Even
if the IPCC reports are more and more alarming, scepticism is always
present when it comes to climate change and the impact of human activity
on it, as the Trump administration has proven in the past.
Scepticism is also present when we talk about ESG criteria or
Sustainable Finance. Around one-third of the finance professionals view
Environmental, Social and Governance issues through the lens of negative
screening without trying to understand the deeper context.
Globally, and similar to climate change, scepticism
on Sustainable Finance is massively due to a lack of knowledge and a
lack of clear and common definitions for its key concepts. How many people talk about Sustainable Finance without having a clear point of view on the issue?
Thanks
to regulatory pressures and public opinion, Sustainable Finance is
becoming THE new standard for financial centers across Europe.
However, this lack of knowledge and not having a common basis are still
present. Everybody knows what is an equity or a bond but few have a
clear understanding of Green Bonds, Impact Investing or positive or
negative screening… To fight against such scepticism, education, as
usual, will be an essential tool to establish standards in Sustainable
Finance.
Initiatives
such as the EFPA ESG Advisor certification, which was launched in 2021
in 12 countries across Europe by the European Financial Planning
Association (EFPA) can help to close the gap between the current level
of information and the level necessary due to increasing regulatory
requirements around the integration of ESG criterion. Always with this
aim of a deeper understanding, EFPA Luxembourg publishes an update of its manual Green Ethica 2nd Edition. To achieve our goal, we enlarged this endeavour to a wider range of contributors from different backgrounds.
With new content on the fund industry,
the design of insurance products, the net-zero alliances, the
governance and updated content on the regulation impacting the
sustainable finance, this new edition enlarges its point of view to
portray the most diverse landscape of what Sustainable Finance is today,
and what it could be tomorrow.
Between
new contributions and former ones, we approached this project with the
desire to give flexibility to the authors while, at the same time,
ensuring all aspects of the matter at hand were covered. Special thanks
go to all the contributors, the former and the new ones, for their
amazing intellectual effort. We believe this will provide invaluable
information to those who are interested in Sustainable Finance.
Although the world of Sustainable Finance is constantly evolving,
this book offers some important insights into concepts regarding the
current issues linked to Green Finance as well as the future development
of market trends and ESG criteria integration. It also emphasizes the essential features of regulation, which is becoming more and more sophisticated.
From
the history of Sustainable Finance to its current and future regulatory
environment, from the influence of Corporate Social Responsibility to
the integration of the ESG criterion in the investment processes, from
the products already available on the market for creating greener
portfolios to the next challenges the financial centers will be asked to
solve, this handbook offers a 360° point of view over the landscape of the Green Finance.
We hope this new edition will help the reader to have a better
understanding of what Sustainable Finance means, looking at its
framework, its aims and its challenges. I wish you a pleasant reading.
