FINANCE
However , she sees the scope of ‘ sustainable finance ’ as much broader . In fact , it needs to be a key component of the United Nations 17 Sustainable Development Goals ( SDGs ).
“ Addressing poverty is a sustainability issue , it ’ s the number one Sustainable Development Goal ,” she says . “ And then we have SDG 3 – good health and wellbeing . How do we finance healthcare systems to maintain physical and mental health ? How do we fund access to clean water for all ( SDG 6 ), or a quality education for all ( SDG 4 )? Each SDG requires funds , and action by companies , politicians and governments .”
Professor Liu offers an example of how sustainable finance also integrates with SDG 5 ( gender equity ). There are moves globally , and even legislation in some countries , to improve the gender balance on company boards . Professor Liu points to a growing body of evidence , including her own research , which shows that when there are more women on boards , there is increased investment in sustainability initiatives .
These board decisions reflect a greater desire to reduce corporate risk , including those with environmental and social impacts , she says .
The cost of oil addiction
Meanwhile , the current cost of living crisis being felt around the globe has highlighted a critical nexus between sustainable finance and SDG 7 ( affordable clean energy ).
At the CISF , Dr Scott Mahadeo says rising oil prices ( exacerbated by the Russia- Ukraine conflict ) are at the root of the current cost of living squeeze .
He notes that more than 80 per cent of the world ’ s energy , including in the UK , still comes primarily from oil , natural gas and coal . From March 2020 , when the first COVID-19 lockdowns were implemented , to May 2022 , the price of crude oil rose from
a low of US $ 14.85 to US $ 114.86 per barrel . These jumps in fuel costs flow on to agriculture and the cost of food and transport .
“ Energy markets and oil , in particular , react to geopolitical risk at the best of times . And given Russia ’ s huge importance as an oil exporter , energy prices have been particularly affected by the war between Russia and Ukraine .”
Food prices are being further affected by the shortage of wheat , also normally produced in large quantities in Russia and Ukraine , which underpins baked goods as well as feed for livestock industries . Sunflower and safflower oils widely used in cooking and food processing are also in short supply . Ukraine produces 50 per cent of the world ’ s sunflower and safflower oils .
The uncertainty factor
Added to all this , in the UK , is the impact of Brexit and increasing trade friction with the EU , along with continuing COVID-19 related supply disruptions .
“ Brexit seems to have caused much more uncertainty in markets and the economy than either the Russia-Ukraine war or COVID-19 , which is further feeding the cost of living crisis in the UK . The impacts of this are being felt by businesses when buying inputs to produce goods , and then by consumers ,” Dr Mahadeo notes .
The role of oil in the current inflationary crisis is highlighting the need for urgent investment in alternative energy
44 ISSUE 04 / 2022