More about our work in the finance system
The finance sector underpins all commercial activity, and so it is critical to the transformation to a sustainable world. The way capital is allocated to businesses and individuals – right down to the types of savings, insurance and investment products available – has a major influence on sustainable development.
Our goal is to shift financial resources towards sustainable activities and away from unsustainable ones. We want to create change within the finance system by confronting its weaknesses, working with financial experts, and introducing new solutions and ways of thinking from outside the system.
We diagnosed flaws in the system in our publications Rethinking Capital and Living Within Our Means. Its focus on short-term gains means too much money funds unsustainable activities, power is concentrated in a few institutions making the system vulnerable to shocks, and there is little focus on new financial models which will support the transition to a sustainable economy. We are therefore focusing our efforts on three areas:
Incentivising long-term thinking
We want to encourage investors and businesses to take account of long-term drivers of value by changing culture, incentives, flows of information and analytical tools.
We recommended changes to culture and incentive structures in our project Overcoming Barriers to Long-term Thinking. Our Practical Innovations project is bringing financial institutions and companies together to work out the detail.
This workstream builds on work we are doing with Aviva Investors on the Vision for a Sustainable Economy, which focuses on the role of capital markets. It also builds on our Better Decisions, Real Value work with our Leader Business Group, which produced a toolkit designed to make information on sustainability more strategic and relevant to investors.
Innovating financial models
We aim to create and promote financial models that drive finance towards sustainable activities and apply them to specific challenges in the food and energy sectors. Our Funding Revolution project produced a guide to help communities set up rolling programmes of low-carbon energy projects using revolving funds. We also work with individual financial institutions to explore how these models could be scaled up within their own organisations.
This theme also builds on:
- our Climate Finance project, which helps public sector organisations find smart ways to raise and use money to cut carbon;
- our Innovative Social Finance work with Barclays, to scale up investment models which take account of sustainability;
- our work on forest investment, particularly Forest-backed Bonds.
Injecting fresh-thinking from outside
We aim to identify and scale up new ideas from outside the finance sector, and to find, support and develop new players who can deliver finance needs more effectively.
Our Future of Money project will explore how new technologies or approaches could offer resilient, cost-effective or accessible means of payment outside the current financial system, such as online currencies, peer-to-peer lending, and mobile phone transactions.
Past projects
Forum for the Future has been working on creating change in the finance system for many years. Other recent projects that are relevant to our aim of driving capital towards activities that increase sustainability and resilience include:
- exploring ways that insurance companies can build climate change considerations more effectively into their business models
- investigating how microfinance institutions have tapped into global capital markets and the lessons learned for scaling up solutions
- opportunities for investment in activities that help people, organisations and countries adapt to climate change
- a guide for fund managers on how to address the growing risks and opportunities of climate change in investment decisions
- work on how commercial financial institutions can get involved in financing biodiversity and ecosystems services
- assessing how the voluntary carbon markets can work for the poor
For more information about our finance work please contact Ruth Curran.
