SUSTAINABLE FINANCE: THE FINANCIAL MARKET IS CHANGING COURSE
Great hope currently rests with the financial market since accessing outside capital is of existential importance for large portions of the world economy. If the financial market sets the right marks, its effects on boosting sustainable development will be much more powerful than those the world of politics can bring about.
Recommendations for more transparency
Meeting the climate goals of the Paris Agreement will require investments worth some 180 billion euros per year, thereby opening up a vast field for investors. Yet at the same time, there’s reason to fear that investments into coal-fired power plants and oil-dependent industries, along with other non-sustainable investments, will permanently lose value. To set the course for the right allocation of financial means, the Task Force on Climate-Related Disclosures (TCFD) was thus convened by the Financial Stability Board. It presented its stipulations at the 2017 G20 summit in Hamburg. On a European level, the High Level Expert Group on Sustainable Finance became active for this purpose and presented its recommendations in the spring of 2018. Both expert groups are working towards more transparency regarding climate and sustainability risks and have managed to set off a re-orientation of the financial market.
Demands from analysts and investors
It’s not an entirely new lever: Sustainability-oriented ratings have acquired a high standing with—and considerable influence over—companies in recent years. Such ratings have typically served as the guiding principle for pension fund investments with a long-term orientation. They’ve also proven that investing in sustainability-oriented companies is not only more secure but can also generate better returns. akzente has already supported companies for many years in correctly answering the rating agencies’ questionnaires or integrating the agencies’ specific transparency stipulations into their sustainability reporting. While in the future, it will be of even more crucial importance how a company positions itself in the capital market, this fact should not be a cause for worry. A company’s positioning will, however, certainly tend to require more substantial strategies and figures than it does today.
