Can the Financial Sector Protect the Climate? The Potential of Sustainable Finance
Contributions to Edited Volumes and Conference Proceedings // 2024Climate policy aims to reduce emissions by redirecting investment from emission-intensive toward carbon-neutral assets. One key instrument, carbon pricing, guides investors and asset managers by lowering the return of fossil fuel-related assets. This chapter reviews three key mechanisms on how sustainable finance can support climate policy: first, providing investors with the necessary information to factor climate risk into their investment and portfolio decisions; second, building awareness for sustainable investing by differentiated means for institutional investors and retail investors; and, finally, addressing the cost of capital as an obstacle to low-carbon investments. For each, we critically review opportunities and shortcomings based on recent research and draw up recommendations for investors and policymakers.
Lessmann, Kai, Franzsika Schütze, Angelika von Dulong, Daniel Engler, Gunnar Gutsche, Achim Hagen, Christian Klein, Andrew McConnell, Oliver Schenker, Marie Therese von Schickfus and Boyan Yanovski (2024), Can the Financial Sector Protect the Climate? The Potential of Sustainable Finance, in: Karen Wendt, Bernd Villhauer (Eds.), Springer Nature, Cham, Switzerland, 23-44