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 ([email protected]) 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
Check out this promotional flyer for more info:
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
What do we hope to achieve?
Here is a short video from the 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
Below are some specific resources the toolkit has to offer by the type of user.
Remember, you can help us expand this toolkit. !
Learn Many Points of Information
Check out the resources that we have linked together in this toolkit.
Bonus Learning
Auxiliary topics that are worth checking out!
Events
SIF
Interview stakeholders and network
Write on finance "hot topics"
Organize events and conferences
Network with the industry
Have a positive impact
Conferences, Events, or Workshops you can participate in
Partners & Resources
Supporting People and Organizations to network with
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.
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.
Join Us!
Join our team of future leaders from around the world to build the toolkit, organize events, and write content.
Share Your Knowledge
Sign up to be interviewed and help others learn from you.
oikos Sustainable Finance Interview with Leaders in the Space
Yuki Yashui - UNEP FI
oikos Sustainable Finance Interview with Leaders in the Space
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.
Newsletter
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.
Infrastructure Projects - The Inter-American Development Bank has created a course to train professionals on how to incorporate disaster risk assessment and resilience to climate change in the design of infrastructure projects. The course may be useful to you
Corporate Finance Institute
The Corporate Finance Institute has two sessions that are useful to the sector. They also offer many other trainings and useful content.
#SriTweeters, #SriDOCS) are free to access and at your disposal, I'm fine if you can just quote the blog as the source. Is this what you had in mind? If not, pls explain to me. Moreover: since you're a #SRINatives contributor, you think there's a way to bring @SRI_natives on board in this project? You tell me
#ESGCareerMap as we said in the call
Around the World
This section of the Toolkit provides resources that are most relevant to specific geographical regions.
Would you like to feature your region? Add your resource and a short description using our sign-up form. We will get in touch with you and add your contribution.
Being trained by these programs will take you to the next step of your Sustainable Finance journey.
Conferences
B-Corp
US SIF
Public Sector
Workshops
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?
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
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?
Our favourite video
If you want more
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 [email protected].
Principles of Sustainable Finance
Interviews
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?
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.
Our favourite video
If you want more
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.
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.
Source: UNIDO
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?
Our favourite video
If you want more
Steve Waygood - Aviva Investors
oikos Sustainable Finance Interview with Leaders in the Space
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
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
If you want more
Paul Gower - University of Warwick
oikos Sustainable Finance Interview with Leaders in the Space
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.
Kelly Kirsch - Sustainable Finance Careers
oikos Sustainable Finance Interview with Leaders in the Space
Lubna Maria Elia - NEIII Impact Investing
oikos Sustainable Finance Interview with Leaders in the Space
Ibrahim Rashied - ESG Research
oikos Sustainable Finance Interview with Leaders in the Space
Andy Agathangelou - Transparency Times
oikos Sustainable Finance Interview with Leaders in the Space
Alice Khounta - GABV Banking Alliance
oikos Sustainable Finance Interview with Leaders in the Space
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.
Career Paths
There is a boom in interest in Sustainable Finance! Having experience on your resume and speaking the "language" is essential to differentiate yourself.
Major banks, asset managers, consulting companies, and others are adding roles and looking for talent with traditional financial skills, sustainability experience, and ESG knowledge.
Many Paths
There is no one way for you to enter the industry. There are many roles and opportunities and they seem to be constantly evolving. One way to think of it is as either:
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
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!
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.
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:
SOCAP Global
is an organization "accelerating movement towards a more just and sustainable economy." They organize events, host conferences, and publish content to educate and bring together stakeholders to learn more about Impact and how to incorporate it into organizations.
They host an excellent podcast called which is a great listen
You can join the of leaders and organizations to access their network. They use an app called where you can apply to join.
They offer scholarships for social entreprenuers -
Sign up for their newsletter here:
Types of Capital
The different ways a financial investment is made.
CONVERTIBLE DEBT Loan that can be converted into an equity investment at a future date or under certain circumstances. Upon conversion, the value of the debt is used to buy shares at a pre-negotiated, typically discounted price.
EQUITY Ownership of stock in an enterprise, purchased either directly from the company or from another investor. Equity investors may receive voting rights and/or board seats.
GRANT Financial award given to an organization to address a stated goal with no repayment obligation.
GUARANTEE Binding promise made by one individual or organization to cover the debts of another individual or organization in the event they cannot repay a debt.
LINE OF CREDIT Credit facility that can be drawn upon and replenished, typically to fund working capital. The line can include commitment fees as well as interest rate charges.
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:
Competitions
- invites teams of graduate students from around the world to develop and pitch creative financial approaches to tackle pressing social and environmental challenges.
Impact Criteria
Criteria for evaluating whether a company meets the social impact objectives of a fund.
COMMUNITY ENGAGEMENT How engaged is the enterprise in its local community?
ECOLOGICAL STEWARDSHIP What is the ecological footprint of the enterprise? What steps is it taking to improve its positive impact or mitigate its negative impact?
EQUITABLE OPPORTUNITY How does the enterprise create opportunity for people who have been impacted by racial, social and economic inequality? How many quality jobs does it create? What is the composition of management and leadership?
EQUITABLE OWNERSHIP Who has the opportunity to own this enterprise? How is ownership structured to create meaningful, social impact?
LOCAL CONSUMPTION To what extent does the enterprise create products and/or services for the local community?
Financial Management Reports
Procedures and reports used to manage information and make decisions.
AUM Assets Under Management is the total value of all deployed and undeployed fund assets, excluding operating cash.
BUDGET Projection of the expected inflows and disbursements of a fund, project or enterprise, used and modified in an ongoing way as an operating management tool.
CASH BALANCE Current amount of cash on hand.
COLLECTION POLICY Policy describing the fund's approach to collecting past due debts and recovering losses from collateral liquidations.
COVENANT TRACKING Report tracking financial and impact covenants, which are legally binding agreements made between the fund and an enterprise regarding expected financial and impact performance.
Candriam
Carbon Washing
Despite the increased attention and capital incentives around corporate sustainability, the development of sustainability reporting standards and monitoring systems has been progressing at a slow pace. As a result, companies have misaligned incentives to deliberately or selectively communicate information not matched with actual environmental impacts or make largely unsubstantiated promises around future ambitions. These incidents are broadly called “greenwashing,” but there is no clear consensus on its definition and taxonomy. We pay particular attention to the threat of greenwashing concerning carbon emission reductions by coining a new term, “carbonwashing.” Since carbon mitigation is the universal goal, the corporate carbon performance data supply chain is relatively more advanced than that of the entire sustainability data landscape. Nonetheless, the threat of carbonwashing persists, even far more severe than general greenwashing due to the financial values attached to corporate carbon performance. This paper contextualizes sustainable finance-related carbonwashing via an outline of the communication as well as the measurement, reporting, and verification (MRV) of carbon emission mitigation performance. Moreover, it proposes several actionable policy recommendations on how industry stakeholders and government regulators can reduce carbonwashing risks.
Where to Apply?
One way to narrow down your job hunting is by thinking of different sectors of jobs. Some include:
Community Developer Financial Institutions (CDFIs)
Consulting Companies
Tools
Check out this page for software and programs geared toward helping you practice Sustainable Finance.
- the US Financial Industry Regulatory Authority (FINRA) offers information and analysis on over 30,000 mutual funds, exchange traded funds (ETFs) and exchange traded notes (ETNs)
Partners
Below are just a few of the many partners that we have supporting the development of the Sustainable Finance Toolkit.
Join us and support our mission of sharing sustainable finance resources and programming with future leaders. If you'd like to participate, please reach out to Stephen Snider at [email protected].
CFA
The has developed a certificate for those interested in learning more about ESG Investing. You can register for the class below. The CFA UK also offers a great diversity of events and career resources.
The CFA UK has prepared some resources to help you to study for their ESG Investing certificate. These are below. These are provided only as reference materials and if you decide to take the CFA UK's course you should consider purchasing the most up-to-date materials.
Organizers and Contributors
Check out this file to see who has been involved in the project - .
If you'd like to join our Squad and want to contribute to the toolkit then
Chai Locher - Institute for Social Banking
oikos Sustainable Finance Interview with Leaders in the Space
Amy Ryan - ESG Strategies
oikos Sustainable Finance Interview with Leaders in the Space
Rating Agencies
Separating the green from the greenwashers
Ones to know
- The ESG rating system of one of the biggest and most trusted financial companies.
For Teachers
The following are some resources specific to those organizing classes or lectures on the topic. Our hope with this page is that resources can be shared globally to improve the quality of education on the topic of sustainable finance.
Please contact Stephen Snider if you would like to share any resources with us - [email protected]
Syllabi for Your Class
This Google folder has a bunch of great syllabus from top universities from around the globe that offer exciting and really interesting courses. Please reach out to the professor of the class to discuss the syllabus. If copying any materials you need to ask for permission to share them. Thank you for your interest.
PREFERRED EQUITY Preferred equity investments give the investor a higher claim to dividends or asset distribution than other equity positions.
PURCHASE ORDER FINANCE Loan made with an incoming receivable, such as a customer order or grant, used as collateral. Repayment occurs when the receivable is collected.
RECOVERABLE GRANT Grant made by nonprofit organizations or donors that, under predetermined circumstances, becomes repayable, potentially with interest.
ROYALTY FINANCE Loan with repayment obligations based on a percent of revenue.
SAFE Simple Agreement for Future - Equity that provides rights to an investor for future equity without determining a specific price per share until a later priced round or liquidity event occurs. Often used with start-ups.
TERM LOAN Loan that is repaid in regular payments over a set period of time, usually greater than one year. Term loans can have a range of interest rates and amortization schedules.
LOCAL PRODUCTION How much of the enterprise's supply-chain is sourced locally? How much production takes place locally?
NEGATIVE SCREENS To what extent does the enterprise earn revenue from business sectors that the fund has screened out (such as fossil fuels, private prisons, defense sector, etc.)?
WORKPLACE DEMOCRACY How democratic or participatory is the enterprise? Do workers have a voice? How is information and decision-making distributed?
CREDIT RATING REPORT Report assessing the probability of repayment for each investment in a portfolio, based on historical and projected data and judgment.
DEPLOYED ASSET REPORT Report describing each investment the fund has made, including investment type, outstanding balance, credit score and repayment timeline.
DURATION ANALYSIS Dollar-weighted average time of asset return and liability obligations.
EQUITY VALUATION Projection, typically created on an annual basis, that assigns value to the ownership of a for-profit enterprise. Used to determine whether equity investments have appreciated or been impaired.
FINANCIAL COVENANT GUIDELINES Policy providing guidance about which financial covenants should be included in final investment documents.
FINANCIAL REPORTING Series of financial statements in line with accounting principles as required by law (GAAP) and management decision-making needs.
FUND POSITION REPORT Report used to monitor the continued financial viability of a fund with respect to its past and future obligations and investments.
IMPACT COVENANT GUIDELINES Policy providing guidance about which impact covenants should be included in final investment documents.
IPS: DEPLOYED ASSETS Investment Policy Statement for the fund's stated goals and requirements for making investments, including expected risk, return, asset mix and special constraints.
IPS: UNDEPLOYED ASSETS Investment Policy Statement for the fund's stated goals and requirements for how to invest undeployed assets in alignment with return, risk, liquidity and other non-financial expectations.
PRO FORMA Forecast of financial prospects of a fund, project or enterprise, typically used for soliciting capital.
RESERVE MANAGEMENT POLICY Policy for the fund's stated goals and requirements for how to determine required and discretionary reserves relative to current and future expected bad debt.
UNDEPLOYED ASSET REPORT Report describing the interim investment program for the fund's undeployed assets, and comparison to the borrowing costs to raise those funds.
YIELD ANALYSIS Analysis that compares a fund's average yield of assets against the average costs of its liabilities.
Institutional Investors
Family Offices
Foundations
Investment Managers (public and private equity, or even debt)
International Organizations (like the UN or World Bank)
Microfinance
Philanthropy
You could also apply to organizations that are signatories to UN PRI, are members ofGIIN, or have been certified as B-Corporations.
Many organizations are adding jobs so quickly they don't have the time to train or hire the right talent. Some firms are internally promoting individuals and giving them titles they do not have a background in because there is such a major demand for these services. A basic understanding of sustainability does not make them an "ESG and Sustainability Expert." Likewise, a career in finance does not mean you will have the understanding to address environmental and social issues.
Greenwashing means that individuals with passion, empathy, different backgrounds, and understanding can stand out and have a deeper impact.
An evidence-based way to estimate social and environmental returns.
Impact investing—directing capital to ventures that are expected to yield social and environmental benefits as well as profits—provides investors with a way to “do well by doing good.” But whereas the business world has tools for estimating a potential investment’s financial yield, it lacks them for estimating social rewards in dollar terms. Now the Rise Fund and the Bridgespan Group have developed what they call the impact multiple of money (IMM) to demonstrate the value of putting impact underwriting on the same footing as financial underwriting. In this article they explain their six-step process for calculating it: (1) Assess the relevance and scale of a potential product, service, or project. (2) Identify target social or environmental outcomes. (3) Estimate the economic value of those outcomes to society. (4) Adjust for risks. (5) Estimate terminal value. (6) Calculate the social return on every dollar spent. The IMM, they write, “offers a rigorous methodology to advance the art of allocating capital to achieve social benefit.”
SDG Impact Measurement
Check out this course on Impact Measurement and Management for the SDGs. The course is available on Coursera and is offered CASE at Duke University. The course's instructor is Catherine Clark. The is currently $49 USD, about 9 hours long, and provides you with a certificate at the end.
The UN is working on creating an “SDG-Seal” for funds (equity/debt, both private and public), and Duke was commissioned to create a course helping investors and enterprises get certified.
Here are two takeaways Ibrahim Rashid had about the course:
1. The #ImpactInvesting industry is trending towards requiring third-party validation. SDG Impact is in the process of building an SDG Seal of assurance (like a fair-trade seal) for all impact investments. The Duke course is the best way, if implemented, to prepare your fund (regardless of asset class) for UN Certification.
2. The real strength of this course is its ability to drive home the spirit of the different impact measurement and management frameworks on the market, and understand their limitations, use cases, and how to apply them coherently together. It's one thing to know about the #IMP5dimensions, and how to write a report that explains the "who what how much, etc.", it's another to understand how to embed that within your impact thesis, diligence process, and incorporate other frameworks (like the IRIS indicators, or the SASB/GRI materiality framework) within that analysis. Long story short - it helps us move away from seeing these frameworks as box-ticking or window dressing, and more towards a holistic and integrated theory of impact.
Switzerland
The oikos St. Gallen team has written two reports on the topic of Sustainable Finance in Switzerland based on various events that they have hosted. Check the reports here.
Legally binding agreements between a fund and the companies in which it has invested to advance social impact.
ANTI-DISPLACEMENT PRACTICES Require that real estate investments do not displace local residents and businesses, thereby contributing to accelerated speculation and gentrification.
COMMUNITY EMPLOYMENT Require a percentage of jobs to be created and sustained from target populations (e.g. returning citizens, immigrants and refugees, neighborhood workers, etc.).
COMPENSATION RATIO Cap the difference in total compensation between the highest paid and lowest paid workers in an enterprise.
DISTRIBUTED OWNERSHIP Require a percentage of enterprise ownership to be distributed to workers.
GENDER EQUITY Designate a percentage of board seats, management and/or staff to be filled by women based on recruiting and retention efforts.
LIVING WAGE Require wages to approach, meet or exceed a calculated wage target that covers the cost of living in the enterprise's Community.
PROCUREMENT: EQUITABLE Require a percentage of supplier relationships or dollars to come from enterprises owned by people of color and/or women.
PROCUREMENT: LOCAL Require a percentage of supplier relationships or dollars to come from local providers.
RACIAL EQUITY Designate a percentage of board seats, management and/or staff to be filled by people of color based n recruiting and retention efforts.
WORKPLACE DEMOCRACY Require the creation or maintenance of internal systems that distribute information and decision-making power among staff (e.g. cooperatives governance, participatory decision-making, open book accounting, etc.).
Type of Entity
Organizations that are seeking capital to achieve their goal.
B-CORP For-profit entity that is legally organized to be accountable for both profit and impact objectives.
COMMUNITY LAND TRUST Nonprofit corporation that develops and stewards affordable housing, community gardens, civic buildings, commercial spaces and other community assets.
EARLY STAGE ENTERPRISE Enterprise that has not yet achieved financial sustainability and may not have ready access to traditional financing given its limited operating history.
FOR-PROFIT ENTITY C-Corp, S-Corp, LLC that seeks to increase the value of ownership for its shareholders. For-profit entities may state impact goals, but are not held accountable to them by their incorporation.
GROWTH ENTERPRISE Enterprise with a fully devel oped business model seeking to grow its customer-validated value proposition. Revenue growth may come at the expense of profitability, requiring additional external funding.
NON-PROFIT ENTITY Tax-exempt organization that works for the public interest. All assets and income from the nonprofit are reinvested into the organization or donated.
OTHER COOPERATIVES Values-driven enterprise owned and governed collectively. Consumer coops buy goods and services together. Producer coops process and market products. Retail coops pool purchasing power. Housing cOop members own building shares rather than individual units.
SMALL/ MEDIUM ENTERPRISE (SME) Enterprise with typically fewer than 500 employees.
START-UP New enterprise that intends to grow beyond the founder and may not yet have earned any revenue.
WORKER-OWNED COOPERATIVE Values-driven enterprise that is owned and governed by its workers. Worker-owners participate in profits, oversight and management of enterprise using democratic practices.
Transaction Structure
The mechanism through which investors and companies agree to exchange financial capital
CO-LENDING AGREEMENT Agreement made between two or more lenders concerning how they will jointly interact with the same borrower.
CROWDFUNDING Process of soliciting capital from the general public, including non-accredited investors, without the use of a registered underwriter, often leveraging internet platforms.
DPO Direct Public Offering is a structure in which a company offers stock directly to the general public, including non-accredited investors, without the use of a registered underwriter.
EQUIPMENT FINANCING Loan made to an enterprise with the purpose of purchasing equipment.
ESCROW ACCOUNT Contractual arrangement in which a third party (escrow agent) receives and disburses money or property for the primary transacting parties, based upon agreed conditions.
ISA Income Sharing Agreement is a debt repayment structure based on a percentage of future or current income for a discrete time period. Most commonly applied to student loans.
IPO Initial Public Offering is a structure in which a company uses an underwriter to establish an initial value for stock ownership of the company, then sells the stock on public exchanges to investors.
MORTGAGE Debt obligation secured by real estate owned by the borrower.
PARTICIPATION AGREEMENT A lending institution agrees to fund a portion of a larger loan commitment and allow a lead funder to administer the loan.
PAY-FOR-SUCCESS Deal structure in which repayment terms are based on the achievement of pre-established, observable metrics, usually defined by social impact. Social Impact Bonds are an example.
RECOVERABLE GRANT Grant made under predetermined circumstances that can become repayable, potentially with interest. Recoverable grants are different from loans in that they are forgivable.
ROYALTY FINANCE Form of debt in which lenders agree to be repaid based on an agreed upon formula, usually a percentage of revenue (a royalty).
SELF-LIQUIDATING EQUITY Form of structured exit in which an equity position is repaid using a pre-determined formula (such as available free cash flow) up to a cap.
SPV Special Purpose Vehicle is a standalone legal entity formed for the purpose of financing a specific project or business operation, often on a temporary basis.
STRUCTURED EXIT Pre-negotiated arrangement for an investor to sell a debt or equity position at a later date to realize an investment gain. This replaces traditional exits in which the investor is paid out when the company is acquired.
TAX CREDIT STRUCTURE Transaction in which the investor pays in advance for expected future tax credits related to project finance.
VARIABLE DIVIDEND VEHICLE Form of equity in which shareholders receive distributions (dividends) of available excess cash based on an agreed upon formula.
Kenya
Contributors to the Toolkit have provided some information on the state of sustainable finance in Kenya.
The Kenya Climate Change Innovation Centre (housed in Strathmore University): has been preparing reports and educating on how sustainable finance can be used. Check out more here - https://www.kenyacic.org/
We are looking for organizations working and educating around sustainable finance. If you would like to be a part of the creation of this toolkit, please reach out.
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.
Source: Global Climate Litigation Report, 2020
[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 realizesthat 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
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?
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Useful resources
Some great organisations to help you with your decision making are below:
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.
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
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.
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.
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!
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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?
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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.
- 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
- 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
- The law that in 2016 made Ireland the first country in the world to divest from fossil fuels
- The law that in 2021 made the Main State the first in the US to divest 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
- A decade of progress towards a just climate future (released October 26, 2021)
- The database of fossil fuel divestment commitments made by institutions worldwide
Organizations and Coalitions
- 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)
- 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
- A global network of organizations committed to divest from fossil fuels and (re)invest in climate solutions in order to tackle the climate crisis
Other Related Initiatives
- 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
Organizations
Some organizations to be aware of that are acting in the space are here. Some additional pages are included that go deeper into a few of these organizations.
Social Entrepreneurs seeking funding for their enterprises can find alternative financial models and long-term partners in the impact investing community.
Business leaders can gather insights on bringing a stakeholder mindset into their organization and discover how to include environmental, social and governance factors throughout their operations.
Retail investors, which includes anyone with a bank account and 401(k) or other retirement plan, can now find options that keep their money out of sectors they don’t agree with, such as fossil fuels, and put the money into impact, like renewable energy infrastructure.
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.
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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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LinkedIn Is Your Friend
Search out jobs and network broadly on LinkedIn. Many currently in roles are willing to chat and mentor because they see the need for more people to join the field.
Use this link to search ESG jobs. There are thousands!
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.
Integrated Capital Game
The following is a list of key words and definitions you should learn.
(BII) has created this list in the form of a deck of 121 cards to teach you the terminology and definitions common to the impact investing space. These cards can be used in group settings or by the individual to learn about impact investing and structuring deals. Check out the definitions and the instructions on how to play.
Please reach out to BII to get permission to use the cards in a group setting. BII can facilitate a training session. Email them at - [email protected]
Here are the game's instructions. Follow this link to learn more about the game -
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:
Local Stakeholders
Groups and organizations important to the decision-making process who need to be incorporated into transactions.
ANCHOR INSTITUTION Nonprofit institution such as a university or hospital that once established tends not to move location. It can have significant impact in its local community via its investment, procurement, hiring and philanthropic practices.
ANGEL INVESTOR Individuals who provide financial support and strategic advice to entrepreneurs launching early stage enterprises, usually in exchange for convertible debt or equity. They often form organized collectives to identify investment opportunities.
BANK Regulated financial institutions with access to the Federal Reserve It is able to offer low-interest rates, but primarily to organizations with profitable financial histories.
BUSINESS ASSOCIATION Network of professionals from various industries who exchange expertise and relationships to advance their field.
Funding Source
Organizations or individuals that could invest in a company
ANCHOR INSTITUTION Nonprofit institution such as a university or hospital that once established tends not to move location. It can have significant impact in its local community via its investment, procurement, hiring and philanthropic practices.
ACCREDITED INVESTOR Investor with annual income above $200k ($300k for couples) or minimum net worth of $1M. An organization may be accredited if it has a minimum of $5M in assets or if its owners are accredited investors.
ANGEL INVESTOR Individual who provides financial support and strategic advice to entrepreneurs launching early stage enterprises, usually in exchange for convertible debt or equity. Angels often form organized collectives to identify investment opportunities.
BANK Regulated financial institution with access to the Federal Reserve. It is able to offer low interest rates, but primarily to organizations with profitable financial histories.
Universities
Even though not enough universities offer resources on Sustainable Finance, we managed to gather the ones and how you can find them underneath this title.
Hult International Business School - Joanne Lawrence
Harvard Library Resources:
Service
Harvard Library System ()
: Harvard library page for help with library resources, company & industry data, and more
News Sources
Keeping up with the current developments is a crucial part of participating in Sustainable Finance. We have many news resources that will keep you updated!
-
(free account with Harvard email address)
Upcoming Conferences
Here are links to some of the most popular events out there hosted by major organizations around the globe. These are great opportunities for learning and networking. Often they will have free passes for students, so do reach out to the organizers. They usually need volunteers, and that is a great way to make connections.
26 October 2021 | Webinar - - The Financial Times and International Finance Corporation gather senior investors, innovators, social entrepreneurs and other thought leaders with cutting-edge dialogue on the big challenges facing the developing world.
Online Resources
Universities
Even though not enough universities offer resources on Sustainable Finance, we managed to gather the ones and how you can find them underneath this title.
Organizers
- , Founder & CEO, has crafted an amazing network of sustainability and impact investing professionals. Free events and webinars are often hosted. Their magazine is a great collection of articles.
- They have student discounts.
- As a student or recent graduate, you can apply for the Peter DeSimone Scholarship to attend for free
Foundations can align the investment of their endowment with the mission of their philanthropic giving to leverage organizational impact.
Financial advisers and intermediaries can learn how to speak to clients about impact, identify relevant securities, and expand opportunities to build their book and retain assets with the impending wealth transfer.
Asset Owners can align investments with their values, and seek out best practices and strategies.
CDC Community Development Corporation focused on revitalizing its local geography, typically low-income, underserved neighborhoods that have experienced significant disinvestment.
CDFI Community Development Financial Institution provides affordable capital (primarily lending) to disinvested people and communities. Capital comes primarily from grants and low-interest loans from foundations, the government and banks.
CHAMBER OF COMMERCE Voluntary association of businesses in different trades and industries whose purpose is to advance shared business interests in their community.
CHARITABLE LOAN FUND Lightly regulated nonprofit that raises debt and grants from accredited and non-accredited investors to finance organizations that advance a charitable mission. Exempt from federal securities offering registration and in most states.
COMMUNITY ORGANIZATIONS Civic, grassroots and community-based organizations are formal and informal networks of community members that can be mobilized to advance educational, charitable, cultural, political or economic development goals.
CORPORATIONS Large companies that may be inclined to direct philanthropic or in-kind support to social issues aligned with their corporate interests.
CREDIT UNION Financial cooperative owned and controlled by its depositors and providing its members with traditional banking services, including credit.
DIVERSIFIED BUSINESS FUND Individuals who provide financial support and strategic advice to entrepreneurs launching early stage enterprises, usually in exchange for convertible debt or equity. They often form organized collectives to identify investment opportunities.
FAITH-BASED INSTITUTION Religious organization that may incorporate its values into decision-making criteria for its investing, grantmaking and procurement practices.
FOUNDATION Public, private and community foundations are tax-exempt charitable organization that distribute grants with a mission focus.
GOVERNMENT Direct, small business support from government may take the form of grants, low-interest loans, guarantees, technical assistance and policy programs effecting procurement and diversity practices.
INCUBATORS & ACCELERATORS Organizations that support early-stage businesses by offering strategic advice, technical assistance, co-work space and/or financial support.
MENTOR NETWORK Network designed to match experienced business and nonprofit leaders with emerging leaders. Mentoring may include leadership coaching, strategic guidance and technical advisory support.
MUTUAL AID NETWORK Network or platform designed to enable voluntary reciprocal exchange of resources and services for mutual benefit in a community.
NGO Non-governmental organizations are mission-based and tax-exempt nonprofits that rely on grants, and sometimes earned income, to advance a social good.
PRIVATE EQUITY Funds and individual investors that directly invest in private companies. They may seek to take managerial control and grow the business to sell for profit.
TA PROVIDER Technical Assistance Providers are individuals and organizations offering practical, strategic business advice to enterprises. These services may be paid for by a third-party.
VENTURE CAPITAL Investors using pooled private capital to invest in early stage businesses. They typically take on higher risk, seek high returns and a 3-7 year exit. They may seek a controlling interest and assume an active role in governance.
WORKER SERVICES AND LABOR Organizations representing the interests of a workforce, whose endorsement and bargaining power depend on the labor climate in the community.
CDC Community Development Corporation focused on revitalizing its local geography, typically low-income, underserved neighborhoods that have experienced significant disinvestment.
CDFI Community Development Financial Institution provides affordable capital (primarily lending) to disinvested people and communities. Capital comes primarily from grants and low-interest loans from foundations, the government and banks.
CHARITABLE LOAN FUND Lightly regulated nonprofit that raises debt and grants from accredited and non-accredited investors to finance organizations that advance a charitable mission. Exempt from federal securities offering registration and in most states.
CORPORATE PHILANTHROPY Financial donations or in-kind support from corporations. Corporations may be inclined to support issues aligned with their corporate interests.
COMMUNITY FOUNDATION Tax-exempt charitable organization that distributes grants with a mission focus within a specific geographic area. Unlike private foundations, they have a broad, public donor base.
CREDIT UNION Financial cooperative owned and controlled by its depositors and providing its members with traditional banking services, including credit.
DIVERSIFIED BUSINESS FUND Fund whose investing activities are ancillary to some other purpose, such as being an incubator, accelerator or co-work facility.
DONOR-ADVISED FUND Charitable giving vehicle administered by a public charity created to manage donations on behalf of organizations, families or individuals. Donor retains advisory privileges over how money is distributed.
FAITH-BASED INSTITUTION Religious organization that may incorporate its values into decision-making criteria for its investing, grantmaking and procurement practices.
FAMILY OFFICE Entity established by wealthy families to manage their wealth and provide other services, such as tax and estate planning.
GOVERNMENT Direct, small business support from government may take the form of grants, low-interest loans, guarantees, technical assistance and policy programs effecting procurement and diversity practices.
IMPACT INVESTING FUND Institutional investors that evaluate investments based on financial and non-financial return objectives.
NON-ACCREDITED INVESTOR Investor with annual income below $200k ($300k for couples) and net worth less than $1M. They are frequently prohibited from making direct investments, with the exception of DPOS, crowdsourcing platforms and community funds.
PRIVATE FOUNDATION Tax-exempt charitable foundation that receives funding from one or a few high net worth individuals, families or corporations.It must grant 5% of its assets each year while a public charity may not.
REGISTERED INVESTMENT ADVISOR Person or firm that is registered with the State or Federal Securities Exchange Commission to provide investment advisory services to the public.
VENTURE CAPITAL Investors using pooled private capital to invest in early stage businesses. They typically take on higher risk, seek high returns and a 3-7 year exit. They may seek a controlling interest and assume an active role in governance.
Books
In order to widen your knowledge on the topic, we recommend you check these books!
Companies
Looking into these companies’ work is going to be a really good start for your journey in Sustainable Finance.
ESG Data and Reporting
You can find many projects and initiatives working on ESG Data and Reporting in this section.
Research
Additional to the research material on Carbon Washing and Impact Investing, we have some websites that can help you under this title.
Tools
Check out this page for software and programs geared toward helping you practice Sustainable Finance.
Partnerships
We are looking for organizations working and educating around sustainable finance. If you would like to be a part of the creation of this toolkit, please reach out.
Glossary of Important Terms
In order to fully understand the resources and the analyses we have provided so far, you need to know what these terms mean.
News Sources
Keeping up with the current developments is a crucial part of participating in Sustainable Finance. We have many news resources that will keep you updated!
Trainings
Being trained by these programs will take you to the next step of your Sustainable Finance journey.
Organizations
Some organizations to be aware of that are acting in the space are here. Some additional pages are included that go deeper into a few of these organizations.
18-20 October 2021 | Conference - SOCAP21 Virtual - Billed as the largest gathering of investors, entrepreneurs, and social impact leaders who come together to accelerate progress against the world’s toughest challenges through market-based solutions. This year the 100+ sessions are focused on the themes of Impact Investing, Equity and Inclusivity, Social Entrepreneurship, Climate Action and Climate Justice, Sustainable Development, Stakeholder Economics, Global Health, and Digital Inclusivity.
21-22 October 2021 | Conference - Reuters Events ESG Investment Europe- 3000+ European institutional asset owners, asset managers, regulators, standard setters, and data providers unit just 2 weeks before COP26 to tackle how to use ESG to create data-driven, climate and shareholder conscious strategies, that accurately identify risk and deliver superior returns
4-8 October 2021 | Conference - UNEP FI Regional Roundtable North America 2021 - UNEP FI’s Regional Roundtables on Sustainable Finance provide an opportunity for members and actors in the sustainable finance community to come together to discuss the latest trends and innovations in sustainable finance in 5 regions across the globe. The events provide insight into key developments such as the benefits of sustainable finance integration in national economies, Principles for Responsible Banking, positive impact finance for the Sustainable Development Goals, implementation progress of the Principles for Sustainable Insurance, climate-related disclosures, biodiversity target setting, and much more.
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 ()
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.
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.
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.
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The Caribbean
The following research was prepared by our Toolkit contributor, Colin Bogle, to summarize the state of Sustainable Financing in the Latin American and Caribbean (LAC) region. His full research has been attached at the bottom of this page for your further reference. Please reach out to Colin to discuss his research further.
1. Definition – What is Green Finance
Broadly speaking, climate finance is the domain of financial entities seeking to fund adaptation or mitigation responses to climate change. Green banks are one such entity, differentiating themselves from typical banks with their dedication to facilitating private investment in environmental or “green” solutions to climate change. They are particularly in demand in regions that are especially vulnerable to climate change and require direct financial assistance.
2. Why do we need green banking?
Funding climate resilience is expensive. So expensive, that The United Nations Environment Program estimates that by the year 2030, roughly $300 billion will be needed annually by developing nations to help offset climate change (). The purpose of climate finance on a whole is to fund these efforts, especially in regions of the world that need financial support to prepare for climate change.
3. Why does the Caribbean need green banking?
The developing world finds itself facing a climate catastrophe it is not responsible for nor equipped to manage. Green banks are one mechanism to shore up financial support for desperately needed mitigation and adaptation efforts. In the Caribbean, the risk of exacerbating issues such as poverty and governmental instability is particularly damaging given the risk the battering the region has received due to the Covid-19 pandemic, which decreased tourism, increased unemployment, and overall led to a decrease in economic growth (). Going forward, if the Caribbean is to weather climate change-related crises, it will require a reliable financing mechanism specifically tailored towards the region.
4. The state of green banking in the Caribbean
According to a 2019 report from the Climate Bonds Initiative, the Latin America and Caribbean (LAC) region is slowly, but surely, developing a green financial market. Although only 9 of the 33 nations of the region offer green bonds, their issuance increased markedly in 2019 and stands to increase further. This growth is driven primarily by the need for green infrastructural development in the region (). The pledges of various nations to reduce or halt their greenhouse gas emissions, combined with the passing of various climate policies, have acted as a market signal to encourage further development.
5. Examples of climate financing efforts in the LAC
Green Bond Transparency Platform - This is a digital tool designed to facilitate greater transparency in the Latin American and Caribbean (LAC) green bond market.
Listing of a Caribbean-based green bond on the Jamaica Stock Exchange
Green Finance LAC Platform - This platform promotes knowledge exchange on green financing throughout the region. It also offers technical assistance to regional governments.
6. Barriers to entry: What’s preventing green financing in the LAC?
The following are some identified barriers to entry:
A lack of regional financial integration
Overcoming cultural and linguistic barriers between countries
The relatively poor state of Caribbean financial development
For more information on this topic and to credit 's research please contact him on LinkedIn or by email - [email protected]
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.
Source: World Economic Forum, 2017
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 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 ).
Another effort to follow is the 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: . Check this for .
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
Books
In order to widen your knowledge on the topic, we recommend you check these books!
Sustainable development is becoming the guiding principle for the 21st century. This textbook - based on the author's course and rigorously class-tested by his students - provides an introduction into patterns of past and present (un)sustainable development and into the emergence of the notion of sustainable development
Job Descriptions
Many Types of Roles
Here we share with you some examples of jobs we're seeing in the space but this is in no way a comprehensive subset. There are many different roles that are integrating sustainable finance and there is an opportunity for you to create your own way in your roles.
Some typical job positsions include:
Overreliance on tourism, agriculture, and extractive industries discourages change
The Principles of Responsible Investing is a great place to start
Between these two limits, is 'the safe and just space for humanity' to operate in sustainably.
Source: UN
Source: Kate Raworth
ESG Risk Analyst
Performance
Consulting
Sales, Product Development,
Backoffice and Finance Roles
Marketing and Product Support
Share Your Job - If you would like to share with us an example of a job description please reach out. We can also share with our network interesting roles for the community. Contact - [email protected]
The following has been prepared for an in-person workshop oikos Conference 2021, in St. Gallen, Switzerland (https://www.oikos-conference.ch/)
Title: How do we finance a better future?
Date and Time: Thu, 21.10; 2-4.30 pm CEST.
Session Description: Join oikos International for a workshop on using the financial system to solve climate change's global challenges. We'll work together and discuss the available financial tools. The workshop will use the newly created oikos Sustainable Finance Toolkit and Career Map. This platform has been built to help students and researchers explore the exciting world of Sustainable Finance, ESG (Environmental, Social, and Governance), and Impact Investing. Come learn how our financial system can be used for good
Agenda:
Welcome and Introductions (5min)
Presentation of the Toolkit (5mins)
Carbon Markets and Group Discussion (10min)
Facilitators:
Participants:
. We'd love to stay in touch with you after the workshop.
Purpose of the Toolkit:
This toolkit is a platform to help you enter the field of sustainable finance by providing you with knowledge, skills, and access to the community.
You can join our Sustainable Finance Squad to help us to build this toolkit with resources, interviews, trainings, and more.
Share the research you are working on
Explore topics of interest
Network with the industry
What is Sustainable Finance?
Sustainable Finance describes a broad area within the world of finance. We can think of it along a spectrum of activity.
It can get quite complicated...
It is helpful to think of it in terms of Risk, Profit, AND Impact. Where Impact is the additional of ESG (Environmental, Social, and Governance).
BNP Paribas has a quick article to explain all this further - . And you can use our toolkit for more information. Check out this page:
Methods to Implement Sustainable Finance
There are a lot of good blogs out there to help you. .
Exclusionary Screening
Avoid investing in companies in industries that are deemed as unethical e.g. tobacco, weapon, gambling. This strategy is sometimes referred to as Socially Responsible Investing (SRI) and is the oldest form of sustainable investing that first became popular in the 1980s
Best-in-Class Screening
Also referred to as positive screening, this strategy is based on selecting companies with better or improving ESG performance relative to their peers.
ESG Integration
Consider ESG risks and opportunities as part of the investment process alongside financial analysis. Some examples are adjusting a company’s financial forecast or cost of capital based on its ESG risks.
Thematic Investing
Invest in themes that are specifically related to sustainability such as clean energy, carbon transition, education, healthcare.
Active Engagement
Exercise ownership rights through direct engagement with companies. Some examples are voting in annual general meetings, meeting with company representatives, filing a shareholder resolution.
Impact investing
Investments are made with the intention to generate positive and measurable impact alongside a financial return.
There are many misconceptions that research is changing.
Carbon - A Key Piece to the Puzzle
Will finance really ever be sustainable unless we price in externalities?
Understanding carbon and other emissions is a key piece of knowledge future finance practitioners should have
Reporting and ESG frameworks are grappling with how to measure and price Scope 1, 2, and 3 Emissions
Analysis of carbon and the need for a price on carbon is going mainstream
Why do we need a price on carbon?
healthcare costs from pollution
heatwaves and droughts
damage to property from fires, flooding, and sea-level rise
"While no one would suggest we immediately stop driving, flying, or using steel, the sooner we admit these activities come with a cost, the better."
Time for an Activity
The is a very useful training and is from the University of Nottingham Trent. The project has identified the major outcomes that will happen given the impacts of climate change.
We need the world of finance to help with this future.
Will it be a Positive one? or a Trouble one?
What do you think are the most important issues to address?
How can finance be used to prevent or facilitate these issues?
Now Let's Role Play
Choose one of your most important issues and use the following game to discuss that issue.
