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Sustainability challenges and the ambivalent role of the financial sector

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  • Arnim Wiek
  • Olaf Weber

Abstract

Over the past few decades, the financial sector has sought to positively contributing to sustainable development through innovative products and services. However, in its business-as-usual the financial sector continues to contribute to military interventions, environmental degradation, growing disparity of incomes, de-coupling of finance and real economy, and global economic crises. This article presents a framework of how to appraise the positive and negative contributions of the financial sector to sustainable development, from a systems perspective. On this base, the article proposes an approach for designing effective finance interventions to complex sustainability problems. Based on similar experiences from studies on water governance and technology development, the approach proposes a participatory procedure, first, to identify the role of the financial sector in complex sustainability problem constellations and, second, to develop intervention strategies for financial intermediaries interested in shifting their role and mitigating the identified problems. We discuss challenges of establishing causal links within the problem constellation, which is a prerequisite for successful intervention design, as well as in the cause-effect structure of the interventions themselves. The article concludes with outlining future research needs.

Suggested Citation

  • Arnim Wiek & Olaf Weber, 2014. "Sustainability challenges and the ambivalent role of the financial sector," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 4(1), pages 9-20, January.
    • Handle: RePEc:taf:jsustf:v:4:y:2014:i:1:p:9-20
    DOI: 10.1080/20430795.2014.887349
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    References listed on IDEAS

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    1. Antony Bugg-Levine & Jed Emerson, 2011. "Impact Investing: Transforming How We Make Money while Making a Difference," Innovations: Technology, Governance, Globalization, MIT Press, vol. 6(3), pages 9-18, July.
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    1. Maria Carolina Rezende de Carvalho Ferreira & Vinicius Amorim Sobreiro & Herbert Kimura & Flavio Luiz de Moraes Barboza, 2016. "A systematic review of literature about finance and sustainability," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 6(2), pages 112-147, April.
    2. Shome, Samik & Hassan, M. Kabir & Verma, Sushma & Panigrahi, Tushar Ranjan, 2023. "Impact investment for sustainable development: A bibliometric analysis," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 770-800.
    3. Mario La Torre & Helen Chiappini (ed.), 2020. "Contemporary Issues in Sustainable Finance," Palgrave Studies in Impact Finance, Palgrave Macmillan, number 978-3-030-40248-8, September.
    4. Samer Ajour El Zein & Carolina Consolacion-Segura & Ruben Huertas-Garcia, 2019. "The Role of Sustainability in Brand Equity Value in the Financial Sector," Sustainability, MDPI, vol. 12(1), pages 1-19, December.
    5. Alexandre Rambaud & Jacques Richard, 2015. "Towards a finance that CARES," Post-Print halshs-01260075, HAL.
    6. Kathleen Krause & Dirk Battenfeld, 2019. "Coming Out of the Niche? Social Banking in Germany: An Empirical Analysis of Consumer Characteristics and Market Size," Journal of Business Ethics, Springer, vol. 155(3), pages 889-911, March.
    7. Joachim P. Hasebrook & Leonie Michalak & Anna Wessels & Sabine Koenig & Stefan Spierling & Stefan Kirmsse, 2022. "Green Behavior: Factors Influencing Behavioral Intention and Actual Environmental Behavior of Employees in the Financial Service Sector," Sustainability, MDPI, vol. 14(17), pages 1-35, August.

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