Value for money: Synthesis of transition discussions financial sector

Date 12 Oct, 2023

The Dutch financial sector is motivated to function as “a flywheel for sustainability transitions”. In the action research publication ‘Value over money’ we explore together with banks, pension funds and other financial players how that requires structural change in the system itself. Are we willing to renegotiate the fundamentals of finance?

Agriculture, healthcare, construction, energy, mobility and water management are all nearing their ecological and social (systemic) limits. In the Netherlands, a small country partially below sea level, these boundaries are becoming increasingly tangible. A larger, systemic shift to an economy within ecological limits is unavoidable. Yet the transition, or systemic change, is faltering because in practice, it is hard to let go of the established structures, interests and routines.

The financial system is not immune to these dynamics and is experiencing increasing pressure too. We must ask ourselves: is this system also contributing to inequality and ecological damage? The financial sector can and wants to play a significant role in sustainability transitions, but there are still too few specific steps being taken to achieve the climate goals set. From a transitions perspective, the financial system itself needs to change fundamentally.

This document contains a synthesis of five conversations about transition in the financial sector. This ‘transition arena’ was facilitated by DRIFT, the Erasmus University transition institute, and the Sustainable Finance LAB.

The document first introduces the need for change in the financial world. Then it addresses the dark side of this system based on four core problems (one-sided focus, backward-looking risk, wealth inequality and compartmentalisation/specialisation). The publication also formulates three principles for the sector’s future and devotes attention to disruptive change processes and desired transitions.

Derk Loorbach, Igno Notermans, Maria Fraaije (DRIFT), Rens van Tilburg, Dirk Schoenmaker and Peter Blom (Sustainable Finance Lab)

Download the report
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This arena process also resulted in the discussion piece ‘Managing on Impact’, an appendix to ‘Value over Money’.