Swedish Community for Sustainable Finance

Beyond political goals and targets are the threat to the very foundation of life on Earth. The transition towards net zero is filled with challenges and the estimated 180-350bn€ investment gap needs to be filled if we are to meet the national and European targets of becoming net zero by 2050. 

Sustainable finance is a broad term that basically means utilizing the financial system as a catalyst for change – three key mechanisms are repeated in this endeavor: 

• To channel funding and investments towards sustainable projects
• To integrate sustainability into all risk management practices of financial firms
• To ensure transparency by developing a consistent framework for sustainability reporting purposes
  
  SCSF is actively pursuing its purpose within three main areas:
• Financing the net zero transition
• The role of finance in mitigating biodiversity loss
• Financing the circular economy

Financing the Net Zero Transition

A joint work together with Volvo Cars on developing internal carbon pricing has resulted in a themed conference, a master thesis, and a book chapter in the Routledge Handbook of Green Finance. 

In the multidisciplinary research project, Financing the Transition towards a Net Zero Transport System, some of the key results from this project is an estimation of the financing need for the Swedish road transport system, a supply network analysis of the supply chain financial flow, and a series of workshops and seminars on the financing challenges and opportunities associated with the transition. 

In an ongoing study of newly introduced regulations for financial advisors, researchers from business administration and economics collaborate with selected banks to further our understandning of investor sustainability preferences.

The Role of Finance in Mitgating Biodiversity Loss

EcoComp is a collaborative innovation project aimed at building a market platform aimed at matching landowners with business that are legally required to, or on a voluntary basis would like to, protect biodiversity rich areas. 

BioPath is a multidisciplinary research programme aimed at integrating biodiversity considerations into financial decision-making. With more than 20 researchers, over 10 phD-students and Postdocs, and 34 commercial partners. This programme will strive to actively change the way industry and financial institutions relate to the very nature on which they depend. 

SamBio is a local and collaborative initiative aimed at spreading knowledge of biodiversity through increased collaboration, exchange of experience and capacity-building the specifically to business and children. 

A role model for other actors

The financial service industry has the potential to be a fundamental vehicle to promote sustainability and function as a role model for other actors. This includes but is not limited to those who are employed in or who are consumers of financial services, financial service firms and policy makers. The financial service industry has not yet taken this lead role despite how topics such as the cost of capital, risk mitigation, financial innovation, equality, and digitalization are at the heart of finance. This encapsulated in SCSF’s vision: 

Finance for Tomorrow

Our long-term goals:

• Establish a world-leading community for research and collaboration on sustainable finance
• Achieve active exchange between the sustainable finance start-up scene, academia, and business in the Gothenburg area
• Ensure a persistent flow of PhDs and Post-docs

Financing the Circular Economy

A circular economy is increasingly recognized as a crucial to deliver on goals related to climate change and other global challenges. The circular econmy is a system of production and consumption that seeks to minimize waste, maximize resource efficiency, and promote sustainable economic growth.

The role of finance in the circular economy is essential, as it provides the capital and investment necessary to support the development and implementation of circular business models and initiatives. Circular business models involve designing products and services to be more durable, reusable, and recyclable, which can require significant investment in research, development, and new production processes. 

Finance can provide the capital necessary for business to transition to circular models, such as by investing in new recycling technologies or funding the development of sustainable products, incentivize circular practices through financing options. Through finance, it is also possible to promote transparency and accountability in the supply chain, by investing in supporting measures and technologies that encourage companies to report their environmental impact and progress towards circular goals. 

Nevertheless, challenges around the relationship between circularity, risks, investment decisions and returns have become increasingly obvious. Building on aspects of the value-based approach in financial management, we therefore aim to extend the rational of economic linear value drivers to develop and include a value-based perspective on the drivers for circular economy. 

We do this by disaggregating the total value creation of (mostly resource intensive) firms and by exploring the role that accounting and finance plays in increasing firms’ circularity. Our research approach is applied across value chains, and within specific industries. 

Key topics include: 

• What barriers are hindering a circular economy transition in practice and how can they be overcome? 
• What (financial) mechanisms are needed to create sufficient incentives for transition to circular economy?
• How are circular economy projects financed and how is this related to risks (along the value chain)?