How can financial markets facilitate the transformation towards a sustainable and climate-friendly society?Interim Report of the Working Group "Sustainable Finance" at CSS

28 July 2020, by CSS

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In July 2019, the Center for Sustainable Society Research (CSS) approved the establishment of the Working Group "Sustainable Finance".

What has been achieved so far?

The members of the Working Group are involved in the “Sustainable Finance Research Platform”, a network of scientists from several German universities and research institutions. Within the framework of the Research Platform, work was carried out on a funding application to the Mercator Foundation in 2019. The aim of the project is to use scientifically based methods to help the financial market assume its required facilitating role in the transformation towards a sustainable and climate-friendly society. In order to achieve this, the project aims on the one hand to empower policy makers to assess the effectiveness of policy instruments and, as a result, to be able to use and adapt them accordingly. On the other hand, the project aims to help relevant decision-makers from the financial sector to enable the development of financial instruments that support the transformation towards a sustainable economy. The funding application was submitted in May 2020 . In addition, the “Sustainable Finance Research Platform” was able to contribute to the political discussions on the topic of Sustainable Finance with policy briefs and workshops.

In 2019, the Working Group organized two lectures by international scientists with support of the CSS: Prof. Jeong Bon Kim (City University of Hong Kong) and Prof. Chris van Staden (Auckland University of Technology). In further discussions with the researchers, cooperative research projects were initiated.

The substantial development of the Working Group in 2019 is also reflected in the publications in scientific journals such as Business, Strategy and the Environment, Energy Policy, European Accounting Review, Journal of Business Ethics, Journal of Cleaner Production, Journal of Industrial Ecology, Organization & Environment, and The International Journal of Accounting.

What turned out to be particularly exciting developments?

Current developments in the field of sustainable finance and the related questions of corporate reporting offer a dynamic and exciting field of research. In 2019, the German government established the “Sustainable Finance Research Platform” with the aim of developing Germany into a leading sustainable finance location. Alexander Bassen is a member of the advisory board. At European level, the “EU Action Plan on Sustainable Finance” was presented in March 2018 and shortly afterwards the “Technical Expert Group on Sustainable Finance” (TEG) was founded. Andreas Hoepner (University College Dublin), permanent visiting professor of the Working Group, is a member of the TEG. In the meantime, proposals for an EU classification system for sustainable investments (EU Taxonomy), an EU Green Bond Standard and proposals for corporate reporting on climate-relevant information have been developed. In this dynamically developing environment, many exciting research questions arise both from the perspective of companies from the real economy and financial sector as well as from the perspective of regulators.

What are the next steps for the Working Group?

The Working Group is currently working on various research projects and can make its contribution to the social and political discourse through its cooperation in the “Sustainable Finance Research Platform”. In addition, the corona pandemic has created the need for completely new research projects on topics such as resilience and risk management. The Working Group can also contribute to the discussion on linking economic aid with sustainability goals. International cooperations continue to be an important element in this context.