Economy
Finance forSustainability
One of the key enablers of sustainable development is access to sufficient financial resources. Such funding is essential if states, businesses and households are to meet the challenges of transformation, achieve the 17 Sustainable Development Goals and comply with the Paris Agreement.
At present, major efforts are being made to shift the focus of the financial sector towards sustainable practices. In addition to voluntary initiatives to introduce consistent risk-related indicators that explicitly take into account environmental, social and governance (ESG) criteria, the regulatory landscape in the EU and Germany has also turned its attention to this trend. Voluntary initiatives and standards include the Task Force on Climate-related Financial Disclosures (TCFD) and the Principles for Responsible Investment (PRI) supported by the United Nations. At European level, the aim is to increasingly direct financial flows towards active support for the transformation to a climate-neutral and resource-efficient economy. The European Green Deal provides a clear overall framework for action in this regard and is being implemented on a strategic and regulatory basis through the Sustainable Finance Strategy, the EU Taxonomy to Facilitate Sustainable Investment and the EU Sustainable Finance Disclosure Regulation (SFDR).
Researchers at the Wuppertal Institute are conducting research on the sustainability impacts of various sources of finance, such as loans from banks, and investments, including performing impact assessments in the bond market, for instance. Their aim is to develop plausible and robust impact logics to qualify and quantify contributions towards sustainability goals. Put more simply, they want to be able to present the complex, causal relationships between the resources used, such as money or labour, and the long-term impact – a contribution towards one of the Sustainable Development Goals (SDGs), for example. Ideally, these relationships should be measurable. The researchers also support companies and banks in developing appropriate sustainability strategies and operating methods that will deliver "finance for sustainability" in line with overarching sustainability goals, such as the SDGs. As an impact-oriented think tank, the Wuppertal Institute's focus here is on providing small and medium-sized enterprises with scientifically well-founded support. To this end, it also collects sustainability information, such as data relating to the fulfilment of EU Taxonomy criteria.
![[Translate to Englisch:] Gemüse aus biologischem Anbau](/fileadmin/redaktion/images_hq/misc/Getty_546200366_Sustainable_Finance.jpg "[Translate to Englisch:] Gemüse aus biologischem Anbau")
Work conducted by the Wuppertal Institute to date
The Wuppertal Institute's researchers have already worked with a variety of financial market participants. As part of the Impact Assessment of NRW.BANK Social Bonds, for example, the project participants are evaluating the social impacts of the state-owned development bank in the context of refinancing. The focus of the research is to develop a robust impact logic that will identify the best possible social indicators in the bond market. The Wuppertal Institute has been supporting the state government of North Rhine-Westphalia since 2017 by providing impact assessments of the Sustainability Bonds issued by NRW's Ministry of Finance. Here, methodological developments in the field of impact measurement go hand in hand with the bond issuer's efforts to establish an increasingly close and direct connection between the SDGs and the (refinanced) projects.
Regarding the subject of Finance for Sustainability the Wuppertal Institute has been focusing its activities primarily on the following areas:
Sustainability reporting:
- Providing support/advising on the collection and reporting of non-financial sustainability information within the framework of the EU Taxonomy and the Non-Financial Reporting Directive (NFRD), or on the future SFDR and Corporate Sustainability Reporting Directive (CSRD)
Sustainability assessment:
- Providing support/advising on the identification, qualification and quantification of indicators of sustainable development with reference to the EU Taxonomy, the SDGs and comparable frameworks (e.g., Scope 3 emissions in the lending business in accordance with the Greenhouse Gas Protocol, i.e., the indirect emissions caused by the individual borrowers and the processes in their own value chains).
- Preparing investor reports and method papers for green or social bonds offered by private or institutional issuers
Publi-cations
You find all scientific publications on our publication server:
Projects
Here you find research activities in the field of Sustainable Finance.