustainable Finance Institute (SFI) and the World Sustainable Finance Association (WSFA), "sustainable finance is actually many things not just one, or what we call the Seven Tribes of Sustainable Investing, namely negative and positive screening, impact and thematic investing, ESG integration, shareholder engagement and applying minimum standards to sectors."

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