Financing sustainable development

Bad financial management in terms of sustainability by society is one of the main structural causes of long-term deterioration of environmental quality, natural resources, welfare and well-being. The general response to the recommendations and commitments of UNCED regarding financing falls significantly short of expectations and requirements. Moreover, at the international level, prospects for achieving adequate, predictable, new and additional financial flows to developing countries for sustainable development are fraught with many challenges. Therefore, the goal of mobilizing financial resources for sustainable development makes it necessary to act on all possible fronts, including innovative approaches.

Financial decisions and financial management by individuals and companies are to a significant extend influenced by two key players: governments, which dictate rules, apply economic and fiscal instruments and execute monetary policies; and financial institutions, which provide capital, insurance and other financial products.

The recommendations of the Sustainable Societies Initiative are: Provide financial incentives for sustainable communities and activities, and disincentives for environmentally and socially destructive practices at the national, regional and local levels. Use the tax system to support programmes which alleviate poverty and protect vulnerable and marginalized groups. Review the policies of international financial institutions to move towards more sustainable investment and debt structures.

At the European level, the European Investment Bank claimed, in 1998, to have 30% of its assets in environmental projects.