A Framework for Sustainable Finance

26 Pages Posted: 21 Feb 2018 Last revised: 17 May 2019

See all articles by Dirk Schoenmaker

Dirk Schoenmaker

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: May 2019

Abstract

This paper develops a new framework for sustainable finance. Financial institutions have started to avoid unsustainable companies from a risk perspective, which we label as Sustainable Finance 1.0. In Sustainable Finance 2.0, financial institutions look for companies that balance the financial, social and environmental goals. The frontrunners are investing in and lending to sustainable companies that create long-term value for the wider community (Sustainable Finance 3.0). The new framework allows us to develop an indicator to assess how deep sustainable finance is. While general reports suggest a large increase in sustainable investing and banking, our empirical findings suggest that the financial system is just above, but still quite close to, Sustainable Finance 1.0.

Keywords: sustainable development, environmental, social and governance (ESG) risks, sustainable finance, corporate governance, short-termism

JEL Classification: G11, G21, H23, H41, Q01

Suggested Citation

Schoenmaker, Dirk, A Framework for Sustainable Finance (May 2019). Available at SSRN: https://ssrn.com/abstract=3125351 or http://dx.doi.org/10.2139/ssrn.3125351

Dirk Schoenmaker (Contact Author)

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam
Netherlands

HOME PAGE: http://www.rsm.nl/people/dirk-schoenmaker/

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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