Is growth sustainable? Since the 1970s, society has been aware that we are living in a world with finite resources. This scarcity of raw materials is inevitably causing a loss of economic momentum, which is in line not only with a Newtonian mechanistic outlook, but is conversely in keeping with the law of entropy and, more specifically, the second law of thermodynamics. Growth is sustainable, then, only if it preserves natural capital and incorporates environmental and social aspects alongside its economic dimension. This form of growth is none other than sustainable development, in other words a development “that meets the needs of the present without compromising the ability of future generations to meet their own needs”.
Sustainable development has been a major focus since the 1987 Brundtland report and the Rio Earth Summit in 1992, creating 380 million jobs and $12,000 billion of value by 2030. For partisans of weak or strong sustainability, innovation plays a central role and is inseparable from sustainable development. This is known as eco-innovation, an important strategic source of competitiveness for companies, allowing them to cut costs, offer new avenues for growth and boost their credentials by improving their image with customers. Sustainability is transcending national borders to become an international phenomenon. On 8 March 2018, the European Union unveiled its action plan for financing sustainable growth. The EU roadmap has three objectives: redirecting capital flows to a more sustainable and inclusive economy, incorporating sustainability in financial risk management, and promoting transparency and sustainable investing. Europe currently has an annual investment shortfall of nearly EUR 180 billion, to achieve its objectives by 2030 the European Commission is seeking to overhaul the financial sector, so that this major promoter of economic development helps to support sustainable development. By prioritising environmental, social and governance (ESG) criteria in financing and investment decisions, finance and sustainability combine to produce sustainable finance.