Today's financial market is not equipped to solve the challenges of the future. If, for example, an entrepreneur develops a circular business model that is both commercially and ecologically sustainable, the players in the financial market have difficulty valuing it using o the tools available.
The investment is not only about environmental but also about social sustainability. For example, within the framework of the Sustainable Finance Lab, Malin Malmström will run a project on how AI can be used to identify unconscious bias against entrepreneurial women in the financial market and the societal costs of non-investment in women's entrepreneurship.
– The financial market can be a positive force in the societal transformation needed by choosing which ideas will receive financial support. There is a great desire for new knowledge among the players in the financial market. They want to make a difference, they just do not know how, says Malin Malmström.
Sustainable Finance Lab is a consortium consisting of six universities and research institutes: Luleå University of Technology, KTH, Stockholm School of Economics, Stockholm Resilience Center, the Royal Swedish Academy of Sciences, IVL Swedish Environmental Institute and the University of Gothenburg.
Different research orientations
The participating researchers represent a wide range of research orientations. In addition to Malin Malmström, economists, philosophers and business economists are participating. She shares the chairmanship with Kent Eriksson, professor at the Division of Real Estate Business and Financial Systems at KTH.
– We who participate did not know each other before. It was via Vinnova that we got in touch. It has been great to collaborate with each other and together we are a strong team with our different perspectives on the issue of sustainability.
The consortium works on the basis of four themes: 1. Evaluation of the impact of the financial tools. How should financial market tools change in order to stimulate sustainable business solutions? 2. Reconceptualization. How can the conception of risk and opportunity change to contribute to a sustainable financial market? Sustainable standards and policies. How should the political instruments change in order to contribute to a sustainable development? What role can players who are not part of the financial market play, for example NGOs? Based on the results of these three themes, the consortium will 4. Develop new transformative innovations.
Practically applicable research
– It is important to us that our research is practically applicable. That is why we work closely with our partners in the financial market who will provide us with financial data and test the prototypes of the financial tools we develop, says Malin Malmström.
Sustainable Finance Lab will also collaborate with actors in the real economy, ie companies that produce goods and services, such as the construction industry and the food industry, to get an idea of how collaboration with the financial market can help these companies to switch to sustainable production. Furthermore, the consortium has established contact with the Riksbank (Sweden's central bank) and several commercial banks.
– There is a need for a new way of thinking about financing companies throughout the life cycle, everything from how to decide on start-up capital to how a company should be listed on the stock exchange.
There is a pronounced political will for Sweden to take the lead in the transition to a circular economy. Malin Malmström sees the creation of the Sustainable Finance Lab as an expression of that. The consortium has good contacts with international organizations, such as the World Bank and the OECD. Malin Malmström therefore believes that the possibilities to reach out with research results that can transform the financial market on a global leve is good.
It is about time to bring about a change since the existing financial systems lack ecologically and socially sustainable functions, says Malin Malmström.
– As Einstein said: “The world as we have created it is a result of our thinking. It cannot be changed without us changing the way we think.”