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The Hau of Finance: Impact Investing and the Globalization of Social and Environmental Sustainability

Periodic Reporting for period 2 - IMPACT HAU (The Hau of Finance: Impact Investing and the Globalization of Social and Environmental Sustainability)

Reporting period: 2020-08-01 to 2022-01-31

IMPACT HAU explores cultural and ethical dimensions of the rapid growth in ‘sustainable’ and ‘ethical’ finance, including financial products that are both socially and environmentally progressive.

The moral and sustainable turn in finance could have enormous implications for society worldwide. It may be only with the help of private finance that governments can hope to implement climate goals and social development objectives, even when the political will is sufficient. Curiously some parts of the finance sector often seems to be pushing more strongly than governments in this direction – so we need to know what the motivations are, and if it is financial innovation that is offering solutions for sustainability, what effects might this have on society?

IMPACT HAU focuses on a various types of bond like green bonds, sustainability bonds, social bonds and development impact bonds, to find out who is behind this trend for moral and sustainable finance. What do they want to achieve? What are the concrete effects – the much vaunted ‘impacts’ – of sustainability-labeled bonds upon local populations, and what do they think about them?
During the first period of the project, the first three members of the research team joined (two PhD students and one postdoctoral fellow). They have each been focusing on specific tasks. Alessandro Maresca, a PhD student, prepared for his field research on the financial communities, networks and technologies that produce green- and social- labeled ‘vanilla’ bonds, issued and traded on global bond markets, and he has been exploring the work of organisations such as accountancy firms, investment banks, and professional associations. Claudia Campisano, a PhD student, has been preparing for fieldwork on moral dimensions of Development Impact Bonds (DIBs), focusing on a DIB for poverty alleviation in Eastern Africa. Giulia Dal Maso, a postdoctoral fellow, has been in charge of a case study of the issuing of a Chinese Green Bond in Europe. Zikri Jaafar, a research assistant, carried out background research on the regulatory system for green Islamic bonds in Malaysia. The data gathering process is ongoing, and we have so far held one event, a workshop on the Moral Turn in Finance, held online in March 2020 with contributors from several countries. Some of the contributions will be published in a special section of the journal Focaal.
Our work so far, at this early stage of the project, suggests that the moral and sustainable turn in finance, and the focus on social and environmental impact, are subscribed by a limited section of the financial sector. There is considerable variety in the sector, but there is clearly a significant contingent of actors with strongly articulated ambitions to make finance sustainable, with a powerful conviction that financial products have the potential to bring about positive change. Opinions vary about the adequacy of the structural dimensions of financial institutions and products to the task. Even if there is powerful motivation among individual actors, and even perhaps a cultural shift among finance professionals, is this enough to change the course of a financial system closely allied with extractive economies and entrenched practices of unsustainable resource use? The evidence of positive change occurring among local populations and in local ecosystems as a result of financial innovations such as impact bonds or green bonds is so far thin.
Doing well out of doing good