External publications

The role of finance in greening economic development

Volz, Ulrich / Damon Aitken
External Publications (2025)

in: John A. Mathews / Arkebe Oqubay Metiku (eds.), The Oxford Handbook on the Greening of Economic Development, Oxford: Oxford University Press, 295-318

ISBN: 978-0-19-888348-7
Information

This chapter discusses the role of the financial sector in greening economic development and the need to align finance with climate and other sustainability goals. Starting with a discussion of prevailing market failures in finance, the chapter makes the case for systematically integrating climate and other environmental risks and impacts in financial decision-making. It highlights the critical role that central banks and supervisors need to play in governing sustainable finance and discusses actions that these institutions may need to take to this end. The chapter also emphasizes the role that public development banks can play in scaling up sustainable investment and in mainstreaming sustainable finance practices and developing sustainable markets.

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