Financial Markets and the Transition to a Low-Carbon Economy: Challenging the Dominant Logics. (March 2019)

• Record Type: Journal Article
• Authors: Louche, Celine; Busch, Timo; Crifo, Patricia; Marcus, Alfred
• Other Names: Louche Celine guest-editor.; Busch Timo guest-editor.; Crifo Patricia guest-editor.; Marcus Alfred guest-editor.
• Is Part Of: Organization & environment. Volume 32:Number 1(2019:Jan.)
• Page Start: 3
• Page End: 17
• Publication Date: 2019-03
• Subjects: financial markets -- climate change -- low-carbon economy -- theory of change; Associations, institutions, etc -- Environmental aspects -- Periodicals; Business enterprises -- Environmental aspects -- Periodicals; Environmental management -- Periodicals; Environmental responsibility -- Periodicals; Sustainability -- Periodicals; 658.408305
• DOI: 10.1177/1086026619831516
• Languages: English
• ISSNs: 1086-0266

Abstract

Financial markets play a major role in contributing to the transition to a low-carbon economy. Although many initiatives and developments are taking place, this is just the beginning. In this article, we argue for a theory of change—a theory rooted in logics that will help financial markets play a key role in the transition to a low-carbon economy. We argue that the current dominant logics in finance—short-termism, predictability of the future based on ex-post data, price efficiency, and risk-adjusted returns—impede the effective integration of climate considerations in financial markets. We suggest four alternative logics that can enable and foster a change toward the low-carbon economy: long-termism, systems interconnectedness, carbon price dynamics, and active ownership.