Sustainable finance is finance raised for the purpose of sustainable projects.
Sustainable finance includes a strong green finance component that aims to support economic growth while:
- Reducing pressures on the environment
- Addressing green-house gas emissions and tackling pollution
- Minimising waste and improving efficiency in the use of natural resources.
Sustainable finance also encompasses increasing awareness of and transparency about:
- The risks which may have an impact on the sustainability of the financial system
- The need for financial and corporate market participants to mitigate those risks through appropriate governance.
Governance is fundamental
- "Sustainable finance generally refers to the process of taking due account of environmental, social and governance considerations when making investment decisions in the financial sector, leading to increased longer-term investments into sustainable economic activities and projects.
- Environmental considerations refer to climate change mitigation and adaptation, as well as the environment more broadly, such as preserving biodiversity, preventing pollution and promoting the circular economy.
- Social considerations refer to issues of inequality, inclusiveness, labour relations, investment in human capital and communities, and human rights issues.
- The governance of public and private institutions, including management structures, employee relations and executive remuneration, plays a fundamental role in ensuring the inclusion of social and environmental considerations in the decision-making process."
- European Union - Lex - September 2023.
Channelling private money
- "Sustainable investing covers a range of activities, from putting cash into green energy projects to investing in companies that demonstrate social values such as social inclusion or good governance by having, for example, more women on their boards.
- Sustainable finance has a key role to play in the world’s transition to net zero by channelling private money into carbon-neutral projects."
- World Economic Forum - January 2022.
- Circular economy
- Climate change adaptation
- Climate change mitigation
- Climate finance
- Climate risk
- Environmental considerations
- Environmental profit and loss
- ESG investment
- Financial sustainability
- G20 Sustainable Finance Working Group
- Global Sustainable Finance Council
- Global Sustainable Investment Alliance
- Green energy
- Green finance
- Greenhouse gas
- Human capital
- Human rights
- International Platform on Sustainable Finance
- Natural resources
- Net zero
- Social concerns
- Social inclusion bond
- Sustainability bond
- Sustainability linked loan
- Sustainable bond
- Sustainable debt
- Sustainable Finance Disclosure Regulation (SFDR)
- Sustainable investment
- Sustainable loan
- Ten Point Plan for a Green Industrial Revolution
- UK Sustainable Investment and Finance Association
- World Economic Forum (WEF)