Towards a public sustainable finance paradigm for the green transition
Sustainable finance is often discussed as a solution to the climate crisis, but its impacts are limited and its discourse focuses on mobilising private investments through public de-risking, without considering direct government action. We argue that this is due to an implicit reference to mainstrea...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Cambridge University Press
2024-04-01
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| Series: | Finance and Society |
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| Online Access: | https://www.cambridge.org/core/product/identifier/S2059599923000158/type/journal_article |
| _version_ | 1797246638474919936 |
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| author | Philipp Golka Steffen Murau Jan-Erik Thie |
| author_facet | Philipp Golka Steffen Murau Jan-Erik Thie |
| author_sort | Philipp Golka |
| collection | DOAJ |
| description | Sustainable finance is often discussed as a solution to the climate crisis, but its impacts are limited and its discourse focuses on mobilising private investments through public de-risking, without considering direct government action. We argue that this is due to an implicit reference to mainstream economic theory assuming that an active state leads to time inconsistency problems and crowding-out effects. However, these assumptions have been sufficiently refuted as public investments may actually crowd-in private capital. We therefore propose a paradigm shift towards what we call Public Sustainable Finance, aimed at empowering the role of the state in the green transition on the discursive, policy, and political economy levels. Studying the case of Germany, we show how Public Sustainable Finance can be introduced despite tight fiscal regimes. To this end, we propose that the Climate- and Transformation Fund be given its own borrowing powers. By borrowing an average of 23 billion euros annually from 2024 to 2030, the existing financing gap that has been exacerbated following the November 2023 constitutional court ruling can be closed, enabling a more rapid and effective green transition. |
| first_indexed | 2024-04-24T19:45:59Z |
| format | Article |
| id | doaj.art-24008d1b39664ae7afb32de513d8eb3e |
| institution | Directory Open Access Journal |
| issn | 2059-5999 |
| language | English |
| last_indexed | 2024-04-24T19:45:59Z |
| publishDate | 2024-04-01 |
| publisher | Cambridge University Press |
| record_format | Article |
| series | Finance and Society |
| spelling | doaj.art-24008d1b39664ae7afb32de513d8eb3e2024-03-25T07:12:08ZengCambridge University PressFinance and Society2059-59992024-04-0110385010.1017/fas.2023.15Towards a public sustainable finance paradigm for the green transitionPhilipp Golka0https://orcid.org/0009-0008-4644-6661Steffen Murau1https://orcid.org/0000-0002-3460-0026Jan-Erik Thie2https://orcid.org/0009-0002-7755-9841Max Planck Institute for the Study of Societies, Cologne, GermanyGlobal Climate Forum e.V., Berlin, Germany Freie Universität Berlin, Berlin, Germany Boston University, Global Development Policy Center, Boston, United StatesGlobal Climate Forum e.V., Berlin, Germany Macroeconomic Policy Institute (IMK), Düsseldorf, Germany Universität Potsdam, Potsdam, GermanySustainable finance is often discussed as a solution to the climate crisis, but its impacts are limited and its discourse focuses on mobilising private investments through public de-risking, without considering direct government action. We argue that this is due to an implicit reference to mainstream economic theory assuming that an active state leads to time inconsistency problems and crowding-out effects. However, these assumptions have been sufficiently refuted as public investments may actually crowd-in private capital. We therefore propose a paradigm shift towards what we call Public Sustainable Finance, aimed at empowering the role of the state in the green transition on the discursive, policy, and political economy levels. Studying the case of Germany, we show how Public Sustainable Finance can be introduced despite tight fiscal regimes. To this end, we propose that the Climate- and Transformation Fund be given its own borrowing powers. By borrowing an average of 23 billion euros annually from 2024 to 2030, the existing financing gap that has been exacerbated following the November 2023 constitutional court ruling can be closed, enabling a more rapid and effective green transition.https://www.cambridge.org/core/product/identifier/S2059599923000158/type/journal_articleclimate crisisfinancial marketsfiscal policygreen transitionsustainable finance |
| spellingShingle | Philipp Golka Steffen Murau Jan-Erik Thie Towards a public sustainable finance paradigm for the green transition Finance and Society climate crisis financial markets fiscal policy green transition sustainable finance |
| title | Towards a public sustainable finance paradigm for the green transition |
| title_full | Towards a public sustainable finance paradigm for the green transition |
| title_fullStr | Towards a public sustainable finance paradigm for the green transition |
| title_full_unstemmed | Towards a public sustainable finance paradigm for the green transition |
| title_short | Towards a public sustainable finance paradigm for the green transition |
| title_sort | towards a public sustainable finance paradigm for the green transition |
| topic | climate crisis financial markets fiscal policy green transition sustainable finance |
| url | https://www.cambridge.org/core/product/identifier/S2059599923000158/type/journal_article |
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