Technology (especially the high energy-consuming blockchain) is not often associated with environmental goals but the elements of peer-to-peer networks, sharing economy and ‘direct’ finance in the Fintech world present coherence and continuity with the ESG world. Furthermore, the potential of Fintech in reducing costs, connecting people on a global scale, improving financial inclusion, diversification and resilience offer great opportunities also in the area of sustainable finance, advancing societal factors. Nonetheless, relevant risks and limitations must be considered, too. This chapter will first introduce the emerging area of sustainable digital finance, with particular regard to environmental objectives. Second, it will focus on ‘green Fintech’ facilitating capital raising. In particular, the chapter will analyse the main legal and technical challenges related to green financing, with special regard to green crowdfunding, green tokens offerings and other Distributed Ledger Technology (DLT)-based opportunities, also considering recent EU regulatory initiatives, also advancing some policy proposals.

The care for sustainability is one of the most urgent problems addressed by policy makers. It requires combined effort by multiple players for its efficiency. There are various levels at which different tools of multiple character are being introduced. Eventually, they turn into policies and actions by private businesses and public agencies. These different instruments can be of legislative and regulatory nature introduced on various levels: the UN conventions, communications, policies and protocols, the EU legislation, the Member States, regional and local authorities. As a result, they take a shape of instruments of various types. The range of non-regulatory tools that supplement the regulatory instruments is wide and often takes the form of financial measures. They can be divided into four groups – incentives, tradable instruments, fines and contractual compensations. All these instruments differ in terms of their character, reach and efficiency. Not necessarily being perfect, still, they contribute to the overall re-shift of approach and help transforming the current anxiety for the nature to tangible actions that protect it. The text addresses questions that are not limited to analyses of the efficiency of existing financial tools but also refer to what else could be done to enhance them and make them even more efficient.

The question of whether ‘specialist’ securities such as use-of-proceeds green bonds should be subject to a greater level of regulation has attracted considerable attention among policymakers and market actors. Much is at stake, especially because the green bond market has seen significant growth over the years. In this chapter we consider the role that EU prospectus disclosure regulation should play in relation to instruments such as green bonds. We examine the rationale for mandatory prospectus regulation and consider the role played by different market initiatives that have hitherto filled the regulatory gap. We are critical of current practices and argue in favour of mandatory ‘green bond’ prospectus requirements.

To get to a net-zero-carbon economy, we will need a new generation of sustainable technologies and the financing infrastructure to channel novel ideas into viable products and companies.

The enormity of climate change and the many ways one might address it is overwhelming. This chapter examines two movements that have sought to do so. One, the green bond movement, seeks to explicitly create opportunities for market participants to prioritize labeled sustainable and climate investment. The other, the divestment movement, seeks to move investment away from fossil fuel companies via direct political action that pressures large entities like universities and nonprofits to take their money out of fossil fuel companies and emissions intensive industries. Tripathy’s argument is twofold. First, he describes how the two movements, despite profound ideological and cultural differences, share an underlying assumption that climate change can be addressed by manipulating the workings of financial markets. Our increasing realization that neither of these movements, in isolation or in combination, has been even remotely successful in addressing the problem of climate change should remind us of a classical critique of market solutions: markets are inadequate when it comes to efficiently addressing problems with very distant and broad societal consequences. The chapter thus suggests that the failure of two market approaches with such diverse profiles should make us expand our political will and imagination to look beyond markets for future means to address climate change. Second, Tripathy suggests that in our necessary endeavor to develop alternative solutions, we may seek inspiration from the divestment movement. What is particularly interesting in this movement is its emphasis on democratic ideals of participation and inclusion in the political process itself, as well as its broad conception for a necessary agenda of societal change required to address climate change.

The availability of finance is a key requirement for action to mitigate and adapt to climate change. Several studies show that companies responding to ESG (environement, sustainability and governance) principles generally outperform others financially. There is strong growth of the sustainable finance sub-sector but off a low base. Fiduciary duty now is generally understood to include the need to take into account climate chage in decision-making and the exposure of company directors is growing exponentially. With falling prices, renewables are now being adopted by many leading companies for their own energy requirements. Green bonds and other climate-friendly financial instruments are in growing demand but large global financial institutions continue to direct a larger proportion of funds to fossil fuels than to ESG-rated investments including renewables. The present rate of growth of sustainable finance is not sufficient to meet climate goals for limiting emissions. The chapter recommends actions by governments to change this situation.