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Sustainable Finance

Welcome to the Toolkit!

oikos International has received a generous gift from AVIVA Investors to bring you this Sustainable Finance Toolkit and Career Map.

Do you want to help us build this resource? You can help us co-create it - Join Us Here.

Please use the search function (in the top right) if you are looking for something specific. The industry is growing very quickly so if we are missing something you can let us know about it and we'll add it to the toolkit.

Contact Stephen Snider (stephen.snider@oikos-international.org) if you have any questions.

How can the Toolkit help you?

Learn how to find job opportunities
Participate in workshops and trainings
Develop your professional, technical, and leadership skills
Interview stakeholders and network
Write on finance "hot topics"
Organize events and conferences

Check out this promotional flyer for more info:

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Why should you help us?

If you help us then you can:

Join our squad of international professionals
Feature your work
Have your profile online
Network with the industry
Have a positive impact

What do we hope to achieve?

Here is a short video from the United Nation's Principles of Responsible Investing (PRI) that shows how we hope to make a sustainable financial system.

What resources are available?

The Toolkit provides valuable pages of information. Generally, information is organized in the following three sections. Please use the Search bar in the top right to look for anything specific.

Toolkit Resources
- Interviews, Career Advice, Websites, and Online Resources
Activities & Events
- Conferences, Events, or Workshops you can participate in
Partners & Resources
- Supporting People and Organizations to network with

Table of Contents

Below are some specific resources the toolkit has to offer by the type of user.

Remember, you can help us expand this toolkit. Join Us Here!

Learn Many Points of Information

Check out the resources that we have linked together in this toolkit.

Lessons Online Resources

Check Out Careers and Job Advice

There are a lot of different pages of information and we've put together advice on career paths within the industry.

Career Paths

Listen to and Conduct Interviews

Check out the many interviews that we've done with leaders in the space. If you'd like to conduct an interview with someone you'd like to network with just let us know.

Interviews

Join Us!

Join our team of future leaders from around the world to build the toolkit, organize events, and write content.

Organizers and Contributors

Interviews

Resources

Online Resources Around the World

Participate in Training and Workshops

Workshops

Join Us!

Help us create the toolkit and feature the work you are doing in this space. You can tap into our network and share your knowledge with the world.

Coming Soon

Coming Soon!

What is Sustainable Finance?

Traditional vs. Sustainable Finance

We believe that our global financial system needs to improve. Sustainable Finance tries to achieve this by evolving Traditional Finance.

Traditional Finance focuses on Return and Risk, while Sustainable Finance includes environmental and social issues to measure Impact. We can think of this graphically.

[Insert Graph of Return v Risk (x&y) and Return, Risk, Impact (x,y,&z)]

Why does Traditional Finance fail?

Our current economic models were developed based on a set of false assumptions, such as, natural resources are infinite, and carbon emissions are not harmful. These models did not factor in environmental and social concerns. To this day, labor and capital are the only scarce production factors to optimize in economic production. The problem is that the mindset derived from the Industrial Revolution in the 19th century is no longer tenable.

Where does Sustainable Finance step in?

The world of finance now realizes that we must consider more than just financial performance. We must also consider the impact we have in the form of Environmental, Social, and Governance (ESG) factors when we analyze companies and investments. The reasons for this change in mindset are many:

Sustainability is a new business imperative thanks to its proven value-add
Customers are becoming increasingly worried about global issues like climate change
Investors realize they can address societal challenges with their decisions
Regulation is forcing changes to business models and reporting standards

https://littlesustainableinvestor.com/resources/

https://littlesustainableinvestor.com/investing-101/introduction-to-sustainable-investing/

https://www.gov.uk/government/publications/investing-in-a-better-world-results-of-uk-survey-on-financing-the-sdgs A survey by the UK government suggests that a lack of information and knowledge are the main barriers for individuals to engage in sustainable investing. My goal is to provide information in an easily understood way and introduce the concept of sustainable investing to more people.

Sustainable Investing is along a Spectrum

Want to learn more?

Check out this document https://docs.google.com/document/d/1OVzBNYeDAYUJHVh3XHqc-Tnkxl1ZfaQe3XJ8Ebf38-0/edit

We'll be creating a regular Newsletter with updates from the Toolkit. We'll feature our latest interviews and content pieces. Sign up with the link below and let us know if you'd like to participate in creating content for the Newsletter.

An Invitation to Join Us

How did we build it?

While at Curriculum Camp 2021, the Sustainable Finance Squad designed the rollout of the toolkit to the oikos community and to the world. This plan includes an invitation for you to join in co-creating with us. Sign up here!

So far, we’ve designed the key components of our website to be a resource for students and young professionals to understand the growing topics of Sustainable Finance, ESG (Environmental, Social, and Governance), and Impact Investing. The toolkit:

Defines what Sustainable Finance is and why it can solve global issues
Explains how you can use the resources for career development
Outlines the most important terms and resources you can use
Presents interviews and writings from students, professors, and practitioners

Would you like to learn more about the project? Check out the following presentation with background info on the toolkit. You can also rewatch the recording of our info session.

What was Curriculum Camp?

Check out this promo video from our friends at oikos Barcelona - See Video

Toolkit Resources

Lessons

Prepare to learn about the power of the financial industry when sustainable values are applied.

oikos Syllabus

There are so many areas of Sustainable Finance because it touches so many aspects of our society. At oikos International we are developing focus areas with the key points of information you need to build a better financial system. Below are the areas we think form the Principles of Sustainable Finance.

If you'd like to help us explore these areas further, please let us know by emailing Stephen Snider at stephen.snider@oikos-international.org.

Principles of Sustainable Finance

History of Sustainable Finance

The notion of considering sustainability in the financial world did not always exist...

Key dates timeline

1700s - John Wesley's novel idea

The founder of the Methodist movement, is credited with the first conscious investment practice. Urging followers to refrain from making investments in 'sin stocks' such as weapons and tobacco.

1971 - Pax World Fund launched

To avoid supporting companies contributing to the Vietnam War, the first sustainable mutual fund is launched.

1988 - Institutions Created

After NASA's James Hansen told a congressional hearing that there was a 'real warming trend', climate change attracted global attention. The Intergovernmental Panel on Climate Change (IPCC) and the United Nations Environment Programme (UNEP) are established.

1997 - Agreements in Japan

The Kyoto Protocol, an international treaty committing to reduce greenhouse gas emissions, is signed by 192 states.

2006 - Principles in Place

The United Nations' Principles for Responsible Investment (PRI) is launched to encourage further development of sustainable investing.

2007 - Impact Investing

The term 'impact investing' is coined by the Rockefeller Foundation. Putting a name to investments that intend to generate both a financial return and social impact.

2009 - A Network is Born

The Global Impact Investing Network (GIIN) is created to promote investing with the aim of creating a social benefit.

2015 - Frameworks in France

At COP 21 the Paris Agreement is signed by 196 parties agreeing to meet certain future climate goals.

2020 - The Largest Asset Manager Acts

Larry Fink, founder and CEO of BlackRock, wrote in his annual letter that companies generating more than 25% of revenues from coal production will be removed from their active portfolios.

2021 - Study Shows Sustainable Finance is Significant

The Global Sustainable Investment Alliance (GSIA), found that 35.9% of total assets under management were sustainable as of 2020.

2022 and beyond - You Can Make an Impact

The industry is still growing and getting more attention everyday. Could you be a key part of this exciting future?

Our favourite video

If you want more

SRI - Socially Responsible Investment

Money over everything...?

Key information

SRI refers to investment approaches that apply social and environmental criteria when evaluating companies.

How it works:

Investors will create a scoring system based on criteria relating to social impact
Investments are usually made considering the environmental, social and governance (ESG) aspects of a company.
Excluded companies are dictated by the goals of the investor, some may want to avoid weapons companies where as others could want to support companies that do not pollute excessively.

Sustainable Finance, SRI, ESG, etc. is not just a Trend

$12 trillion market in 2019, or about $1 of every $4 investing in SRI
UN’s Principles for Responsible Investment (PRI) has >3,000 signatories & $90 trillion
Green bond & loan issuance $360 billion globally in 2019
BlackRock predicts ESG funds to rise >$400 billion over the next ten years
Unique tools are being created $25 million water bond for Washington, D.C. in 2016
90% of millennials want to invest retirement savings sustainably ()
75% of savers say they want SRI choices ()
75% of millennials consider company values (, )

Source: HBR: The State of Socially Responsible Investing

Our favourite video

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ESG - Environmental Social Governance

A framework for assessing a company beyond its financials

Key information

ESG Criteria allow investors and companies to measure the impact they have on people and the planet.

The factors are broken down as so:

E - Environmental - includes a company's use of renewable energy, waste output, and GHG emissions.

S - Social - refers to how a company interacts with society from wages, to gender balance, and human rights.

G - Governance - describe the management and policies a company has in place. Corporate scandals may be a result of poor governance.

Our favourite video

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Impact Investing

Key information

Impact investing is defined as the deployment of investment capital seeking to make a positive social and/or environmental difference alongside financial returns.

“All investing has an impact that is largely opaque to the investor, and I think that the work of our field, in part, is to make that impact, positive and negative … transparent to the investor so that the investor can choose.”

— Fran Seegull, Executive Director of the U.S. Impact Investing Alliance

How money is allocated influences which companies are able to grow and what products and services are delivered to people, it is one of the most powerful scarce resources.

Historically, investment decisions were almost exclusively made based on the traditional risk vs return model. Today, ESG ratings have led to asset selection screening based on these factors. Impact investing goes one-step further, specifically directing capital towards companies whose product/service has a positive impact.

Broadly speaking, as much as 1/3 of USA Assets Under Management can be considered as Impact Investments.

Our favourite video

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Banking and Asset Management

What role do the banks and asset owners have to play?

Key information

Banking and Asset Management are tools for Sustainability and Development. But the United Nations Conference on Trade and Development 2020 report confirms that there is a $2.5 Trillion Gap to achieve the Sustainable Development Goals. World Investment Report.

More money needs to flow towards sustainability and green projects. Current investment trends and monitoring capacities show we fall short. Green Finance Platform

We can do this by mapping the SDGs to Impact Investing and aligning our goals to our tools. How do we connect the SDGs to ESG?

How to Get to Sustainable Banking

In our banking world, we need to have structural reforms, integrate ESG risks, and use more sustainable lending. One place that has defined the principles we need is the Global Alliance on Banking Values (GABV).

Another effort to follow is the UN's Principles of Responsible Banking which has had massive adoption with 45% of global assets participating including 275 signatories. You can check if your bank has signed the principles here: UNEFPI Signatories. Check this for resources for implementation.

Our favourite video

Think of Asset Managers as chefs because they create portfolios for their clients to balance: Risk, Return, and Impact (Sustainability). The "chef" must cater to the needs of their clients and allign their needs and motives to security possibilities.

If you want more

Equity and Valuation

Key information

Equity

Public companies, meaning they are listed on the stock exchange, have a market value which is known as market capitalisation.

Share price is impacted by supply and demand, and sustainability factors are increasingly influencing demand of stocks.

Tesla is a great case study for this, it took them 17 years to turn their first annual profit in 2020. Yet it became the most valuable automative company in the world in July of that year, before the news of its annual profit was announced. Investors became confident in the future of cars being electric, and hence demand for a piece of the company skyrocketed.

Valuation

The most common intrinsic valuation method is the discounted cash flow (DCF) approach.

Analysts are now aware that many factors relating to sustainability will impact the future cash flows of companies. For example, necessary investments to make processes less polluting or potential regulations that could force a firm to change some of its products/services.

Quick Activity: Think of a company you like, or one you don't, how do you think sustainability factors might affect their future cash flows?

Our favourite video

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Green Bonds and Climate Financing

Fixed income is a way to change humanity's outcome.

Key information

In November 2008, the World Bank became the first institution to issue a green bond.

Green bonds typically have the same structure, credit risk, yield, and rewards as traditional bonds.
Their differentiation comes from “greenness” or being environmentally friendly.
Although that is not particularly well regulated, the investment in itself is structured just like any other fixed-income security.
There are also social, blue bonds, etc.

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Characteristics of Bonds:

It is useful to learn more about traditional and sustainable bond factors to better understand how we finance projects using bonds. Source: Schoenmaker and Schramade, 2019.

Traditional Bond Factors

Sustainable Bond Factors

Sustainability Assessment Methods:

There are many valuation methods useful in analyzing and financing sustainability. Below are just a few of the methods possible and some useful research papers to help you learn more.

Frameworks

Key information

There are many frameworks created to assist companies and major stakeholders in the financial industry to form their sustainability goals and implement the necessary changes to achieve them.

We have identified 4 key frameworks which are having a big positive impact:

1. United Nation's Sustainable Development Goals (UN SDGs)

The 17 SDGs are at the heart of the 2030 Agenda for Sustainable Development which was adopted by United Nations' members in 2015.

2. Doughnut Economics

The Doughnut is the creation of economist and Oxford professor Kate Raworth.
The social foundation is the minimum social standards we want for humanity, based on the UN SDGs.
The ecological ceiling highlights the nine planetary boundaries set out by John Rockström and his colleagues. Beyond which lie catastrophic environmental changes.
Between these two limits, is 'the safe and just space for humanity' to operate in sustainably.

3. Principles for Responsible Investment

Created by the PRI, these six principles intend to guide investors on how to act in order to create a more sustainable global financial system for the future.
The PRI has almost 4000 signatories now made up of institutional investors.

4. Sustainability Accounting Standards Board (SASB)

Reporting and accounting standards are crucial to the business world, allowing companies to understand themselves better and facilitating transparency between firms, shareholders and investors.
The SASB has developed standards specific to 77 industries, identifying the ESG issues most relevant to financial performance.

Our favourite video

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Risk Management

How can we deal with the future uncertainty?

Key information

Risk is a measurement of uncertainty, and so it is a crucial factor when considering the unknown future before us. Through analysing the probability of an event occurring, and the resultant financial impact, we can analyse risk and put measures in place to minimise loss.

There are three main categories of risks related to sustainability:

Physical Risk
- Encapsulates risks related to the physical impact of climate change
- Examples include extreme heat events, which studies have attributed to human action causing warming of the climate in many studies
Transition Risk
- Includes risks related to the transition to a low-carbon economy
- A big aspect of this is stranded assets, which are assets that have suffered from unanticipated write-downs or devaluations due to climate factors
- For example, nearly 60% of oil and fossil methane gas and 90% of all coal reserves would have to remain unused to keep temperature increase at 1.5°C - the target level set in the 2015 Paris Agreement.
Litigation Risk
- The chance of legal action being taken in response to company's behaviours relating to climate change
- Since 2017, the total number of climate litigation cases nearly doubled to 1550

Quick activity: Can you think of which industries could be most susceptible to each of these risks?

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Insurance

Risk experts have to consider climate risk also

Key information

The purpose of the insurance sector is to understand, manage and carry risk on behalf of people, companies and governments. With the increasing focus on ESG issues, the industry has to adapt.

Leading this is the United Nations Environment Programme Finance Initiative, which has identified four principles to integrate ESG into insurance:

We will embed in our decision-making environmental, social and governance issues relevant to our insurance business.
We will work together with our clients and business partners to raise awareness of environmental, social and governance issues, manage risk and develop solutions.
We will work together with governments, regulators and other key stakeholders to promote widespread action across society on environmental, social and governance issues.
We will demonstrate accountability and transparency in regularly disclosing publicly our progress in implementing the Principles.

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Green Buildings

Homes, offices and industrial buildings are in need of a revamp

Key information

Did you know that nearly 50% of the world's greenhouse gases come from the built world?

27% from building operations and 20% from building materials and construction, both of these areas need to have an operational overhaul.

Green buildings are those that are environmentally responsible and resource-efficient, through the full lifecycle - from design, to construction, to operation and finally with demolition.

PropTech companies, those that are using technology to the real estate industry, are finding many creative solutions to this problem.

Our favourite videos

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Carbon Pricing

The 'polluter pays' principle

Key information

There is a general consensus that carbon pricing is a key strategy that will help lead us to a fully decarbonised economy.

It works by putting a price on carbon emissions, companies have a large financial incentive to reduce their emissions.

How it works

The two most common carbon pricing policies are:

Emission Trading System (ETS) - Companies have emissions units which are tradable, if a company emits less than their units, they can sell the remaining and benefit financially.

Carbon Tax - Directly sets a price on carbon by setting a specific tax rate on greenhouse gas emissions.

Our favourite video

If you want more

How Carbon Pricing Can Save the World - TedX

How does the emission trading scheme work? - Carbon Control

CSR - Corporate Social Responsibility

Conducting business in an ethical way

Key information

Corporate Social Responsibility (CSR) is a management concept whereby companies are socially accountable to themselves and their stakeholders. Through integrating social and environmental concerns into their operations and stakeholder interactions firms a company can achieve balance socially, environmentally, and economically.

There is an accounting framework that considers these three key factors which is called 'the triple bottom line'. The three areas are often referred to as The Three P's; People, Profit and Planet.

Some examples of CSR in practice

TOMS shoes - Founded upon the social mission that for every pair of shoes sold, one pair would be given to a child in need of shoes.
Starbucks - In its hiring procedures Starbucks strives for equality and diversity, hiring veterans and refugees, and maintaining 100% pay equity across men and women and people of all races for performing similar work.
Salesforce - Champions a 1-1-1 philanthropic model, this means giving 1% of product, 1% of equity, and 1% of employee time to communities and the non-profit sector. Interlinking success of the company with positive impact.

Quick activity: Think of a job that you have done, what is a way that CSR practices could be applied to the work or company?

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Innovation and ClimateTech

Can technology save us?

Key information

Technology is unlikely to be the silver bullet that many people hope it will be, however innovation will be a key contributing factor to achieving necessary climate goals. A McKinsey report found that 40% of required emissions abatement could come from technologies that are still being developed, so watch this space!

ClimateTech

ClimateTech is a sub-sector of technology companies which are focusing on developing and/or utilising technologies to combat climate change. Companies in this space are attracting significant investments from venture capitalists (VCs) who are early-stage investors, giving capital to risky start-ups in return for equity in the company, in the hope that it will grow.

Some of the most successful and impactful ClimateTech companies include:

Nature's Fynd - Using their fermentation technology they turn fungi into dairy and meat food substitutes, using a fraction of the water, land and energy resources of animal protein sources.
Prometheus Fuels - Has developed a tools to filter atmospheric CO2 and turn it into a viable net-zero fuel that can compete with fossil fuels.
Volocopter - An electric powered air vehicle designed to operate as an air taxi, reducing cars on the road.

Crunchbase is a great resource for finding exciting start-ups, check it out and see if you can find a ClimateTech firm that you think will see financial and environmental success!

Our favourite video

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Climate Justice

Human rights considerations for those most impacted by climate change

Key information

Climate Justice is liked to human rights and international development, as it acknowledges there is a disparity between those having the largest causal influence on climate change and those feeling the largest burden from its impacts.

As the more developed nations have achieved their wealth in-part due to climate damaging practices, such as burning fossil fuels, many argue it would be 'just' for them to redistribute their wealth more equitably to those dealing with the consequences.

Some facts motivating climate justice activists

People in low- and lower-middle-income countries are ~5x more likely than people in high-income countries to be displaced by extreme weather disasters. (Oxfam)
Just 122 corporations account for 80% of all carbon dioxide emissions. (Corpwatch)
From 1990 to 2015, the richest 10% of the world's population were responsible for 52% of cumulative carbon emissions. (Oxfam and SEI)

World leaders are continuously struggling to find a 'just' solution to the climate problem, what do YOU think would be a fair agreement between developed and developing nations?

Our favourite video

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Climate Justice is Social Justice - Earthrise

Who is Responsible for Climate Change? - Kurzgesagt

Bonus Learning

Auxiliary topics that are worth checking out!

Rating Agencies

Separating the green from the greenwashers

Ones to know

MSCI (Morgan Stanley Capital International) ESG Ratings - The ESG rating system of one of the biggest and most trusted financial companies.

Divestment

The following resources about fossil fuel divestment were prepared by our partner @SriEvent. Check out @SriEvent website for more resources, news, #LiveTweeting, and more.

Origins and Milestones of Divestment

Unburnable Carbon: Are the World’s Financial Markets Carrying a Carbon Bubble? -The original report released in 2011 by Carbon Tracker that codified the concepts of "stranded assets" and "carbon bubble" from which the fossil fuel divestment movement and campaign started

Global Warming’s Terrifying New Math - This article by Bill McKibben published on Rollingstone.com in 2012 triggered the fossil fuel divestment movement and campaign first in US college campuses and then across the world

Laudato si' encyclical letter (in particular: par.26, par.165) - Pope Francis' so-called "green" encyclical that stressed the urgent need to progressively phase out fossil fuels and inspired the Catholic world to act on climate through divestment

Fossil Fuel Divestment Act - The law that in 2016 made Ireland the first country in the world to divest from fossil fuels

LD99 - An Act To Require the State To Divest Itself of Assets Invested in the Fossil Fuel Industry - The law that in 2021 made the Main State the first in the US to divest from fossil fuels

Harvard Will Move to Divest its Endowment from Fossil Fuels - The moment Harvard University, the richest on earth, in 2021 committed to divest from fossil fuels in practice after a decade of resistance to one of the longest, strongest and most iconic divestment campaigns in the world, carried out by its students

Data

Invest-Divest 2021 report - A decade of progress towards a just climate future (released October 26, 2021)

Divestment Database - The database of fossil fuel divestment commitments made by institutions worldwide

Organizations and Coalitions

350.org - This US-based non-profit, climate activist organization was co-founded by Bill McKibben and represents the heart of the fossil fuel divestment movement and campaign ("350" stands for 350 parts per million, which is the concentration of carbon dioxide in the atmosphere considered safe by scientists)

Laudato si' Movement - Formerly the Global Catholic Climate Movement. They have a great section on Divestment. This is a coalition of Catholic institutions and organizations from across the world committed to acting on climate, being inspired by Pope Francis' encyclical Laudato si', which is linked above

DivestInvest - A global network of organizations committed to divest from fossil fuels and (re)invest in climate solutions in order to tackle the climate crisis

The Fossil fuel Non-proliferation Treaty - A global initiative launched in 2020 to phase out fossil fuels and support a just transition through an internationally binding treaty modeled on the historical Treaty on the Non-Proliferation of Nuclear Weapons

Personal Investing

The change starts with you!

What is it?

Many people like to save some of their income for the future, and investing is one possible approach.

If you decide to do this, how can you be sure that your money isn't supporting companies that don't align with your values? Check out the resources below to find out!

Useful resources

Some great organisations to help you with your decision making are below:

Mighty Deposits

Find out what your bank is doing with your money and find a bank that invests aligned with your values. They only review U.S banks and credit unions currently. They pull together information from publicly reported data, financial institution websites, and surveys. You can check if your institution is certified as sustainable, if they invest in low-income communities, if they do small business lending, if it is women or minority-owned, and much more.

Shareholder Action

In terms of Sustainable Finance, this refers to how shareholders are using their collective power to force companies to make organizational and operational changes through the use of engagement, shareholder resolutions, public advocacy, and more.

Organizations to Check Out

Some organizations working in this space are below. These groups are helping the average shareholder take collective action to change the way public companies are behaving.

As You Sow

Shareholder Commons

Interviews

Who are you and what is your work?
What can you teach us about Sustainable Finance?
How can students find jobs in your area?

Private Sector

Karen Lin - ESG Consulting