38
investment inflows and portfolio investment inflows are the key characteristics of
economic globalisation, which impact the social and environmental development at
a global level (Li and Reuveny 2003; O’Brien and Leichenko 2000). As global key
players, the relevant stakeholders at this level (international corporates, asset managers, insurances and hedge funds) have a high responsibility due to their volume of
financial resources.
The global economic growth in 2017 reached 3.1%, the highest rate of global
growth recorded since 2011 (World Bank Group 2018). This growth depended
mostly on the unlimited exploitation of natural resources, which led to a supply risk
and irreversible violation of ecosystems and the environment. The transformation of
the global economic growth model depending on the resources exploitation towards
a sustainable economy has led to a growing number of citizens and economists
exploring different economic models (UN 2015; European Commission 2011).
Many international and regional policies were implemented to support citizens and
governments to develop green economies, to support for environmentally friendly
innovation and to change consumption and production (Altenburg et al. 2017; Green
Growth Knowledge Platform 2013; Fay 2012). The global report of the UNEP, for
example, stresses the need for an inclusive global finance system, which ensures
sustainability and opportunities for natural wealth and the circular and green economy (UNEP 2015).
So-called green investors focus on projects such as the conservation of natural
resources, the discovery of alternative energy sources and the trading of reusable
commodities. This increasing trend represents a socially responsible investing alternative following ethical criteria (Barnea et al. 2005). The financial performance of
green funds in comparison to traditional mutual funds is mostly evaluated as underperforming on a risk-adjusted basis although the performances have improved during the last years (Tett 2018; Chang et al. 2012). One of the strongest trends in
global investments is the transition towards sustainable energy. Given the situation
that fossil fuels remain competitive, the current stage of the development and establishment of clean-energy technologies needs to be supported and accelerated.
Government policies are needed to stimulate the transition towards affordable and
sustainable energy supply and align the market forces (Chu and Majumdar 2012).
A green economy is perceived as a tool for achieving sustainability (Šimo-Svrček
et al. 2017; Jones 2011) and is defined by UNEP (2018) as low carbon, resource
efficient and socially inclusive. In a green economy, growth in employment and
income is driven by public and private investment into such economic activities,
infrastructure and assets that allow reduced carbon emissions and pollution,
enhanced energy and resource efficiency and prevention of the loss of biodiversity
and ecosystem services (UNEP 2018). Egorova et al. (2015) have shown that the
green economy will influence the health level of nations and increase factors that
promote the development of social and economic prospects and the welfare of society in general. However, the main challenge for the green investment is to show a
profitable and stable long-term return and a low risk profile, in order to be a good
alternative to ordinary investments. Most of these projects have low return and high
risk and volatility; however, this can be avoided through tax and other governmental
V. Kaputa et al.
investment inflows and portfolio investment inflows are the key characteristics of
economic globalisation, which impact the social and environmental development at
a global level (Li and Reuveny 2003; O’Brien and Leichenko 2000). As global key
players, the relevant stakeholders at this level (international corporates, asset managers, insurances and hedge funds) have a high responsibility due to their volume of
financial resources.
The global economic growth in 2017 reached 3.1%, the highest rate of global
growth recorded since 2011 (World Bank Group 2018). This growth depended
mostly on the unlimited exploitation of natural resources, which led to a supply risk
and irreversible violation of ecosystems and the environment. The transformation of
the global economic growth model depending on the resources exploitation towards
a sustainable economy has led to a growing number of citizens and economists
exploring different economic models (UN 2015; European Commission 2011).
Many international and regional policies were implemented to support citizens and
governments to develop green economies, to support for environmentally friendly
innovation and to change consumption and production (Altenburg et al. 2017; Green
Growth Knowledge Platform 2013; Fay 2012). The global report of the UNEP, for
example, stresses the need for an inclusive global finance system, which ensures
sustainability and opportunities for natural wealth and the circular and green economy (UNEP 2015).
So-called green investors focus on projects such as the conservation of natural
resources, the discovery of alternative energy sources and the trading of reusable
commodities. This increasing trend represents a socially responsible investing alternative following ethical criteria (Barnea et al. 2005). The financial performance of
green funds in comparison to traditional mutual funds is mostly evaluated as underperforming on a risk-adjusted basis although the performances have improved during the last years (Tett 2018; Chang et al. 2012). One of the strongest trends in
global investments is the transition towards sustainable energy. Given the situation
that fossil fuels remain competitive, the current stage of the development and establishment of clean-energy technologies needs to be supported and accelerated.
Government policies are needed to stimulate the transition towards affordable and
sustainable energy supply and align the market forces (Chu and Majumdar 2012).
A green economy is perceived as a tool for achieving sustainability (Šimo-Svrček
et al. 2017; Jones 2011) and is defined by UNEP (2018) as low carbon, resource
efficient and socially inclusive. In a green economy, growth in employment and
income is driven by public and private investment into such economic activities,
infrastructure and assets that allow reduced carbon emissions and pollution,
enhanced energy and resource efficiency and prevention of the loss of biodiversity
and ecosystem services (UNEP 2018). Egorova et al. (2015) have shown that the
green economy will influence the health level of nations and increase factors that
promote the development of social and economic prospects and the welfare of society in general. However, the main challenge for the green investment is to show a
profitable and stable long-term return and a low risk profile, in order to be a good
alternative to ordinary investments. Most of these projects have low return and high
risk and volatility; however, this can be avoided through tax and other governmental
V. Kaputa et al.