ENV 863a () / 2022-2023

Sustainable Finance Policy & Regulation

Finance has long been considered essential for the transition to a sustainable economy. Yet, what Lord Stern characterized as the "greatest market failure the world has seen," climate change, did not concern the financial markets, nor its custodians – regulators and central banks – until very recently. The rise of ESG markets, mired in controversies over greenwashing, the conclusion of the Paris Agreement, and the unabated climate emergency have forced policymakers and regulators to switch gears. This novel course explores how financial policy and regulation are shaping the transition to a sustainable economy. Sustainable finance policy and regulation rank among the most innovative public responses to today’s climate emergency. We start this course by exploring the limits of self-regulation and traditional policy instruments. We then engage in the new debates on the role of financial policies and regulation. These debates set the stage for the methodic and practical examination of old and new instruments used or considered worldwide to support the financial system in the transition to a sustainable economy. Despite the focus of financial policies and regulation on climate, the class integrates other social and environmental dimensions of sustainable finance. In addition to two weekly lectures, students have, over the course of the term, the chance to exchange with three high-level experts of sustainable finance policy and regulation. No prior course is required for this class.