Why We Need Sustainable Finance
They say money makes the world go ‘round. True or not, the impending environmental crisis and growing economic disparity we are facing means we need to reexamine our relationship to finance and how we act in our pursuit of it.
The good news is the answer may already be out there: sustainable finance.
After all, the financial system is fully ingrained in our society and marketplace and, with no viable alternative compensation system available, it’s unlikely the system is going anywhere. This means our best bet to better the world is to improve the existing systems. For finance this is where sustainable finance will play a major role.
Let’s look at why we need sustainable finance and where this improved system will take us.
The world is changing (although not entirely in a good way) and we are in the process of doing what we can to minimize the damage and bring in improvements.
Businesses, naturally, need to adapt and improve in order to prove they are not on the wrong side of history. The environmental, social and governance (ESG) factors and the UN Sustainable Development Goals (SDGs) serve as great benchmarks to use to evaluate how much effort a company is putting in towards achieving a sustainable world.
Sustainable finance makes perfect sense in this regard, as it is an upgrade to our financial system that recognizes where the damage has been inflicted, what needs repairing and what we need to remain the same. This new financial system is what we need to ensure the SDGs are fully met.
Major business hubs have seen both the need for and potential in sustainable finance and the smart ones are preparing to step up as sustainability experts.
Montreal, for example, first created Finance Montréal to help set the town up as a financial hub and then created the Finance and Sustainability Initiative (FSI) to help promote and spread the need for sustainable finance. The initiative offers education, scholarships and partnerships in order to help raise awareness and adoption of sustainable finance.
Canada is standing with Montreal and created the Expert Panel on Sustainable Finance to properly explore the future of finance. This panel recently released its interim report, which stressed the role of the financial system in the fight against climate change, the importance of sustainable finance and the need to innovate in an eco-friendly way. Once the panel is done its consultation a clear plan will be presented showing how Canada can use sustainable finance to grow as a country and a business power.
Sustainable finance is growing but is not a new player. The elements that form its base can be found in vital services already being used.
Impact investing is a great example of this and plays a big part when it comes to using sustainable finance in the real world. As it is an older player in the field and is more solidly defined it is a logical option for those who want to explore sustainable finance but aren’t 100% sure of their footing. RBC, for example, offers the RBC Generator as a platform for investment in social and environmental causes. Or, if you want to work with a company with a stronger link to impact investing, there is SVX. SVX was founded on the basis of creating a social stock market and investments made through this platform with definitely make a positive impact.
With our ever-growing social consciousness and the rise of Millennials and Generation Y you can trust that sustainable finance is going to continue to grow as a presence in the financial and investment field. This is a good thing, as these are the causes that should be funded and need financial backing to properly make an impact.
Would the world become a much better place if we invested more in sustainable investments? I think so. Let’s make it happen.