Sustainable finance should switch to positive from defensive message, experts say

Proponents of efforts to cut carbon emissions need to make a more inspiring case to green the economy to counter a shift by some governments and companies away from promoting sustainability, according to sustainable finance experts.

“Sometimes the arguments that are used are a little bit defensive,” said David Ramos Muñoz, professor of commercial law at Madrid’s Carlos III university, which is hosting a conference on sustainable finance – Finance on the Brink – with the European Banking Institute (EBI) in collaboration with Green Central Banking.

“Sustainable finance is central to the problems that the world is facing right now,” Ramos Muñoz said. “Sustainable finance benefits us all. This is not something that some experts and elites want to impose.”

Nejc Smole, deputy managing director of the executive board of the EBI who is attending the conference in his personal capacity, said sustainability needs to be reframed as being central to economic resilience and opportunity.

“Risks created through climate change and nature degradation will not go away just because you ignore it,” Smole said. “One of the aims of this conference is to shift this dialogue from ‘we don’t have to do this’ to ‘we would be foolish to ignore the impact from climate change’,” Smole said.

The conference brings together experts and non-experts from across the world along with regulators, students and business representatives.

Smole said scepticism is healthy and, especially in a relatively new field of research like sustainability, it is important to close the remaining research gaps to identify the opportunities from it, and navigate the most efficient course of action in this unprecedented situation.

While there is still a risk of corporate greenwashing, some companies are going in the opposite direction towards “greenhushing” or claiming to have done less for the climate than in reality, especially when it comes to sustainability financial disclosures, Ramos Muñoz said.

“People are afraid of making promises because they believe that they will be called out on them or called liars,” he said.

The conference will focus on the contention that climate and competitiveness, environmental and social justice, and sustainability and geopolitics are polar opposites.

Ramos Muñoz said those dichotomies could all be challenged.

In answer to the suggestion that climate rules are too costly, he said: “Sustainable finance is a way to improve data collection to better evaluate risk and identify sources of growth.”

He added that experts should discuss when reporting may not be as useful, and to insist on its use when it can provide benefits.

He said environmental and social perspectives were often complementary and mutually reinforcing, rather than in opposition. And sustainability is often an essential factor in geopolitics.

“We should not lose faith in people’s ability to to keep in mind that sometimes there are two sides to a problem,” he said.

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