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Book Chapter

Can the Financial Sector Protect the Climate? The Potential of Sustainable Finance

Authors
/persons/resource/Kai.Lessmann

Lessmann,  Kai
Potsdam Institute for Climate Impact Research;

Schütze,  Franziska
External Organizations;

von Dulong,  Angelika
External Organizations;

Engler,  Daniel
External Organizations;

Gutsche,  Gunnar
External Organizations;

Hagen,  Achim
External Organizations;

Klein,  Christian
External Organizations;

McConnell,  Andrew
External Organizations;

Schenker,  Oliver
External Organizations;

von Schickfus,  Marie Theres
External Organizations;

Yanovski,  Boyan
External Organizations;

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Citation

Lessmann, K., Schütze, F., von Dulong, A., Engler, D., Gutsche, G., Hagen, A., Klein, C., McConnell, A., Schenker, O., von Schickfus, M. T., Yanovski, B. (2024): Can the Financial Sector Protect the Climate? The Potential of Sustainable Finance. - In: Wendt, K., Villhauer, B. (Eds.), Sustainable Wealth Management, (Sustainable Finance), Cham : Springer, 23-44.
https://doi.org/10.1007/978-3-031-55505-3_3


Cite as: https://publications.pik-potsdam.de/pubman/item/item_30725
Abstract
Climate policy aims to reduce emissions by redirecting investment from emission-intensive toward carbon-neutral assets. One key instrument, carbon pricing, guides investors and asset managers by lowering the return of fossil fuel-related assets. This chapter reviews three key mechanisms on how sustainable finance can support climate policy: first, providing investors with the necessary information to factor climate risk into their investment and portfolio decisions; second, building awareness for sustainable investing by differentiated means for institutional investors and retail investors; and, finally, addressing the cost of capital as an obstacle to low-carbon investments. For each, we critically review opportunities and shortcomings based on recent research and draw up recommendations for investors and policymakers.