Why should sustainable finance be given priority? Lessons from pollution and biodiversity degradation
AbstractThe concept of sustainable finance is a relatively new concept that is increasingly accepted by the financial industry since the Berne Declaration came together to promote sustainable finance in the commercial sector. Although sustainable finance is very apt and timely, many issues need to be addressed if this concept is to be meaningful and it is to achieve its desired objectives. Some of the issues that need to be clarified and addressed include (1) defining the kind of sustainability that is envisaged (2) examining issues relating to the use of high discount rates and its compatibility with the goals of sustainability (3) the case of excessive pollution due to adverse selection, moral hazard and lobbying and (4) specialisation and path dependent systems that are detrimental to future production. This paper discusses these issues, providing examples from pollution and biodiversity degradation. The paper also shows why economic growth without considering pollution impacts and path dependent systems is detrimental to future production which violates the concept of sustainable finance. This discussion demonstrates why the concept of sustainable finance is timely and why it is necessary to take into account the potential issues that need to be addressed. The challenges that lie ahead are many, and the sooner they are addressed, the more credible and potent sustainable finance will be.
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Bibliographic InfoPaper provided by School of Economics and Finance, Queensland University of Technology in its series School of Economics and Finance Discussion Papers and Working Papers Series with number 260.
Length: 21 pages
Date of creation: 30 Jul 2010
Date of revision:
Sustainable finance; economic growth; pollution; biodiversity degradation; path dependent systems;
Other versions of this item:
- Clevo Wilson, 2010. "Why should sustainable finance be given priority?: Lessons from pollution and biodiversity degradation," Accounting Research Journal, Emerald Group Publishing, vol. 23(3), pages 267 - 280, November.
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
- Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
- Q59 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Other
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hanley, Nick & Shogren, Jason F. & White, Ben, 2001.
"Introduction to Environmental Economics,"
Oxford University Press, number 9780198775959.
- Asheim, Geir B, 1994. " Net National Product as an Indicator of Sustainability," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(2), pages 257-65.
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