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Financial innovation for a sustainable economy

Author

Listed:
  • Andrés Alonso

    (Banco de España)

  • José Manuel Marqués

    (Banco de España)

Abstract

Climate change and its management and mitigation are unquestionably among the main risks facing our society in the coming decades. The financial sector plays a key role in this challenge, firstly because of its exposure and the consequent capital shocks if this risk crystallises, and secondly because it has the task of financing the investments needed to transform our economy into a sustainable one. This article reviews various initiatives under way in the private financial sector to introduce the variable “sustainability” into its decision-making process in order to achieve a balance sheet with a smaller carbon footprint (transformation of stock) and to develop a business strategy aligned with responsible investment principles and international standards (transformation of flow). We analyse the innovations emerging along the path to sustainable finance, looking particularly at: 1) new suppliers and services in the market, 2) the creation of sustainability-linked financial instruments, 3) the adaptation of financial risk management policies, and 4) the interaction of technological progress with climate change.

Suggested Citation

  • Andrés Alonso & José Manuel Marqués, 2019. "Financial innovation for a sustainable economy," Occasional Papers 1916, Banco de España.
    • Handle: RePEc:bde:opaper:1916e
    as

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    File URL: https://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosOcasionales/19/Files/do1916e.pdf
    File Function: First version, October 2019
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    References listed on IDEAS

    as
    1. Olympia Bover, 2011. "The Spanish survey of household finances (eff): description and methods of the 2008 wave," Occasional Papers 1103, Banco de España.
    2. Olympia Bover & Enrique Coronado & Pilar Velilla, 2014. "The Spanish survey of household finances (EFF): description and methods of the 2011 wave," Occasional Papers 1407, Banco de España.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Clara Isabel González Martínez, 2021. "Overview of global and European institutional sustainable finances initiatives," Economic Bulletin, Banco de España, issue 3/2021.
    2. Ricardo Gimeno & Fernando Sols, 2020. "Incorporating sustainability factors into asset management," Revista de Estabilidad Financiera, Banco de España, issue Autumn.
    3. Cristina Chueca Vergara & Luis Ferruz Agudo, 2021. "Fintech and Sustainability: Do They Affect Each Other?," Sustainability, MDPI, vol. 13(13), pages 1-19, June.
    4. Andrés Alonso Robisco & José Manuel Carbó Martínez, 2022. "Measuring the model risk-adjusted performance of machine learning algorithms in credit default prediction," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-35, December.
    5. Ricardo Gimeno & Fernando Sols, 2020. "Incorporating sustainability factors into asset management," Financial Stability Review, Banco de España, issue Autumn.
    6. Randall E. Duran & Peter Tierney, 2023. "Fintech Data Infrastructure for ESG Disclosure Compliance," JRFM, MDPI, vol. 16(8), pages 1-19, August.
    7. Ricardo Gimeno & Fernando Sols, 2020. "Incorporating sustainability factors into asset management," Financial Stability Review, Banco de España, issue Autumn.
    8. Clara Isabel González Martínez, 2021. "The role of central banks in combating climate change and developing sustainable finance," Economic Bulletin, Banco de España, issue 3/2021.

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    More about this item

    Keywords

    fintech; sustainable development goals; climate change; sustainability; green bonds; innovation; artificial intelligence;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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