Sustainable Development and Financial Markets

Abstract

This article explores the role of financial markets for sustainable development. More specifically, the authors ask to what extent financial markets foster and facilitate more sustainable business practices. The authors highlight that their current role is rather modest and conclude that, on the old paths, a paradoxical situation exists. On one hand, financial market participants increasingly integrate environmental, social, and governance (ESG) criteria into their investment decisions, whereas on the other hand, in terms of organizational reality, there seems to be no real shift toward more sustainable business practices. The authors identify two main challenges within the field of sustainable investments that are relevant for entering new avenues that may help overcome this situation. First, a reorientation toward a long-term paradigm for sustainable investments is important. Second, ESG data must become more trustworthy. From a theoretical point of view, the authors finally highlight the potential market consequences when ESG investment criteria are used.

A Global Review of Sustainable Construction Project Financing: Policies, Practices, and Research Efforts

“…However, Lutzkendorf, Fan and Lorenz [49] pointed that, although most financial stakeholders (particularly banks, insurance companies and investors) have already been engaged with the development of sustainable built environment, their understandings of such particular type of projects remain limited. Similar conclusions were also obtained by Busch, Bauer and Orlitzky [45] who pointed out that current financial stakeholders have not been ready to embrace sustainable construction finance. To address this critical issue, both Lutzkendorf, Fan and Lorenz [49] and Busch, Bauer and Orlitzky [45] suggested carrying out education and training for the employees of these financial stakeholders to increase their knowledge and competencies in sustainable construction finance.…”

“…Similar conclusions were also obtained by Busch, Bauer and Orlitzky [45] who pointed out that current financial stakeholders have not been ready to embrace sustainable construction finance. To address this critical issue, both Lutzkendorf, Fan and Lorenz [49] and Busch, Bauer and Orlitzky [45] suggested carrying out education and training for the employees of these financial stakeholders to increase their knowledge and competencies in sustainable construction finance.…”

“…Existing literature reveals that current financial stakeholders are yet to be ready to embrace the tide of sustainable construction project financing due to their knowledge limitation in sustainable construction [45,49]. Thus, it is imperative to direct some particular research efforts in this regard to equip financial stakeholders with proper knowledge to make them capable of addressing sustainable construction finance.…”

Does the Sustainable PPI Investments Promote Financial Market’s Sustainable Development?

“…Table 1 reports descriptive statistics and Table 2 presents correlations for the variables used in this research. To test the mediator effect between PPI investments (PPIG) and financial market liquidity (Stocks), we especially control for financial market size (Capital) as in the following Equation (9). Intuitively, we will check whether if the coefficient of PPIG will decrease after controlling for Stocks.…”

“…With a sustainability perspective, this paper studies whether the PPI investments promote FMD. However, some evidence suggests that governmental policies are unsustainable [6][7][8] and that sustainable investments do not spur sustainable development [9]. To examine the promotion effect, this paper first demonstrates the theoretical effect of the PPI policy on financial markets in the static and dynamic conditions.…”