Towards a Theory of Sustainable Finance

Recent years have displayed a growing discontent in society regarding the functioning of financial agents and markets. This is leading to an emerging consensus that the financial system is in need of reform. The crisis of 2008 and onwards has demonstrated how misaligned incentives and poor regulations impose extreme and detrimental risks on both the financial system itself and society at large. But a more general problem is the seemingly inability of financial markets to address the more pressing sustainability challenges of our time, such as global poverty and the threat of climate change. These systemic flaws do not only pose a practical challenge for the world’s leaders, but they also pose a theoretical challenge for contemporary researchers