Professional Documents
Culture Documents
(Download PDF) The Financial Ecosystem The Role of Finance in Achieving Sustainability Satyajit Bose Online Ebook All Chapter PDF
(Download PDF) The Financial Ecosystem The Role of Finance in Achieving Sustainability Satyajit Bose Online Ebook All Chapter PDF
https://textbookfull.com/product/investor-decision-making-and-
the-role-of-the-financial-advisor-a-behavioural-finance-
approach-1st-edition-caterina-cruciani-auth/
https://textbookfull.com/product/the-role-of-credit-rating-
agencies-in-responsible-finance-daniel-cash/
https://textbookfull.com/product/the-fungal-community-its-
organization-and-role-in-the-ecosystem-fourth-edition-dighton/
https://textbookfull.com/product/in-the-combat-zone-of-finance-
an-insiders-account-of-the-financial-crisis-svein-harald-oygard/
Stories of Capitalism Inside the Role of Financial
Analysts 1st Edition Stefan Leins
https://textbookfull.com/product/stories-of-capitalism-inside-
the-role-of-financial-analysts-1st-edition-stefan-leins/
https://textbookfull.com/product/law-and-finance-after-the-
financial-crisis-the-untold-stories-of-the-uk-financial-
market-1st-edition-abdul-karim-aldohni-editor/
https://textbookfull.com/product/financial-sustainability-of-
public-sector-entities-the-relevance-of-accounting-frameworks-
josette-caruana/
https://textbookfull.com/product/the-future-of-fintech-
integrating-finance-and-technology-in-financial-services-1st-
edition-bernardo-nicoletti-auth/
PALGRAVE STUDIES IN IMPACT FINANCE
The Financial
Ecosystem
The Role of Finance in
Achieving Sustainability
Satyajit Bose · Guo Dong · Anne Simpson
Palgrave Studies in Impact Finance
Series Editor
Mario La Torre
Sapienza University of Rome
Rome, Italy
The Palgrave Studies in Impact Finance series provides a valuable scientific
‘hub’ for researchers, professionals and policy makers involved in Impact
finance and related topics. It includes studies in the social, political,
environmental and ethical impact of finance, exploring all aspects of
impact finance and socially responsible investment, including policy issues,
financial instruments, markets and clients, standards, regulations and
financial management, with a particular focus on impact investments and
microfinance.
Titles feature the most recent empirical analysis with a theoretical
approach, including up to date and innovative studies that cover issues
which impact finance and society globally.
The Financial
Ecosystem
The Role of Finance in Achieving Sustainability
Satyajit Bose Guo Dong
Columbia University Columbia University
New York, NY, USA New York, NY, USA
Anne Simpson
CalPERS
Sacramento, CA, USA
This Palgrave Macmillan imprint is published by the registered company Springer Nature
Switzerland AG.
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
S.B. dedicates the book to Tripti and Satyakam.
G.D. dedicates the book to his grandfather.
A.S. dedicates the book to Eden, Frances, and Eve.
Preface
We have developed the material in this book from teaching, research, and
practical experience in sustainable investing especially in the last seven
years. In 2013, the Robert F. Kennedy Center for Justice and Human
Rights collaborated with the Earth Institute at Columbia to develop a six-
day intensive training workshop for investment analysts and managers
from institutional investors, foundations, endowments, pension funds,
sovereign wealth funds, consultants, investment managers, and interested
non-profit organizations. Part of the motivation for the development of
the workshop was the high interest among institutional investors for com-
prehensive overview, greater depth, and technical training in new methods
of due diligence, portfolio screening, and data sources for an investing
strategy that integrated the assessment of environmental and social impact.
The aftermath of the global financial crisis of 2007–2008, when many
institutional investors experienced unanticipated sharp declines in asset
values and levels of funding, served as a catalyst for an integrative and
wide-ranging search for sources of unexpected systemic risk and sustain-
able return. The workshop subsequently inspired many years of research,
discussion, teaching, and codified practice in this field that has come to be
known as sustainable finance.
The writing of a book is a fortunate by-product of a vibrant ecosystem
of ideas. We have been lucky to be part of thoughtful communities of
practice and scholarship. We have many kindred souls to thank. First, this
book would never have come to fruition without Steve Cohen’s early and
continuous encouragement. Similarly, Qian Jing was an unfailing sound-
ing board for many ideas. Our colleagues at the Research Program on
vii
viii PREFACE
Murphy, David Ng, Dan O’Flaherty, Amie Patel, Maneesha Patel, Radhika
Patel, William Patterson, Marivi Perdomo Caba, Julie Pertuiset, Charlotte
Peyraud, John Plender, Jeffrey Potent, Curtis Probst, Olga Puntus, Roy
Radner, Jenik Radon, Fiona Reynolds, Bridget Realmuto, Rod Richardson,
Ailsa Roell, Gema Sacristan, Ashley Schulten, Aniket Shah, Courtney
Small, Jason Smerdon, Song Mingyuan, Art Small, Robert Smith, Amy
Springsteel, Nina Sun, Sun Zhe, Tian Tuo, Tian Xiaolei, Bruce Usher,
Louise Venables, Kurt Vogt, Wang Anyi, Wang Jun, Jason Wingard,
Lynnette Widder, Donald Wissell, Zhang Yong, and Richard Zimmerman.
We are very grateful to our sage and patient editors: Mario La Torre,
Tula Weiss, Sophia Siegler, and Ruth Noble. We are fortunate to have had
so many illuminating teachers who corrected our early errors. Despite all
the help we have received from our ecosystem, there undoubtedly remain
many errors of omission and commission in this work. We are solely
responsible for them. We apologize in advance to those whose writings we
may have inadvertently missed in our efforts to compress a complex and
nuanced literature into a concise and coherent narrative. We also make the
following important disclaimer: This book was written by Anne Simpson
in her personal capacity. The opinions expressed are her own and do not
necessarily reflect the view of her current employer, the California Public
Employees’ Retirement System.
Finally, we express our deepest gratitude to our families for supporting
this endeavor over many years.
xi
xii Contents
11 Impact Investing253
12 Decentralized Finance283
Index399
About the Authors
xiii
xiv ABOUT THE AUTHORS
xv
xvi List of Figures
xvii
CHAPTER 1
The field of finance is a large and diverse ecosystem and the role of the
financial sector in the broader economy and the environment can some-
times seem complex and opaque. In the United States, the portion of
2014 GDP attributable to the finance, insurance, and real estate sector was
approximately 20%, which is the largest contribution of any sector tracked
by the Bureau of Economic Analysis.1 What role does the financial sector
perform in the economy? The efficiency of capital allocation presupposes
the long-run sustainability of the natural and human ecosystems within
which economic activities occur, yet how do the activities of the financial
sector affect the sustainability of the social and environmental systems
upon which the economy depends? When so eminent an authority as Pope
Francis issues an encyclical listing finance and the pursuit of profit among
the causes of the present ecological crisis, one might wonder whether the
financial system can play a beneficial role in the environment.2 At a very
simplified level, financial institutions exist to channel efficiently the savings
of households to productive investment opportunities, to businesses, gov-
ernments, and entrepreneurs looking for capital. But what if those invest-
ments have the unfortunate side effects of polluting waterways, dispersing
toxic substances into the air or disturbing the balance in fragile ecosys-
tems? What if the products and processes created by those investments
hasten disease or even death in customers, employees, and communities?
Financial markets are the primary source of signals used to direct invest-
ment and economic activity in a capitalist global economy. The flows of
Sustainable Finance
After the global financial crisis in 2007–2008, the pursuit of financial
profit alone is viewed by many as unsustainable and detrimental to long-
term societal interest. There appears to be steady and inexorable growth in
Google searches for ‘impact investing’, ‘ESG investing’, and ‘social
finance’. We will label the intentional efforts to use and influence the
financial system to mobilize capital for sustainable development and wide-
spread social benefit the field of ‘sustainable finance’. The rise of sustain-
able finance is a natural corollary of some significant recent phenomena: