Published 2018-01-04

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Government sustainable investment research initiative

The Stockholm Sustainable Finance Centre is a new knowledge centre for sustainable investment. Mistra is one of the participants who have worked for the Centre to come into being.
‘This is a way to scale up the initiatives we already have in the sustainability sphere,’ says Åke Iverfeldt, Mistra’s CEO.

Sustainable investment is one of the latest trends in the global quest for sustainability. Mistra is active in this area, and it is no passing or new preoccupation. The Foundation has funded programmes focusing on financial sustainability for many years.

The Government has now taken another step in the same direction by devoting SEK 17 million to creating the Stockholm Sustainable Finance Centre. Over the next three years, the new Centre will conduct research, raise awareness and disseminate information on how the world’s financial markets can become more sustainable. In addition, the Government hopes that its investment will give private investors more opportunities to invest their money in projects that mitigate climate change.

‘It’s important to accumulate expertise in sustainable investment,’ said Isabella Lövin (Green Party), Minister for International Development Cooperation and Climate, when the initiative was presented in November.

As a further motive, she stated that the world’s aggregate public funds are not enough to deliver on recent global promises. These were made at the UN Climate Change Conference in Paris and the 2015 UN Sustainable Development Summit, where the global development goals in Agenda 2030 were discussed.

‘To meet the international commitments under the Paris Agreement and the UN Global Sustainability Agenda, tens of trillions of US dollars will have to be invested in the years ahead, in the industrialised and developing nations alike. The need to fund these international commitments is enormous,’ said Lövin.

She went on to assert that we cannot afford even one of these investments not being sustainable in the long term.

‘We need a comprehensive transformation of the economy. Minor contributions to sustainable investments, while the rest flows into unsustainable ones, isn’t enough. Instead, we need ways of shifting the economy in a new direction, so that it can become more sustainable as a whole.’

The Stockholm Sustainable Finance Centre will be run jointly by the Stockholm School of Economics (SSE) and the Stockholm Environment Institute (SEI). The idea is for the Centre to combine SSE’s expertise in sustainability, political governance and financial markets with SEI’s extensive knowledge of global policy processes, climate and sustainable development.

Lars Strannegård, President of the Stockholm School of Economics, is enthusiastic about the initiative.

‘It’s an incredibly positive initiative, and we’re glad now to be getting the chance to collaborate with the Stockholm Environment Institute on such an urgent subject as this. And we appreciate Mistra’s efforts to make it happen. Without Mistra’s investments in Misum and Mistra Financial Systems, this initiative would never have happened.’

The Centre’s inception is also attributable to Mistra’s cooperation with the International Finance Corporation, the World Bank agency for promoting the development of private sectors in developing countries.

‘It feels really good that the Government has chosen to take a stand, highlighting the importance of this research area,’ says Åke Iverfeldt. Nevertheless, he thinks Mistra can retain its vital role henceforward, not least as an active asset owner.

To emphasise the scale of the initiative, the Minister for Financial Markets Per Bolund attended the presentation of the Centre. In his speech, he chose to stress Sweden’s ample experience and skills in sustainable investments.

‘Take the example of green bonds. No market player was interested before Sweden introduced them. Now we see rapid growth and I’m convinced that much more will happen in the next few years,’ said Bolund.

The Minister for Financial Markets also mentioned that the Government is changing the rules for four of the Swedish National Pension (AP) Funds. Under the proposal, the Funds’ investments will show greater consideration for sustainable development than they do now.

The Stockholm Sustainable Finance Centre’s research will be aimed both at understanding which factors make a sustainable economy successful and at understanding better how the financial market can support sustainable development more robustly. The Centre will also draw up recommendations for financial institutions, and decision makers will be trained to foster conditions in which a sustainable financial market can keep growing.

‘Today, many investors are interested in contributing to a better planet. This is creating a succession of new issues and challenges for the financial system. So it feels good that an exciting, active research area is now getting much-needed funding,’ thinks Bo Becker, Professor at SSE’s Department of Finance.

According to Johan L. Kuylenstierna, Executive Director of the Stockholm Environment Institute, the new initiative will create new forms of collaboration.

‘The aim is to give the participants in research and financial markets more knowledge about how financial investments can push adaptation to climate change and promote greater sustainability.’

Per Westergård