Research Topics

ESG is an acronym that combines Environmental, Social, and corporate Governance aspects of businesses capturing the non-financial characteristics of firms that may well have material impact on investment returns. ESG metrics of companies are increasingly critical for investment decision-makers.

The Global Sustainable Investment Alliance (GSIA) reported its latest statistics on the global dominance of sustainable investments: by 2020, every third dollar was invested in the financial markets in a sustainable form, in line with the ESG approach. While only 21 per cent of assets under management were ESG-compliant in 2012, the recent surge in ESG investments meant growth exceeded 50 per cent over the six years. The popularity of ESG investing has since grown significantly and is becoming mainstream.

Based on the GSIA  classification, negative screening remains the most popular ESG-based investment strategy. At the same time, thematic investments benefitted from the largest growth of fund inflows in recent years: from 2016 to 2018, thematic funds quadrupled their holdings, now exceeding one trillion USD in assets.

The Climate Finance field investigates how financial systems, institutions, and instruments can accelerate the transition to a low-carbon and climate-resilient economy. It encompasses public, private, and blended finance mechanisms that channel capital into mitigation and adaptation projects: from renewable energy and energy efficiency to sustainable land use and climate-resilient infrastructure. Global initiatives such as the Green Climate Fund and the Task Force on Climate-related Financial Disclosures (TCFD) have shaped frameworks for managing climate-related risks and opportunities within financial decision-making. However, a persistent funding gap remains, namely, achieving the Paris Agreement goals will require an estimated USD 4–6 trillion annually by 2030, according to the UNFCCC. Climate finance research explores risk pricing, disclosure standards, policy design, and innovative instruments including instruments such as transition bonds, sustainability-linked loans, and carbon markets, that aim to realign global capital flows with planetary boundaries.

Investment instruments that specifically have environmental impact targets are labelled as green. Mostly common instruments are Green Bonds, these investments' payout is often contingent upon certain compliance with green goals. By 2020, more than USD 10bn was invested in 172 green bond in 20 different currencies. Their popularity is ever growing among investors.

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Biodiversity finance is a new discipline within nature finance that concerns the funding, and financing the conservation of nature, with particular focus on stopping biodiversity loss in highly-sensitive ecological areas. Unlike climate measures, biodiveristy loss is geography focused, and is yet to develop measurements. Although the existing data vendors rely on the measure of mean species abudance over a space, there is a need for more nuanced methodology to capture nature loss. A starting point for business activities is to conduct a materiality assessment to evaluate the impact of a company's activity on biodiversity, and ecosystems, and the dependenies it has on nature.

Sustainability risk is known as the risk event stemming from environmental or social factors that have a material negative impact on the value of an investment. The EU directive requiring companies to disclose sustainability related risk was enacted in 2021. The topic's importance derives from the shared responsibility of all market participants to tackle sustainability issues. The methodology for measuring sustainability-related risk and including it in finance decisions is an evolving discipline.

The act of claiming green efforts or targets, but in fact are misleading, either in an intentional manner or casued unintentionally. Impact washing is similar to greenwashing but is specific to investments. It is aimed at appealing to the ESG conscious investors, but the investment fails to demonstrate achieving of claimed sustainability targets. Recently, greenwashing scandals have surfaced in the investment industry as regulators become more stringent in their scrutiny.

Defined by CISL as an economy in which public and private sector actors, through choice and incentive, take action at scale to reduce and remove the drivers and pressures fuelling the degradation of nature, actively improving the state of nature (natural capital) and the ecosystem services it provides. 

The Blue Economy Finance field explores how public and private capital is structured, mobilised, and governed to support sustainable ocean and coastal economies. It encompasses instruments such as blue bonds and blue loans earmarked for marine conservation, sustainable fisheries, coastal and riparian region restoration, and clean maritime infrastructure. A notable example is the IFC’s work on Blue Finance). As the marine environment underpins ecosystem services, food security, climate resilience, and livelihoods, aligning financial flows with ocean health is gaining attention, but the investment gap remains large. The World Economic Forum estimates that an annual USD 175 billion is roughly needed to meet SDG 14) (see: WEF). This emerging domain lies at the nexus of climate, biodiversity, sustainable development, and financial innovation, with a specific focus on the unique characteristics of the marine biome and its interconnections with local societies and the global economy.