Complexifying Finance for Sustainability. A Sustainability-Science & Feminist Approach
Posted: 1 Feb 2020
Date Written: January 31, 2020
Silo thinking has been identified as a barrier to policy coherence for sustainability. With environmental issues left to environmental law and policy, and social issues to social areas of law and policy, economic areas such as business and finance have been allowed to concentrate on their narrowly defined objectives informed by dominant law-and-economics inspired postulates of maximization of returns and infinite growth, to the detriment of environmental and social aims.
The convergence of crises we face today: environmental, social and economic, bring home the point that if we are to achieve a safe and just world for humanity, we need to achieve policy coherence for sustainability. To be meaningful, sustainability must encompass the recognition of finite limits of our earth: planetary boundaries. The overarching aim is then to secure the social foundation for humanity now and in the future while staying within these planetary boundaries. However, attempts at achieving sustainability tend to ignore the inherent complexity and uncertainty of sustainability science, electing rather the simple answers based on mechanistic and simplistic approaches to environmental protection.
With the UN Sustainable Development Goals, the Paris Agreement on Climate Change and the Addis Ababa agreement on financing sustainable development as a backdrop, the EU’s Sustainable Finance Initiative is a potentially important step towards breaking down the silos, with finance until then having been one of the most hard-core, stand-alone economic areas of law and policy.
This paper analyses the sustainable finance initiative firstly with the aim of identifying to what extent it reflects the complexity of real (or strong) sustainability, and secondly to what extent it moves beyond some of the problematic aspects of mainstream approaches to business and finance.
The first question entails investigating whether the Sustainable Finance Initiative includes the social, economic and governance aspects of securing the social foundation for humanity and encompasses the recognition of planetary boundaries as limits for our economic systems and our societies, and including all aspects and the inherent complexity and uncertainty in them.
The second question involves investigating whether the sustainable finance initiative is informed by what we will denote as masculinist simplifications of the connections between finance and business, the economy and society, and the ecosystems on which we depend. The EU Commission’s Action Plan is tellingly entitled Financing for Sustainable Growth, and the Action plan does not discuss whether it is possible to continue with infinite economic growth on the macro level and the drive towards profit maximisation, or maximisation of returns for shareholders, and achieve sustainability. Rather than the limits of our planet being the boundaries, the boundaries seem to be those of the business case, reflecting a narrow recognition of the financial risks of unsustainability.
Accordingly, the paper presents a feminist and sustainability-science informed approach to sustainable finance, which recognises and encompasses the complexity, the work-in-progress nature of identifying planetary boundaries and the inherent uncertainty involved in this work. This approach is a basis for proposals that could bring us onto a path towards finance for real sustainability.
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