永續金融的系統觀

Abstract

In the capitalist market economic system, the financial system serves as facilitator of capital to the real economy. Through the forward-looking lens of investment, projects and firms are assigned a price in accordance with their ability to generate value. Through these investments, providers of capital have also financed negative impacts to stocks of natural and social capital, limiting the economy’s long-term growth. To meet the Sustainable Development Goals (SDGs) and the dual mandates of climate change mitigation and adaptation, the global economy must redirect large sums of capital away from real economy activities that drive negative social and environmental impact and toward new technologies and firms that are regenerative. However, the financial system has historically lacked a mandate to ensure sustainability. The financial crisis of 2007-2009 and subsequent economic downturn has revealed structural weaknesses that call into question both the financial system’s effectiveness in allocating assets to projects that create positive impact and to its resilience in the face of growing threats from social and environmental risk. Financial markets are made up of millions of actors including firms, governments, and individuals that each seek to optimize their own wellbeing through productive investments. The result of these decisions in aggregate reveals the effectiveness of the financial system to achieve the goals of economic, social, and environmental sustainability. The framework of systems thinking has emerged from the discipline of industrial dynamics, utilizing a process of critical synthesis to craft models of casual relationships between stakeholders and their actions. This process can assist system stakeholders in better understanding the non-linear causal relationships of actions in the system. A process of drawing casual loops illustrates makes common patterns of system behavior visible, facilitating subsequent analysis and intervention. As the financial system in a market economy is not defined primarily by command and control, system stakeholders can benefit from a common understanding of these dynamics in planning collective interventions. Proposed interventions can be assessed using this language to assess their likely leverage in altering the system. This paper seeks to apply the systems thinking methodology to critically synthesize and evaluate the dynamics that perpetuate the funneling of financial capital into projects that erode natural and social capital. By synthesizing these casual loops using the visual language of systems mapping, I hope to offer stakeholders a model for discussion toward the production of a common mental model aligned to sustainability. My process of synthesis and illustration is supported by the work of the United Nations Environment Programme (UNEP) publication series Inquiry: Design of a Sustainable Financial System. This series of publications beginning in 2014 includes in-depth meta-analysis of existing literature and wide-ranging financial system stakeholder engagements. In addition, I explore proposed interventions including a focus on long-term intrinsic investing, the use of sustainability labelling for financial products, the repricing of externalities, the disclosure and integration of environmental and social risk information by firms and funds, and the effects of financial inclusion on risk profiles in credit and insurance pools. I add to this a discussion of potential systems challenges to these interventions and provide potential areas for further research.