The Role of Green Finance in Economic Development

Dear Colleagues,

According to the United Nations Department of Economic and Social Affairs, the world's population is expected to reach nearly 9.7 billion by 2050, significantly increasing the demand for resources and generating debates about meeting the UNSDGs. These challenges can be combined with various negative externalities such as reducing inequalities, accelerated degradation, climate change and resource depletion. Archeologists worldwide have felt some of the alarming impacts of climate change. The World Bank has noted that climate change affects developing and vulnerable countries the most; hence, they need greater financial support for mitigation and adaptation efforts (World Bank, 2020), as well as the funding required to create sustainable economies. The United Nations Environment Program (UNEP) has reported that investments in climate action are far below the target of $5 trillion needed by 2050 to meet the Paris Agreement goals (UNEP, 2021).

To promote sustainable economic models, green finance, financial innovation, and technology are critical in redirecting significant capital towards environmentally sustainable projects and investments. For example, the OECD has highlighted the potential of green finance in channeling funds into sustainable infrastructure, renewable energy, and climate adaptation to support current economic expansion (OECD, n.d.; United Nations, 2022). Viewed through an economic lens, population growth has facilitated a transition from what was once considered an ‘empty world’—abundant in natural resources and with minimal human economic impact—to a ‘full world’ where intense human economic activity exerts significant environmental stress (Gills and Morgan, 2022). The concept of the ‘full world’ was coined by Goodland, Daly, and El Serafy, who edited a book titled ‘Environmentally Sustainable Economic Development: Building on Brundtland,’ archived at the World Bank for the United Nations Conference on Environment and Development in Rio de Janeiro in June 1992. They articulated that this ‘full world’ would challenge its natural limits within three decades. The current Anthropocene era, where human actions exert a dominant impact on the environment, requires humans to enact large-scale environmental outcomes, which green finance could bring about through financial innovation and technology.

Green bonds, sustainability related loans, and fintech solutions could fuel sustainable economic development. There is also a need to reevaluate how we use natural resources as the vital production input in economic theory and economic development. New categories need to be explored to challenge the current marketed (i.e., metals and materials) and non-marketed (i.e., clean air and ecosystem services) resources to promote sustaining life and economies (Steer, 2014 in Allen et al., 2014). The growing problems of carbon emissions and the human footprint on the Earth’s ecosystems spur the need to integrate green finance into our economic policies so as to mitigate the externalities and capitalize on the opportunity costs associated with underinvestment in sustainable practices. By realigning financial systems with sustainable development objectives, green finance emerges as a critical tool for navigating the complexities of economic growth and environmental conservation in the 21st Century.

The potential of green finance to expedite progress toward sustainable economic development can be further explored through a comprehensive approach that encompasses financial innovation and technology, regulatory and policy frameworks, and shifts in market demand and investment strategies.

Therefore, this Special Issue seeks to explore the multifaceted role of green finance in economic development. We invite contributions that examine how financial innovations, specifically in green finance, policies, and market mechanisms, can drive sustainable economic growth. Studies and research papers should delve into the economic theories underpinning green finance such as, but not limited to, the management of externalities, the economics of sustainable development, and the role of financial markets in enhancing environmental stewardship and resource efficiency.

Aim and Scope

We invite scholarly submissions that address the nexus between green finance and economic development. All contributions from various disciplines, such as economics, environmental science, policy analysis, and financial innovation, are welcome.

List of topic areas

Submissions are encouraged to focus on, but are not limited to, the following topics:

• Economic theories and models related to green finance and sustainable development;
• The impact of green finance on economic growth and development;
• Policy analysis of governmental support for green finance;
• Case studies of successful green finance initiatives and their economic outcomes;
• The role of financial institutions and markets in promoting green investments;
• Innovations in green financial products and services;
• Comparative studies of green finance frameworks and their effectiveness;
• Green finance for ecosystem management;
• Emissions trading;
• Risk management, green finance and economy;
• Impact investing and energy transition;
• Green finance performance metrics;
• Digital finance for green growth;
• Public vs. private in green investments and financing;
• The green investment–environmental impact link;
• Economic challenges in green innovation;
• Sustainable finance for green economic growth;
• Economics and environmental stewardship.

References

1. Allen, F.; Behrman, J. R.; Birdsall, N.; Fardoust, S.; Rodrik, D.; Steer, A. D.; Subramanian, A. Towards a better global economy: policy implications for citizens worldwide in the twentyfirst Century. Oxford University Press: Oxford, UK, 2014.
2. Daly, H. E. Beyond growth: The economics of sustainable development. Beacon Press: Boston, MA, USA, 1996.
3. Gills, B.; Morgan, J. Economics and climate emergency, 1st ed; Routledge: New York, NY, USA, 2022.
4. Goodland, R.; Daly, H.; El Serafy, S. Environmentally sustainable economic development: Building on Brundtland. 1992, Available at: https://documents.worldbank.org/curated/pt/332821467989482335/pdf/multi-page.pdf (accessed on 22 March 2024).
5. OECD, Green growth and sustainable development, Available at: https://www.oecd.org/greengrowth/ (accessed on 22 March 2024).
6. Steer, A. (2014). Resource depletion, climate change, and economic growth; In Towards a better global economy: Policy implications for citizens worldwide in the 21st Century, Oxford University Press: Oxford, UK, 2014; p. 381.
7. Stern, N. (2022). A Time for Action on Climate Change and a Time for Change in Economics. Econ. J. 2022, 132, 1259–1289.
8. United Nations. Global issues: Population, 2022, Available at: https://www.un.org/en/globalissues/population (accessed on 22 March 2024).
9. United Nations Environment Programme (UNEP). Emissions Gap Report 2021, 2021 Available at: https://www.unep.org/resources/emissions-gap-report-2021 (accessed on 22 March 2024).
10. World Bank. Climate Change and Poverty, 2022 Available at: https://www.worldbank.org/en/topic/climatechange (accessed on 22 March 2024).
11. United Nations, Population, Available at: https://www.un.org/en/global-issues/population#:~:text=The%20world%20in%202100,surrounding%20these%20latest%20population%20projections (accessed on 22 March 2024).

Dr. Felicia Hui Ling Chong
Prof. Dr. Christophe Schinckus
Guest Editors

Manuscript Submission Information

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• green finance
• economic development
• sustainable growth
• environmental economics
• financial innovation
• policy analysis
• market mechanisms
• economic theories