Normalizing sustainability in finance

The document identifies the current global financial system as a barrier to sustainability, noting a funding gap of USD 8.4–10.1 trillion for the 2030 Sustainable Development Goals in developing countries. It argues that financial flows are primarily driven by perceived profitability rather than sustainability, and calls for the 'greening' of market-based investments to move from voluntary ESG initiatives to standard working practices. The author recommends that governments use fiscal measures like carbon pricing and that multilateral development institutions make sustainability norms a condition for co-financing. Additionally, the paper emphasizes the need for international harmonization of financial regulations and the equal partnership of developing countries in shaping the global sustainable finance architecture.

• The current global financial system is a major obstacle to sustainability, characterized by a significant funding gap for the 2030 Sustainable Development Goals (SDGs) in developing countries, estimated between USD 8.4 trillion and USD 10.1 trillion.
• Global financial flows are predominantly driven by perceived profitability, meaning that while ESG and net-zero standards are growing, they remain secondary to profit motives. Current ESG practices often focus on the exclusion of harmful sectors, such as coal-fired power plants and coal mining, rather than actively promoting sustainable alternatives.
• To normalize sustainability in finance, the document suggests using fiscal measures to reflect externalities, such as carbon pricing, and leveraging multilateral development finance institutions, aid agencies, and sovereign wealth funds to make sustainability norms a condition for co-financing operations.
• There is a critical need for the international harmonization of financial regulations to prevent fragmented regimes in developing countries from hindering capital flows. The author stresses that developing countries must be equal partners in these forums, as they are the primary destinations for sustainable investments.
• The USD 100 billion mentioned in the Paris Agreement is insufficient and should be viewed as a minimum floor rather than a maximum ceiling, given that trillions of dollars are required for infrastructure and energy systems in developing nations.

APA

Desai, N. (2022). Normalizing sustainability in finance. Stockholm Environment Institute. https://www.sei.org/wp-content/uploads/2022/05/normalizing-sustainability-in-finance-stockholm50backgroundpaper.pdf

Chicago

Desai, Nitin. Normalizing sustainability in finance. Stockholm Environment Institute, 2022. https://www.sei.org/wp-content/uploads/2022/05/normalizing-sustainability-in-finance-stockholm50backgroundpaper.pdf.

Wikipedia

{{cite report |last1=Desai |first1=Nitin |title=Normalizing sustainability in finance |publisher=Stockholm Environment Institute |date=May 2022 |url=https://www.sei.org/wp-content/uploads/2022/05/normalizing-sustainability-in-finance-stockholm50backgroundpaper.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{desai2022normalizing, author = {Desai, Nitin}, title = {{Normalizing sustainability in finance}}, institution = {Stockholm Environment Institute}, year = {2022}, month = may, url = {https://www.sei.org/wp-content/uploads/2022/05/normalizing-sustainability-in-finance-stockholm50backgroundpaper.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }