It is indeed strange, if not a little frightening, that our lives and the future of our planet are determined by concepts so obscure that each of us sometimes - through no fault of our own - understands them in a slightly different way. What does sustainable finance mean and why does an environmental organisation like ours occupy itself with it? 

In a world that money makes go round, according to a popular song, we could not talk about a meaningful response to the climate and biodiversity crises, extreme poverty, and social inequalities, if we left the flow of investments out of the discussion. 

The priorities and respect for the principles of sustainability by the financial system; the type of investments made globally; and the choices made by all of us, from ordinary small investors and depositors to the famous "big money" financiers. These are all elements of the mosaic of finance which needs to, rather than paint itself superficially green, make a substantial sustainable shift if we are to talk about limiting warming and reversing the curve of biodiversity loss on our planet. 

It is part of our mission to build the world we deserve, to help in this critical turning point for the future of us all.  Working alongside a specialist economic research organisation, we seek to inform individuals and finance system stakeholders alike about the need for sustainable finance and the opportunity it brings, and assist the former in investing sustainably and the latter in designing increasingly sustainable products, with an eye to a just future. This way we can help achieve financing the transition to a low carbon economy and stop global warming. 

Public opinion surveys, highlighting the actual characteristics of current money flows, monitoring of products in circulation, involving all the major players, tools for investors, advisors and institutions, developing policy recommendations and more – these are just some of the tools used by the 2 Degrees Investing Initiative, our partner in sustainable finance policies.

When the planet is at risk, all economic activity (public or private) must point in the same direction: investments that respect ecosystems, do not waste natural resources and are climate-neutral.

For this necessary shift towards sustainable investments, strong public policies are necessary; however, citizens and households are also a crucial part of the solution.

In particular, the funding gap for energy efficiency, renewable energy and transport projects at the EU level is in the order of $340 billion per year over 2020-2030. This gap could be covered by investments by European households, as it represents the equivalent of 27% of their savings. But are European households - in other words retail, non-professional investors - willing to invest or save using sustainable finance products?

For this reason, we contributed to a survey conducted in 6 European countries which shows that retail investors state that they are willing to switch to sustainable financial products. However, in order to harness this potential, various inhibitors that undermine the transition from intention to action need to be addressed (e.g. complexity, information overload, risk of "greenwashing"). More information about the research can be found here. 

It was also important to see whether a retail investor would get the clear answers they need from their advisor, so that they can be confident that they are investing as they wish in real (and not misleading) sustainable and environmentally positive products and activities. Another survey found a low level of preparedness on the part of financial advisors when it comes to examining motives and sustainability preferences of potential clients, despite being obliged by EU legislation to do so. More information on this can be found here.