Traditional Finance to Sustainable Finance

Content

This presentation will provide an overview of the history of sustainable finance, explain the concept of externalities from an Environmental, Social and Governance (ESG) perspective and discuss ways in which these can be internalised into financial markets. The challenges and trade offs that are faced while doing this in practice will also be highlighted, along with possible solutions and ways forward. 

The aim of this presentation is to gain an understanding of the challenges facing the global economy in relation to sustainability, externalities and behaviour using a combination of theory, empirical data, and policy. Sustainability challenges for corporate investment will be explained, as well as ways in which finance can steer funding to certain companies and projects without sacrificing return and thus speed up the transition to a sustainable economy. 

The term ‘sustainable finance’ is widely used the current lexicon, yet its meaning is broad and can leave much open to interpretation. This presentation will attempt to define sustainable finance by providing an overview of its history, which can be traced back to the 18th century. The focus will then shift to its current meaning(s) and will define externalities, both negative and positive, in the context of ESG. The concept of integrated value will be introduced, along with real world examples of this. Integrated reporting will also be discussed and compared to traditional reporting, thus highlighting the challenges that internalising externalities can pose. Barriers to change such as short termism in financial markets and behavioural aversions to change will be discussed to provide a realistic perspective on obstacles that have the potential to slow down, or even halt, the transition to a net zero economy. The problem of greenwashing and mitigants in terms of regulation and reporting will be highlighted. The potential for positive externalities and opportunities that the transition may present will also be covered, as these areas tend to be  

Learning outcomes:

• Understand how to use finance as a means to achieve social goals as well as environmental goals;

• Understand the concept of externalities in the context of environment and social issues;

• Understand the need for and concept of integrated value;

• Analyse the Sustainable Development Goals (SDGs) and understand how they can be incorporated into the corporate and financial sectors;

• Evaluate empirical evidence in the area of sustainable finance, such as green bonds and other asset classes;

• Incorporate environmental, social and governance (ESG) considerations into investment decisions;

• Assess climate related financial risks and how to report these

Duration

1 hour (1 CPD Unit)

Speaker

Lisa Sheenan

Lisa is Assistant Professor at Queen’s University Belfast, United Kingdom, lecturing Sustainable Finance and Financial Regulation and Risk Management.

She has worked as an Economist for the Central Bank of Ireland and as a Risk Analyst for the Strategic Banking Corporation of Ireland at the National Treasury Management Agency of Ireland.

She has published in internationally peer-reviewed academic journals and has contributed to the sub-working group on Policy Design for the Green Finance Effectiveness Framework produced by the Green Finance Platform, which is co-hosted by the United Nations Environment Programme and was a visiting scholar in the Banque de France Climate Economics Unit in 2023.

She is on several active research projects investigating mobilising private finance to conserve biodiversity funded by the Irish Research Council, Horizon Europe and the United Kingdom Natural Environment Research Council.

She holds a PhD in Finance from Maynooth University, Ireland (2014).