Climate change has fueled controversy, inspired innovation, and led to many broken promises by governments all over the world. While the dangers that it exposes us to in terms of economic disruption, environmental damage, and severe weather become clearer every year, relatively little real progress has been made to date. In the past, this was in large part because climate action was the purview of philanthropists, individual donors, and a few innovative businesses and charities.
Historically traditional investors sought to maximise returns – so businesses naturally endeavoured to maximise short term profits to attract investment. This simply wasn’t compatible with long term systemic investment in environmentally sustainable endeavours. Now, though, New Zealand is working, with the help of major financiers, to leverage the financial sector for the climate.
Sustainable finance is driving change
Sustainable Finance specifically means working in a manner that promotes the long term health and function of our environment, society, and corporate governance. In New Zealand, these efforts are being spearheaded by the Aotearoa Circle’s Sustainable Finance Forum (SFF) – a broad coalition of representatives of financiers, Māori businesses, Kiwi professional services, civil society, academia, and government.
The SFF’s roadmap for action is relatively simple, but ambitious. It focuses on changing the short term profit-driven mindsets of major actors in the financial system, transforming the system to become sustainable, and financing that transformation. Ultimately, that means reinventing the financial system as one that prioritises all stakeholders, rather than just shareholders in order to provide long term environmental, social and economic prosperity. This means operating within environmental and social constraints to develop the world for future generations.