Dirty Banking: Probing the Gap in Sustainable Finance
In 2016, the Global Sustainable Investment Alliance estimated the market for sustainable investments to have reached 22.89 trillion USD of assets under management. While financial institutions have embraced the idea of sustainable finance as a business opportunity, they have arguably done little, bu...
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ftmdpi:oai:mdpi.com:/2071-1050/11/6/1745/ 2023-08-20T04:04:48+02:00 Dirty Banking: Probing the Gap in Sustainable Finance Michael Urban Dariusz Wójcik agris 2019-03-22 application/pdf https://doi.org/10.3390/su11061745 EN eng Multidisciplinary Digital Publishing Institute Sustainability in Geographic Science https://dx.doi.org/10.3390/su11061745 https://creativecommons.org/licenses/by/4.0/ Sustainability; Volume 11; Issue 6; Pages: 1745 sustainable finance primary markets investment banking Text 2019 ftmdpi https://doi.org/10.3390/su11061745 2023-07-31T22:08:15Z In 2016, the Global Sustainable Investment Alliance estimated the market for sustainable investments to have reached 22.89 trillion USD of assets under management. While financial institutions have embraced the idea of sustainable finance as a business opportunity, they have arguably done little, but to piggy-back on investors’ demand. Today, it is not unusual for a single firm to retail fossil free investment funds and concomitantly offer commercial loans towards fracking, coal, and Arctic drilling. This paradox is underpinned by a major gap in the way sustainability has permeated primary and secondary markets which, we argue, calls for a serious rethinking of the sustainability transition in finance. This article proposes two contributions in this direction. First, we develop an original conceptualisation of finance as a socio-technical system to discuss the dynamics that both hinder and promote a transition from mainstream to sustainable finance. Second, we propose to study how investment banks integrate sustainability in their underwriting services. To do so, we filter through close to half a million of debt and equity underwriting deals (2005–2017) using the Government Pension Fund Global of Norway’s list of 153 excluded companies. Our results suggest that investment banks do not shy away from underwriting companies that have been flagged for major environmental, social, and governance misconduct, neither do they restrain from underwriting companies providing contentious products, such as tobacco, coal, and nuclear weapons. Moving forward, we suggest ways to address this problem and call for further research on the responsibility and agency of finance and advanced business services firms in sustainability transitions. Text Arctic MDPI Open Access Publishing Arctic Sustainability 11 6 1745 |
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sustainable finance primary markets investment banking |
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sustainable finance primary markets investment banking Michael Urban Dariusz Wójcik Dirty Banking: Probing the Gap in Sustainable Finance |
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sustainable finance primary markets investment banking |
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In 2016, the Global Sustainable Investment Alliance estimated the market for sustainable investments to have reached 22.89 trillion USD of assets under management. While financial institutions have embraced the idea of sustainable finance as a business opportunity, they have arguably done little, but to piggy-back on investors’ demand. Today, it is not unusual for a single firm to retail fossil free investment funds and concomitantly offer commercial loans towards fracking, coal, and Arctic drilling. This paradox is underpinned by a major gap in the way sustainability has permeated primary and secondary markets which, we argue, calls for a serious rethinking of the sustainability transition in finance. This article proposes two contributions in this direction. First, we develop an original conceptualisation of finance as a socio-technical system to discuss the dynamics that both hinder and promote a transition from mainstream to sustainable finance. Second, we propose to study how investment banks integrate sustainability in their underwriting services. To do so, we filter through close to half a million of debt and equity underwriting deals (2005–2017) using the Government Pension Fund Global of Norway’s list of 153 excluded companies. Our results suggest that investment banks do not shy away from underwriting companies that have been flagged for major environmental, social, and governance misconduct, neither do they restrain from underwriting companies providing contentious products, such as tobacco, coal, and nuclear weapons. Moving forward, we suggest ways to address this problem and call for further research on the responsibility and agency of finance and advanced business services firms in sustainability transitions. |
format |
Text |
author |
Michael Urban Dariusz Wójcik |
author_facet |
Michael Urban Dariusz Wójcik |
author_sort |
Michael Urban |
title |
Dirty Banking: Probing the Gap in Sustainable Finance |
title_short |
Dirty Banking: Probing the Gap in Sustainable Finance |
title_full |
Dirty Banking: Probing the Gap in Sustainable Finance |
title_fullStr |
Dirty Banking: Probing the Gap in Sustainable Finance |
title_full_unstemmed |
Dirty Banking: Probing the Gap in Sustainable Finance |
title_sort |
dirty banking: probing the gap in sustainable finance |
publisher |
Multidisciplinary Digital Publishing Institute |
publishDate |
2019 |
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https://doi.org/10.3390/su11061745 |
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Sustainability; Volume 11; Issue 6; Pages: 1745 |
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Sustainability in Geographic Science https://dx.doi.org/10.3390/su11061745 |
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https://creativecommons.org/licenses/by/4.0/ |
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https://doi.org/10.3390/su11061745 |
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