• Rakshit Verma

Sustainable Finance

Since the beginning of human existence, the world has been ever-changing. The population is rising rapidly these days, with an increase in the middle class especially. The consumption is also rising. What’s not rising are the resources in hand.

There is no PLAN B and there is no PLANET B.

Financial markets are all about making money, irrespective of the cost in the long term. Financial capital is just the tip of the iceberg, what lies underneath is the environmental issues which now derive our risks that we call “Black Swan”. Black Swans are unexpected events like earthquakes, tsunamis and viral outbreaks that disrupt the cash flows and adversely affect both life and financial markets. It’s clear with the current covid situation that the environment does fight back, when harmed. Financial markets exploited the environment for years, not caring of the consequences that would arise. The environment fought back with a deadly covid 19 virus that disrupted the financial markets.

Today, it’s clear to the world that sustainable development is an important issue.

Money and the environment are both important and sustainable finance is about making money without harming the environment.

The first step to Sustainable Finance was Risk Mitigation. Carrying out trades and activities without harming the environment, and not investing in businesses that are lethargic to the environment. This required a thorough check on the business model of the enterprise in which money had to be invested. Risk Mitigation also means to contribute to society. So corporate firms and companies came together to give back to society.

UN Principles of Responsible Investments was formed for the same. Green bonds, social bonds and sustainability bonds have been introduced. Under the Corporate Social Responsibility Act or CSRA which is listed under the company act in India, every business enterprise is obligated to share a part of their earnings to give back to the society to tackle the environmental and social issues. We’re moving towards the round economy, which means that all products will be reused, reduced and recycled. This will ensure minimum wastage.Investing in renewable energy, and environment friendly businesses is also a part.

An elephant, when sees a mouse in his way, gets frightened and changes it’s direction. The same happens in real life. A few ethical investment banks or finance corporations can change the way others move. They can change the flow of money.

Change your behavior, change the flow of money, or find a new planet.