Attractiveness of Sustainable Business and Investments: An Ethical, Legal or a Financial Issue?

Sustainable growth is a priority goal for the European Union's internal and external policies, as well as of the United Nations 2030 Agenda and Sustainable Development Goals. In enabling the transition towards a sustainable economy, private sector capital plays a crucial role because of the massive investments required to tackle the most pressing global challenges. But can a sustainable corporate and financial approach be considered attractive and compete with the traditional ways to run a business and collect investments from the public? Regulators and policymakers are adopting different measures in order to increase the reliability of sustainable-labelled companies and financial instruments, both promoting voluntary new standardized rules and mandatory disclosure and behaviour duties. Concerning profitability, measures to improve sustainability are often considered as not profitable because classical free cash flow analysis usually concentrates on the most probable case for the project assessment. Risk aspects are usually neglected or considered in a non-quantitative manner. The chapter focuses on two aspects. First, a successful transformation of today's business models requires a balance between legal and economic framework conditions. Second, economic aspects must be more strongly oriented to risk aspects in addition to profit.