Sustainable Finance: A Brief Presentation

By Marianne Mignot Oliastri, Mathilde Poquillon, Ewald Waage

Sustainable Finance: A Brief Presentation

     The Green Deal, along with several other international summits, conferences, and agreements such as the UN Conference on Environment and Development, the UN Sustainable Development Goals (SDGs) or the COPs are leading the way for the ecological transition and a net-zero carbon emission world. Public action is and should be an engine for driving change ; however, to efficiently encompass our entire economic system, the ecological transition requires the leverage of finance.

     To reach the SDGs, we would need a global investment of 6-7 trillion USD per year or an incremental investment of 50-100 trillion USD by 2050. There is an urgent need for public and private investments to form new partnerships and increase available capital. While traditional finance has focused on maximizing short-term financial value, sustainable finance should focus on a more holistic approach to producing long-term and socio-economic value. As shown on the map, various levers are available to drive financial actors toward sustainability and achieve a green transition.

     Public development banks such as the EIB (with a balance sheet of 555 billion USD) or China’s development bank (2.4 trillion USD) are powerful drivers for this transition. Their help will be needed, since our global economy will have to take on an important challenge for the 21st century: achieving the SDGs – in particular the net-zero emission climate goals – while enhancing the resilience and ensuring the stability of our financial institutions.