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.
Original language | English (US) |
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Pages (from-to) | 3-17 |
Number of pages | 15 |
Journal | Organization and Environment |
Volume | 32 |
Issue number | 1 |
DOIs | |
State | Published - Mar 1 2019 |
Bibliographical note
Publisher Copyright:© 2019 SAGE Publications.
Keywords
- climate change
- financial markets
- low-carbon economy
- theory of change