Financial institutions in the face of the environmental emergency

Recently, financial institutions have become central in the discussions related to the environmental emergency, predominantly on climate change and progressively on biodiversity loss. But this rendezvous between the biophysical and financial worlds is not that intuitive. In this chapter, we will first propose a conceptual dual framework to define what are the overarching relationships between these two domains: finance and environment. Based on the notions of ‘impact’ and ‘risk’, this approach will help us to articulate the different approaches that currently co-exist at the interface between these two worlds, with sometimes opposite understandings, philosophies, and goals. Then, we will step back from the current stirring at the edge of these two domains, to unfold how finance, climate change and biodiversity became associated in the frame of what is now often called “sustainable finance”.