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Towards a finance that CARES

Author

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  • Alexandre Rambaud

    (DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

  • Jacques Richard

    (DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

Abstract

Today's sustainable finance mainly relies on the extension of a particular classical capital theory to extra-financial types of capital (in particular human and natural). We call (and justify it) this mainstream theory, the Fisherian-(falsified) Hicksian approach. After a critical analysis of this model, we claim that this way of conceptualising sustainable finance is finally unsustainable. At the same time, we also defend the idea that there is a convergence between ecological-based sustainability (which we can call by definition a genuine sustainability) and the extension of the traditional accounting framework to extra-financial types of capital. Therefore, we propose to structure a sustainable finance from this perspective (which we call CARES, for Capital Approach Resting on Ecological-based Sustainability): after having defined how to operationalise and theorize such a sustainable accounting, thanks to the " Triple Depreciation Line " model (Rambaud & Richard, 2015), we use this model to redefine the notion of free cash-flows to make them " sustainable ". We finally discuss the manner they can be used for financing purposes.

Suggested Citation

  • Alexandre Rambaud & Jacques Richard, 2015. "Towards a finance that CARES," Post-Print halshs-01260075, HAL.
    • Handle: RePEc:hal:journl:halshs-01260075
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01260075
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    Keywords

    sustainable finance; social and environmental accounting; sustainability; capital; integrated reporting; free cash-flows;
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