203R_Too risky – The role of finance as a driver of sustainability transitions (research summary)

Are you interested in the role of finance for sustainability? Our summary today works with the article titled Too risky – The role of finance as a driver of sustainability transitions from 2022 by Björn Nykvist and Aaron Matlais, published in the Environmental Innovation and Societal Transitions journal. This is a great preparation to our next interview with Josh Dry in episode 204 talking about efforts to transform the financial sector. Since we are investigating the future of cities, I thought it would be interesting to see how transitions towards sustainability can be mirrored in the financial sector. This article investigates what motivates the sector and how to govern a faster transition. As the most important things, I would like to highlight 3 aspects: Sustainable and ethical investing, notably with the rise of ESG criteria, positions the finance sector as a pivotal force in driving sustainable economic transitions. The integration of finance in sustainability transitions, especially in sectors like renewable energy, requires clear policy directions and innovative public-private partnerships to overcome inherent risk aversion. Sweden's leadership in sustainable finance, especially through green bonds, demonstrates its role as a positive example for financial sustainability efforts globally. You can find the article through this link. Abstract: The finance sector has a long track record of engaging with sustainability issues, and policymakers and sector representatives agree that a transition to sustainability needs to be mirrored by rapidly expanding financing. Based on in-depth interviews with a broad range of actors in the Swedish finance sector, we show that despite a strong recognition of the challenges, the sector remains cautious towards risk. We explore what motivates the sector and how to govern a faster transition and find that informants strongly believe that the sector cannot move any faster without further government intervention. The preferred policy is the use of generic tools such as CO2 taxes, or for the government to step in and mitigate the risk. We conclude that a more ambitious narrative on how the private and public sector can collaborate to share risk is needed, as it is unlikely that the finance sector will lead the way. Connecting episodes you might be interested in: No.088R - The cost and benefits of environmental sustainability; No.161R - The perception of the quality of smart city solutions; You can find the transcript through ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠this link⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. What wast the most interesting part for you? What questions did arise for you? Let me know on Twitter ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠@WTF4Cities⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ or on the ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠wtf4cities.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ website where the ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠shownotes⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠are also available. I hope this was an interesting episode for you and thanks for tuning in. Music by ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Lesfm ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠from ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Pixabay⁠