The Future of Resilient Finance: Finance Politics in the Age of Sustainable Development [1 ed.] 9783031301377, 9783031301384, 3031301374

Table of contents :
Contents
About the Author
List of Figures
List of Tables
1 Introduction
1.1 Socially Responsible Investment (SRI)
1.2 Green New Deals
1.3 Green Finance and Climate Stabilization Financialization
1.4 The Future of Resilience Finance Leadership
References
2 Resilience Finance Leadership
2.1 Resilient Finance
2.2 Responsible Investment
2.3 Finance Politics
References
3 Resilient Finance in Responsible Investment
3.1 Introduction
3.2 Corporate Social Responsibility
3.3 Financial Social Responsibility
3.4 Socially Responsible Investment
3.5 Resilient Finance
3.6 COVID-19-Induced Inequality
3.7 Corporate Social Justice
3.8 Environmental Attention
3.9 Green Deals
3.10 Diversity
References
4 Global Perspectives
4.1 Introduction
4.2 International Developments
4.3 Resilient Finance After the Great Reset
4.3.1 Inequality in the Socio-Economic Fallout of COVID-19
4.3.2 Resilient Finance as the Great Equalizer
References
5 Environmental Financialization
5.1 Economics of the Environment
5.2 Sustainable Finance
5.3 Climate Stabilization Financialization
References
6 The Future of Resilient Green Finance
6.1 Institutional Landscape
6.2 Green Banking and Green Finance
6.3 The Future
6.3.1 Green Bonds
6.3.2 Green FinTech and Cryptocurrencies Outer Space Exploration Funding
References
7 Finance Diplomacy: The Politics and International Relations of Finance
7.1 Introduction
7.2 Climate Change Resiliency Financing
7.2.1 Climate Change
7.3 Climate Resilience Finance
7.4 Climate Economic Prospects
7.5 Resilient Redistribution
7.6 Science Diplomacy
7.7 Science Diplomacy Index (SDI)
7.8 Research Question and Hypotheses
7.9 Climate Justice
7.10 Climate Resiliency Financing Implementation
7.11 Climate Justice Resiliency Financing Taxation-and-Bonds Strategy
7.12 Economic Model
7.13 Operationalization
7.14 Indices
7.15 Results
7.15.1 Climate Winners and Losers CO2 Emission Index
7.15.2 Climate Winners and Losers’ Climate Flexibility and CO2 Emission Index
7.15.3 Climate Winners and Losers CO2 Emission Change Index
7.15.4 Climate Winners and Losers CO2 Emission Financial Crisis Intervention Index
7.15.5 Climate Winners and Losers CO2 Emission Resilience Finance Index
7.15.6 Climate Winners and Losers CO2 Emission Bank Lending Rate Index
7.15.7 Climate Winners and Losers Consumption-Based, Trade-Adjusted CO2 Emission Index
7.15.8 Science Diplomacy Climate Responsibility Index
7.15.9 Climate Winners and Losers CO2 Emission Global Connectivity Index
7.16 Discussion
7.16.1 Implications
7.16.2 Implementation
7.16.3 Economic Impetus
7.16.4 Feasibility and Limitations
7.16.5 Future Studies
7.16.6 Monitoring, Evaluation and Accountability
7.16.7 Future Outlook
7.17 End Thoughts
References
8 General Discussion and Future Prospects
References
Index

Citation preview

Sustainable Development Goals series

SDG: 8 Decent Work and Economic Growth

The Future of Resilient Finance Finance Politics in the Age of Sustainable Development Julia M. Puaschunder

Sustainable Development Goals Series

The Sustainable Development Goals Series is Springer Nature’s inaugural cross-imprint book series that addresses and supports the United Nations’ seventeen Sustainable Development Goals. The series fosters comprehensive research focused on these global targets and endeavours to address some of society’s greatest grand challenges. The SDGs are inherently multidisciplinary, and they bring people working across different fields together and working towards a common goal. In this spirit, the Sustainable Development Goals series is the first at Springer Nature to publish books under both the Springer and Palgrave Macmillan imprints, bringing the strengths of our imprints together. The Sustainable Development Goals Series is organized into eighteen subseries: one subseries based around each of the seventeen respective Sustainable Development Goals, and an eighteenth subseries, “Connecting the Goals,” which serves as a home for volumes addressing multiple goals or studying the SDGs as a whole. Each subseries is guided by an expert Subseries Advisor with years or decades of experience studying and addressing core components of their respective Goal. The SDG Series has a remit as broad as the SDGs themselves, and contributions are welcome from scientists, academics, policymakers, and researchers working in fields related to any of the seventeen goals. If you are interested in contributing a monograph or curated volume to the series, please contact the Publishers: Zachary Romano [Springer; [email protected]] and Rachael Ballard [Palgrave Macmillan; [email protected]].

Julia M. Puaschunder

The Future of Resilient Finance Finance Politics in the Age of Sustainable Development

Julia M. Puaschunder Graduate School of Arts and Sciences Columbia University New York, NY, USA

ISSN 2523-3084 ISSN 2523-3092 (electronic) Sustainable Development Goals Series ISBN 978-3-031-30137-7 ISBN 978-3-031-30138-4 (eBook) https://doi.org/10.1007/978-3-031-30138-4 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Color wheel and icons: From https://www.un.org/sustainabledevelopment/, Copyright © 2020 United Nations. Used with the permission of the United Nations. The content of this publication has not been approved by the United Nations and does not reflect the views of the United Nations or its officials or Member States. Cover illustration: Nicolay Pandev/gettyimages This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Contents

1

1 5 7

Introduction 1.1 Socially Responsible Investment (SRI) 1.2 Green New Deals 1.3 Green Finance and Climate Stabilization Financialization 1.4 The Future of Resilience Finance Leadership References

9 11 12

2

Resilience Finance Leadership 2.1 Resilient Finance 2.2 Responsible Investment 2.3 Finance Politics References

15 24 31 36 49

3

Resilient Finance in Responsible Investment 3.1 Introduction 3.2 Corporate Social Responsibility 3.3 Financial Social Responsibility 3.4 Socially Responsible Investment 3.5 Resilient Finance 3.6 COVID-19-Induced Inequality 3.7 Corporate Social Justice 3.8 Environmental Attention 3.9 Green Deals

55 56 59 61 63 71 74 78 80 82 v

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CONTENTS

3.10 Diversity References

83 92

Global Perspectives 4.1 Introduction 4.2 International Developments 4.3 Resilient Finance After the Great Reset 4.3.1 Inequality in the Socio-Economic Fallout of COVID-19 4.3.2 Resilient Finance as the Great Equalizer References

103 105 109 116

5

Environmental Financialization 5.1 Economics of the Environment 5.2 Sustainable Finance 5.3 Climate Stabilization Financialization References

153 154 157 163 178

6

The Future of Resilient Green Finance 6.1 Institutional Landscape 6.2 Green Banking and Green Finance 6.3 The Future 6.3.1 Green Bonds 6.3.2 Green FinTech and Cryptocurrencies Outer Space Exploration Funding References

185 187 191 198 198

4

7

Finance Diplomacy: The Politics and International Relations of Finance 7.1 Introduction 7.2 Climate Change Resiliency Financing 7.2.1 Climate Change 7.3 Climate Resilience Finance 7.4 Climate Economic Prospects 7.5 Resilient Redistribution 7.6 Science Diplomacy 7.7 Science Diplomacy Index (SDI) 7.8 Research Question and Hypotheses 7.9 Climate Justice 7.10 Climate Resiliency Financing Implementation

116 123 138

203 206 211 212 215 215 218 219 220 222 224 228 229 237

CONTENTS

Climate Justice Resiliency Financing Taxation-and-Bonds Strategy 7.12 Economic Model 7.13 Operationalization 7.14 Indices 7.15 Results 7.15.1 Climate Winners and Losers CO2 Emission Index 7.15.2 Climate Winners and Losers’ Climate Flexibility and CO2 Emission Index 7.15.3 Climate Winners and Losers CO2 Emission Change Index 7.15.4 Climate Winners and Losers CO2 Emission Financial Crisis Intervention Index 7.15.5 Climate Winners and Losers CO2 Emission Resilience Finance Index 7.15.6 Climate Winners and Losers CO2 Emission Bank Lending Rate Index 7.15.7 Climate Winners and Losers Consumption-Based, Trade-Adjusted CO2 Emission Index 7.15.8 Science Diplomacy Climate Responsibility Index 7.15.9 Climate Winners and Losers CO2 Emission Global Connectivity Index 7.16 Discussion 7.16.1 Implications 7.16.2 Implementation 7.16.3 Economic Impetus 7.16.4 Feasibility and Limitations 7.16.5 Future Studies 7.16.6 Monitoring, Evaluation and Accountability 7.16.7 Future Outlook 7.17 End Thoughts References

vii

7.11

238 245 253 258 268 268 272 276 278 288 293

298 303 306 310 314 317 321 322 323 324 324 326 327

viii

8

CONTENTS

General Discussion and Future Prospects References

Index

337 362 365

About the Author

Julia M. Puaschunder is a Behavioral Economist with Doctorates and Ph.D. in Social and Economic Sciences, as well as Natural Sciences, with over 20 years of experience in applied social sciences empirical research in the international arena. As a post-doctoral researcher in the Interuniversity Consortium of New York, USA, she researches at Columbia University and teaches at The New School in the fields of Economics and Public Engagement. As a Friends of the International Institute for Applied Systems Analysis (IIASA) board member, she advances science diplomacy in cooperation with the United States National Academy of Sciences.

ix

List of Figures

Graph Graph Graph Graph

7.1 7.2 7.3 7.4

Graph 7.5 Graph 7.6 Graph 7.7 Graph 7.8 Graph 7.9 Graph 7.10 Graph Graph Graph Graph Graph Graph

7.11 7.12 7.13 7.14 7.15 7.16

Graph 7.17 Graph 7.18

World surface temperature anomalies 1891–2021 Science Diplomacy index worldmap Science Diplomacy index bar chart Worldmap of W L T T CCC index per country for 185 countries Country ranking of W L T T CCC index for 185 countries Worldmap of C FCCC index per country for 84 countries Country ranking of C FCCC index for 84 countries Worldmap of W L T T CCC G index per country Country ranking of W L T T CCC G index for CO2 reducing countries Country ranking of W L T T CCC G index for CO2 increasing countries Worldmap of CC FC I index per country Country ranking of CC FC I index for 112 countries Worldmap of CC R F I index per country Country ranking of CC R F I index for 130 countries Worldmap of W L T T CCC L index per country Country ranking of W L T T CCC L index for 101 countries Worldmap of W L T T C BT AE index per country for 116 countries Country ranking of W L T T C BT AE index for 116 countries

215 225 227 272 273 276 277 282 283 284 288 289 293 294 298 299 301 302

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LIST OF FIGURES

Graph Graph Graph Graph

7.19 7.20 7.21 7.22

Worldmap of CC S D I index per country for 48 countries Country ranking of CC S D I index for 48 countries Worldmap of CC GC index per country Country ranking of CC GC index for 158 countries

305 306 310 311

List of Tables

Table 7.1 Table 7.2 Table 7.3 Table Table Table Table Table Table Table Table Table

7.4 7.5 7.6 7.7 7.8 7.9 7.10 7.11 7.12

Science Diplomacy Index numerical ranking Influence variables on climate taxation-and-bonds strategy Influence variables on climate taxation-and-bonds strategy operationalization W L T T CCC index per country for 185 countries C FCCC index per country for 84 countries W L T T CCC G index per country for 185 countries CC FC I index per country for 112 world countries CC R F I index per country for 130 world countries W L T T CCC L index per country for 101 world countries W L T T C BT AE index per country for 116 countries W L T T C BT AE index per country for 48 countries CC GC index per country for 158 world countries

226 247 259 269 275 279 286 291 296 300 304 308

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CHAPTER 1

Introduction

Abstract This book is designed to aid academics and practitioners envisioning the future of resilient finance. In the aftermath of substantial crises, resilience is key for survival. The system dynamics of resilience are associated with fast-paced decision-making under uncertainty, which predestines resilience more to be housed in a muddling-through approach rather than slow-thinking optimality control. Given the nature of resilience to gravitate toward satisficing crisis management, the marriage of resilience with finance offers to imbue invaluable efficiency and rationality in market survival. Resilience finance draws attention to leadership features in resiliency, such as clear goal attainment and rational execution plan strategy. This chapter provides an overview of resilience finance through contemporary governmental, corporate and global governance efforts. The first part of the book concerns resilience finance in responsible investments and finance politics. Resilient finance in responsible investments outlines the concepts of Corporate Social Responsibility (CSR) and Financial Social Responsibility (FSR) as well as Socially Responsible Investment (SRI). The COVID-19 rescue and recovery funds also address Corporate Social Justice and growing attention to environmental concerns in Green New Deals. The Green New Deals are covered as governmental resilience finance leadership means of our lifetimes. Socially responsible finance addresses corporate and financial sector resilience endeavors as well as climate justice redistribution pledges © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. M. Puaschunder, The Future of Resilient Finance, Sustainable Development Goals Series, https://doi.org/10.1007/978-3-031-30138-4_1

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as an international sustainable development strategy. The new age of resilience leadership in finance captures monetary means as a source of politics, diplomacy and international aid. Our new resilience leadership features the contemporary societal impact of the current outpouring of rescue and recovery funds and a boom in socially responsible investments that integrate environmental, social and governance criteria in portfolio choices imbuing sustainable value of finance for society. Climate change resilience in redistribution funds serves as an additional resilience leadership example at the forefront of sustainable development. The future of resilient finance is portrayed from an institutional perspective and a practical application in green banking, green finance as well as Green FinTech and cryptocurrencies. International developments in finance diplomacy are captured in climate bonds to redistribute some of the expected gains from a warming globe to areas that lose out the most from climate change. A general discussion and future prospects end the book.

Resilience Finance Ever since crises have become turning points for society. The 2008/ 2009 World Financial Recession and the COVID-19 pandemic external shock changed international finance around the world. In light of systeminherent and external shocks but also looming environmental crises, finance has been put into service for society in providing one of the most powerful means for resilience in liquidity. While resilience is a dynamic mechanism to cope with crises in many domains, the uncertainty and complexity imbued in sustaining large-scale and widespread shocks make resilience prone to diverge from slow-thinking optimal choice mechanisms as practiced in standard neoclassical economics. Resilience finance draws attention to the economic rationality imbued in leadership management theory and practice for the concept of market survival. Leadership theory with economic calculus holds the most sophisticated means to efficient goal attainment and contingency strategy plan execution, which is fundamental for resilience. Given the worldwide impetus of contemporary crises—such as the 2008/2009 World Financial Recession, the COVID-19 pandemic as well as climate change—the time has come to imbue efficiency in resilience in resilience leadership in finance.

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Resilience finance describes the governance, governmental efforts and corporate endeavors to provide contingency to society and markets during internal and external shocks via financial liquidity coupled with aspirational goals for a sustainable future. The concept of resilience finance imbues leadership efficiency into resilience. Through efficient leadership, resilience is thereby brought closer to optimality in times of uncertainty. Resilience finance also gives a closer plan of where to go and into what to change through crises. Instead of ‘bouncing back,’ resilience leadership advocates for ‘bouncing forward’ with a clear goal and mission where to end after a crisis. One of the tasks of resiliency finance management focuses on is to weed out what changes that were done at a fast pace should remain in place after crises and what policy and market changes should be reverted to previous models. In this feature, resilience finance embraces positive aspects of creative destruction that advocates for letting go of inefficient parts of economic systems through crises. Resilience finance marries the ideas of resilience in survival with goal-focused efficiency in leadership. Resilience leadership in finance is a worldwide phenomenon with international variations and diverse implementation strategies. Resilience leadership in finance can intertwine monetary means to provide financial liquidity for system survival with social responsibility in sustainable development. In our post-pandemic new Renaissance, finance is put in the service of society in resilience leadership steering financial flows to social causes in the global and local as well as the public and private sectors. More than ever before in the history of industrialization are finance and economics powerfully pegged to improve societal causes in an efficient and structured way with a long-term future-oriented socially-conscientious focus. This book offers a Law & Economics approach to understanding the most contemporary resilience finance examples in international finance in governance, governmental as well as corporate efforts to sustain efficiently. Already in the aftermath of the 2008/2009 World Financial Recession, governance, governmental, corporate and stakeholder interest grew in Socially Responsible Investments (SRI). Economic external shock disruptions in the wake of the COVID-19 pandemic heralded practitioners of finance and global governance experts to use economic means to alleviate the most pressing societal concerns of our contemporary times by providing liquidity in Green New Deals. In the Western World, the Green

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New Deal in the United States and the European Green Deal in the European Union are plans to peg crisis rescue and recovery packages to societal advancement. Resilience finance in climate justice redistribution pledges addresses global inequality alleviation in redistributing global economic gains of internal and external shocks within society, between nations and over time. The post-COVID-19 recovery era is also a time of blatant disparities and inequalities in terms of access to healthcare and social justice. The COVID-19 bailout and recovery packages provide a unique opportunity to develop fairer and more sustainable societies. How to align economic interests with justice and fairness notions is the question of our times when considering the massive challenges faced in terms of environmental challenges, healthcare demands and social justice pledges. In many countries, governmental crisis aid is particularly pegged to concrete social, economic and environmental causes. In the aftermath of the COVID19 pandemic shock and its subsequent economic fallout, the currently largest-ever governmental rescue and recovery aid is justified by the positive multiplier effect in the hope for a revitalization of the economy. The economic fallout of the COVID-19 crisis has exacerbated socioeconomic disparities and inequalities. The new finance order in the aftermath of the COVID-19 pandemic leverages responsible finance as a means to alleviate the finance performance versus real economy gap. The different affective fallout propensities disparately distributed within society create social volatility. High inflation and longest-ever low interest rate regimes dominate the call for responsible finance that targets rescue, recovery and relief aid. Urban, local, regional or national foci as well as global and future-oriented beneficiaries of governmental recovery aid are potential recipients of aid. Institutional frameworks may ground recovery support with a long-term future-oriented sustainability vision. With the largest rescue and recovery funds being distributed around the world in response to the economic fallout of the crisis, economic growth is currently also being called for being inclusive and green in light of growing awareness of inequality and climate change. With the COVID19 governmental control and liquidity provision needs around the world, finance has also become political in funding political crises resilience and divestiture acts as never before in the history of modern times. In the eye of global inequalities rising, governments around the world tried to

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5

align economic interest with justice and fairness notions in our turbulent world—driven by pandemics, economic turmoil, the onset of climate change and, more recently, the re-emergence of East–West tensions. The new role of capital, during contemporary world events, leveraged finance as a novel political and international relation means to make the world a safer, fairer, more sustainable place, in which the economic benefits of our times are distributed more equitably. In the post-2008/ 2009 World Financial Recession era and after the COVID-19 pandemic inequality gap featuring rising cost of living expenses, resilience finance has also entered the corporate world with a boost for social responsibility and financial conscientiousness—for one in negative screenings and sanction mechanisms in international law infringements—for another in the establishment and fortification of the current Sustainable Development Goals. This book provides the theoretical foundations for possibilities to make resilience more efficient via leadership insights. The societal impetus of finance portrays liquidity as a panacea to help ease the most pressing law and economics predicaments of our times. The monograph also provides vivid cases where finance became more responsible and sustainable after the 2008/2009 World Financial Recession. In addition, examples are given where finance provides access to funds to sustain the climate crisis more equitably. Capturing positive perspectives of resilience finance, this work depicts the most recent governance, governmental and industry resilience finance developments. The book also addresses social, environmental and sustainable corporate and finance trends in Corporate Social Responsibility and Financial Social Responsibility. Climate change and environmental equity are portrayed to steer the power of finance via redistribution for enabling a better world through responsible investing.

1.1

Socially Responsible Investment (SRI)

Since finance exists the power of liquidity can be steered toward the betterment of the world. Financial social responsibility is foremost addressed in Socially Responsible Investment (SRI), which imbues personal values and social concerns into financial investments (Schueth, 2003). SRI and sustainable finance merge the concerns of a broad variety of stakeholders with shareholder interests (Steurer, 2010). SRI is an asset allocation style, by which securities are not only selected based on profit return and risk probabilities, but foremost regarding

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social and environmental contributions of the issuing entities (Beltratti, 2003). SRI assets combine social, environmental and financial aspects in investment options (Dupré et al., 2008; Harvey, 2008). Political activism finds expression in financial markets through political divestiture, which refers to the removal of stocks from socially irresponsible markets with the greater goal of accomplishing social and political changes. Political divestiture features capital withdrawal from politically-incorrect markets— for example, such as the foreign investment drain from South Africa during the Apartheid regime and the capital flight from Sudan for its humanitarian crisis in Darfur or the search for clean energy and market reaction to Russia’s accession attempts. Positive-screened funds are SRI ventures of the future addressing climate stabilization financialization and climate wealth redistribution mechanisms. Positive-screened SRI ventures are future prospective drivers of change to implement the UN Sustainable Development Goals on a large-scale. SRI practices differ throughout the international arena as SRI emerged out of several historic roots. In recent decades, Socially Responsible Investments (SRI) already experienced qualitative and quantitative growth in the Western World that can be traced back to a combination of historical incidents, legislative compulsion and stakeholder pressure. The 2008 World Financial Crisis has heralded the call for responsible finance around the world. The 2008 World Financial Recession drove SRI demand and novel inequalities in light of the COVID-19 external shock that have further risen attention to the need for social responsibility in markets. Through the last decades, financial social conscientiousness grew qualitatively and quantitatively. As of today, SRI has been adopted by a growing proportion of investors around the world. The incorporation of social, environmental and global governance factors into investment options has increasingly become an element of fiduciary duty, particularly for investors with long-term horizons that oversee international portfolios. Today social responsibility has emerged as an en vogue topic for the corporate world and the finance sector. Contrary to classic finance theory that attributes investments to be primarily based on expected utility and volatility, the consideration of social justice and responsibility in financial investment decisions has gained unprecedented momentum (The Economist, January 19, 2008; Hilsenrath et al., 2008; Zheng, 2020). Socially responsible investors allocate financial resources based on profit maximization goals as well as societal implications. Pursuing economic

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and social value maximization alike, socially responsible investors incorporate CSR into financial decision-making (Renneboog et al., 2007; Schueth, 2003; Steurer et al., 2008). Socially conscientious investors fund socially responsible corporations based on evaluations of the CSR performance as well as the social and environmental risks of corporate conduct. Thereby SRI becomes an investment philosophy that combines profit maximization with intrinsic and social components (Ahmad, 2008; Livesey, 2002; Matten & Crane, 2005; Wolff, 2002). SRI allows the pursuit of financial goals while catalyzing positive change in the corporate and financial sectors as well as the international political arena (Mohr et al., 2001; Schueth, 2003). In the case of political divestiture, socially responsible investors use their market power to attribute global governance goals. Through foreign direct investment flows, SRI relocates capital with the greater goal of advancing international political development (Schueth, 2003; Starr, 2008). As of today, SRI accounts for an emerging multi-stakeholder phenomenon with multi-faceted expressions. The United Nations (UN) plays a pivotal role in institutionally promoting SRI in guideline principles and Public–Private-Partnership (PPP) initiatives guiding a future outlook in redistribution finance. To align various SRI notions, the UN builds institutional frameworks in respective initiatives, foremost in the pursuit of the Sustainable Development Goals.

1.2

Green New Deals

The COVID-19 crisis represents the most unforeseen external shock for modern economies. All major economies responded to the economic fallout of COVID-19. The pandemic required governments to take drastic steps to stabilize the economy as consumption, trade and finance flows changed dramatically. In response to the COVID-19 economic fallout, all major economies around the world rolled out economicassistance packages or recovery releases (Cassim et al., 2020; The White House, 2021). In the international arena, central banks of all major world economies—such as Australia, Brazil, Canada, Denmark, Japan, New Zealand, Singapore, South Korea, Sweden, Switzerland, United Kingdom, United States—and the European Central Bank coordinated to lower the price of USD liquidity swap line arrangements in order to foster the provision of global liquidity (Alpert, 2021). The International

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Monetary Fund (IMF) and the World Bank issued economic stimulus and relief efforts in the hundred billion USD range with the majority of relief aid being distributed in the developing world (Alpert, 2021; World Bank, 2020a, 2020b, 2020c). Across countries, economic stimulus responses to the COVID-19 crisis outsize those to the 2008 Financial Crisis (Cassim et al., 2020; The White House, 2021). The qualitative and quantitative stimulus, rescue and recovery aid have surpassed any other similar attempt in human history. Economic COVID-19 stimulus and relief efforts mainly comprise international fiscal and monetary stimulus and relief efforts but also direct rescue bailout packages. The potential focus of bailouts and recovery ranges from urban-local and national to even global and future-oriented beneficiaries, as pursued in public investments on climate stabilization in the US Green New Deal or European Green Deal Sustainable Finance Taxonomy. In the United States, the current rescue funds are targeting a transition to renewable energy in the wake of the so-called Green New Deal (GND). Inspired by the economic success story of the New Deal reform of the United States to recover from the Great Depression of the 1920s, the so-called Green New Deal (GND) is a large-scale governmental attempt to secure a sustainable economic solution in harmony with the earth’s resources (Braga et al., 2020). The GND targets at strengthening the United States economy and foster inclusive growth. One core GND strategy is to share the economic growth benefits more equally within society. The GND advocates for using a transition to renewable energy and sustainable growth to stimulate economic growth (116th Congress of the United States, House Resolution 109, Introduced February 7, 2019). In times of rising inequality, the GND has also become a vehicle to determine the COVID-19 economic bailout and recover aid targets. The GND thereby combines Roosevelt’s economic approach with modern ideas of economic stimulus incentivizing industries for a transition to renewable energy and resource efficiency as well as healthcare equality and social justice pledges (Puaschunder 2020b, 2021). In the European Union, the European Green Deal marries the idea of finance with sustainability. In response to the crisis of responsibility in markets and the widening inequality gaps, the European Bank Recovery and Resolution Directive (BRRD) coordinates resilient finance endeavors in Europe (LaBrosse et al., 2014). The financial crisis revealed the substantial reform need for member-state bank deposit guarantee

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schemes and measures to resolve banks in financial distress within the European Union compound (LaBrosse et al., 2014). Within Europe, the banking sector experienced substantial government intervention and support that led to the recapitalization of several systemically important European banks (LaBrosse et al., 2014). Besides capital aid, the rescue and recovery funds also targeted the reform of bank capital standards that should help ensure resilience in the financial world. Rescue and recovery aid recipients also had to agree to various austerity measures, such as the increase of national value-added tax, social spending cuts, an increase in the retirement age, and the reduction of the workforce in the public sector (Lengfeld & Kley, 2021). The European Sustainable Finance Taxonomy quantifies the carbon emission impact of various industries to make economic impacts on environmental conditions more transparent and accountable. As an avenue of hope, the Green New Deals could be presented as a possibility to make the world and society more equitable in the domains of environmental justice, access to affordable healthcare and social justice excellence. Ethical imperatives and equity mandates lead the economic rationale behind redistribution in the GND as social peace, health and favorable environmental conditions are prerequisites for productivity. The GND offers unprecedented opportunities in making the world and society but also overlapping generations more equitable and thus bestow peace and social harmony within society, around the world and over time. In the currently implemented GND and European Green Deal as the most widespread, large-scale and financially extensive programs, society will first have to define what resilience finance is, how to implement financial social justice why it matters in its multiple implementation facets and international angles. Ethics of inclusion and a diverse mindset with multiple stakeholders involved can thereby serve as a guiding post and beacon of hope that a turn of finance to inclusive change is for everyone.

1.3 Green Finance and Climate Stabilization Financialization Sprung out of SRI and socially conscientious market acts that are of benefit to the greater public, green finance propagates the idea of leveraging financial assets for environmental causes. The insurance sector, general banking and credit regulation but also mutual funds development

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as well as foreign direct investments and trade policies have become intertwined with the idea of environmental stability as a key to prosperity. Green finance promises to promote the positive development of ecological environments in booming economies with positive spillover effects on society (Li & Gan, 2021). One of the starkest examples of green finance is the currently-debated financialization of climate stabilization. Today’s urgent global challenges regarding climate change demand fast action from the global community. Research has elucidated the economic impact of climate change on the world and found vast national differences in Gross Domestic Product (GDP) prospects under climate change around the world (Puaschunder, 2020a). Climate inequality arises within society, between nations and in-between generations. One of the most promising avenues for finding the funds for climate change mitigation and adaptation strategies around the world proposes a redistribution of some of the expected relative economic short-term gains from a warming globe in taxation and green bonds to areas that are losing out from global warming the fastest and most in order to protect the most vulnerable populations (Puaschunder, 2020a). This book proposes to alleviate climate inequalities in redistribution mechanisms enacted by a taxation-and-bonds strategy based on 9 indices. A 9-index redistribution model for economic prospects under climate change is introduced to determine a fair share of relative expected shortterm economic gains under global warming. Redistributing some of the expected economic gains of a warming globe is meant to offset economic losses based on economic, historic, ecological and political factors. The model determining redistribution patterns throughout the world is based on the geo-impact of climate change, the financial crisis resilience capabilities as well as the global connectivity and science diplomacy leadership of a country. Empirically, nine indices provide a basis to determine which countries should be using a taxation strategy and which countries should be granted climate bond premiums to enact a fair redistribution between countries. A country’s starting ground on the climate gains and losses spectrum, a country’s climate flexibility in terms of temperature zones and a country’s CO2 emissions contributions in production and consumption levels as well as a country’s CO2 emissions levels changes and the historicallygrown bank lending rate, as well as resilient finance strategies coupled with science diplomacy leadership and economic connectivity on the international level, thereby determine whether a country is on the taxation

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regime for funding mutual climate stabilization or whether a country will be on the receiving end of the climate bonds solution. The countries expected to be relatively economically gaining from climate change in the short run and being climate flexible as well as countries with high CO2 emissions and not changing CO2 emissions levels as well as consuming goods and services from other countries but also having favorable bank lending rates and a history of resilience finance and crisis intervention expertise but also embodying science diplomacy and trade leadership advantages could be taxed to transfer funds via climate bonds for regions of the world that are losing from global warming and are not climate flexible as well as countries with low CO2 emissions and lowering CO2 emissions levels that are producing goods and services that are consumed in other parts of the world as well as having unfavorable bank lending rates and missing resilience finance expertise as historic science diplomacy and trade followers. The proposed taxation-and-bonds strategy could aid a broad-based and long-term market incentivization of a transition to a clean energy economy.

1.4

The Future of Resilience Finance Leadership

Future research avenues for the concept of resilience finance leadership may tap into the wealth of knowledge created by behavioral economists on how to decide when to make quick decisions or when to ruminate about choices more sophisticatedly (Puaschunder, 2022). Directly aligning resilience with leadership skills could become an area of leadership and management training that sets out clear goals and decision-making strategies on how to plan under heightened uncertainty conditions. Resilience in the trade-off from optimality could become a subject of scrutiny as well as the negative externalities of survival in weakening the market powers of creative destruction (Schumpeter, 1942). The future of finance outlook now faces an international economic climate of high inflation levels in the Western World triggering a crisis of unaffordability, monetary pressures as well as mounting trade and economic sanctions between the Eastern World and the Western World. How finance can be pegged to ideologies and thereby become an ethical choice could be studied in historical examples of political divestiture that can inform the current political events of East–West tensions. In the future, responsible investment trends are expected to continue to rise with a particular focus on social equity and inequality alleviation of

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the disparate impact of the external shock on the finance world and the real economy. Finance after the Great COVID-19 Reset is prospected to flourish resilience in sustainable development. Active stakeholder engagement and green regulation ranging from community investment projects in the finance world after the COVID-19 pandemic up to finance diplomacy on the climate agenda on a global scale are shaping the new era of resilient finance. In analyzing the new role of social online media, finance can be understood as a new democratized form of voicing opinion. On the most futuristic account, resilient finance also serves future-oriented access to revenues in online social media and cryptocurrencies.

References 116th Congress of the United States, House Resolution 109, Introduced February 7, 2019, Recognizing the duty of the Federal Government to create a Green New Deal. https://www.congress.gov/116/bills/hres109/BILLS-116 hres109ih.pdf. Accessed September 30, 2020. Ahmad, M. (2008, January 24). Global CEOs at World Economic Forum cite sovereign wealth funds as the new power broker. BI-ME. Alpert, G. (2021, May 26). International COVID-19 stimulus and relief: International fiscal and monetary stimulus and relief efforts. Investopedia. https://www.investopedia.com/government-stimulus-and-relief-efforts-tofight-the-covid-19-crisis-5113980. Beltratti, A. (2003). Socially responsible investment in general equilibrium: Economic theory and applications. www.ssrn.com Braga, J. P., Fischermann, T., & Semmler, W. (2020, March 10). Ökonomie und Klimapolitik: So könnte es gehen. Die Zeit, 11, 5. Campbell, R. (2008). Harvey’s hypertextual finance glossary. http://www.duke. edu/~charvey/Classes/wpg/bfglosa.htm Cassim, Z., Handjiski, B., Schubert, J., & Zouaoui, Y. (2020, June). The $10 trillion rescue: How governments can deliver impact Governments have announced the provision of trillions of dollars in crisis relief, but translating that into sustained recovery will not be easy, McKinsey, Public Sector Practice https://www.mckinsey.com/~/media/McKinsey/Industries/Pub report. lic%20Sector/Our%20Insights/The%2010%20trillion%20dollar%20rescue% 20How%20governments%20can%20deliver%20impact/The-10-trillion-dollarrescue-How-governments-can-deliver-impact-vF.pdf Dupré, D., Girerd-Potin, I., & Kassoua, R. (2008). Adding an ethical dimension to portfolio management. https://papers.ssrn.com/sol3/papers.cfm?abstract_ id=394101

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Hilsenrath, J., Ng, S., & Paletta. (2008, September 18). Worst crisis since ’30s, with no end yet in sight. The Wall Street Journal. https://www.wsj.com/art icles/SB122169431617549947 LaBrosse, J. R., Olivares-Caminal, R., & Singh, D. (2014). The EU bank recovery and resolution directive—Some observations on the financing arrangements. Journal of Banking Regulation, 15, 218–226. https://doi.org/ 10.1057/jbr.2014.17 Lengfeld, H., & Kley, F. K. (2021). Conditioned solidarity: EU citizens’ attitudes towards economic and social austerities for crisis countries receiving financial aid. Acta Politica, 56, 330–350. https://doi.org/10.1057/s41269-020-001 79-z Li, C., & Gan, Y. (2021). The spatial spillover effects of green finance on ecological environment—empirical research based on spatial econometric model. Environmental Science Pollution Research, 28, 5651–5665. https://doi.org/ 10.1007/s11356-020-10961-3 Livesey, S. M. (2002). The discourse of the middle ground: Citizen Shell commits to sustainable development. Management Communication Quarterly, 15, 313–349. Matten, D., & Crane, A. (2005). Corporate citizenship: Toward an extended theoretical conceptualization. Academy of Management Review, 30, 166–179. Mohr, L. A., Webb, D. J., & Harris, K. E. (2001). Do consumers expect companies to be socially responsible? The impact of corporate social responsibility on buying behavior. Journal of Consumer Affairs, 35(1), 45–72. Puaschunder, J. M. (2020a). Governance and climate justice: Global south and developing nations. Springer. Puaschunder, J. M. (2020b, August 17). The green new deal: Historical foundations, economic fundamentals and implementation strategies. In Proceedings of the 18th research association for interdisciplinary studies conference on social sciences and humanities. Puaschunder, J. M.. (2021, March 1). Monitoring and Evaluation (M&E) of the Green New Deal (GND) and European Green Deal (EGD). In 21st research association for interdisciplinary studies (RAIS) conference proceedings (pp. 202–206). Puaschunder, J. M. (2022). Advances in behavioral economics and finance leadership: Strategic leadership, wise followership and conscientious usership in the digital century. Springer. Renneboog, L. D. R., Horst, J. T. R., & Zhang, C. (2007). Socially responsible investments: Methodology, risk and performance (Tilburg University Center for Economic Research Discussion Paper 2007–2031). Tilburg, The Netherlands. Schueth, S. (2003). Socially responsible investing in the United States. Journal of Business Ethics, 43, 189–194. Schumpeter, J. A. (1942). Capitalism, socialism and democracy. Harper.

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Starr, M. (2008). Socially responsible investment and pro-social change. Journal of Economic Issues, 42, 1, 51–73. Steurer, R. (2010). The role of governments in corporate social responsibility: Characterising public policies on CSR in Europe. Policy Science, 43, 49–72. Steurer, R., Margula, S., & Martinuzzi, A. (2008). Socially responsible investment in EU member states: Overview of government initiatives and SRI experts’ expectations towards governments. Analysis of national policies on CSR, in support of a structured exchange of information on national CSR policies and initiatives. Final report to the EU High-Level Group on CSR provided by the Research Institute for Managing Sustainability. Vienna University of Economics and Business. The Economist. (2008, January 19). Do it right: Corporate responsibility is largely a matter of enlightened self-interest. https://www.economist.com/special-rep ort/2008/01/19/do-it-right The White House. (2021, January 20). Briefing room, President Biden announces American rescue plan. The White House. https://www.whitehouse.gov/bri efing-room/legislation/2021/01/20/president-biden-announces-americanrescue-plan/ Wolff, M. (2002). Response to “Confronting the critics.” New Academy Review, 1, 230–237. World Bank. (2020a). World Bank group: 100 countries get support in response to COVID-19 (Coronavirus). World Bank (Press release). https://www. worldbank.org/en/news/press-release/2020/05/19/world-bank-group100-countries-get-support-in-response-to-covid-19-coronavirus#:~:text=WAS HINGTON%2C%20May%2019%2C%202020%E2%80%94,70%25%20of% 20the%20world%27s%20population.&text=Of%20the%20100%20countries% 2C%2039%20are%20in%20Sub%2DSaharan%20Africa. Accessed September 7, 2020. World Bank. (2020b). World Bank group announces up to $12 billion immediate support for COVID-19 country response. World Bank (Press release). https:/ /www.worldbank.org/en/news/press-release/2020/03/03/world-bankgroup-announces-up-to-12-billion-immediate-support-for-covid-19-countryresponse#:~:text=WASHINGTON%2C%20March%203%2C%202020%20% E2%80%94,impacts%20of%20the%20global%20outbreak. Accessed March 16, 2020. World Bank. (2020c). World Bank Group increases COVID-19 response to $14 billion to help sustain economies, protect jobs (Press release). https://www.wor ldbank.org/en/news/press-release/2020/03/17/world-bank-group-increa ses-covid-19-response-to-14-billion-to-help-sustain-economies-protect-jobs. Accessed March 17, 2020. Zheng, L. (2020, June 15). We are entering the age of Corporate Social Justice. Harvard Business Review. https://hbr.org/2020/06/were-entering-the-ageof-corporate-social-justice

CHAPTER 2

Resilience Finance Leadership

Abstract The COVID-19 crisis represents the most unforeseen external shock for modern economies. With the largest rescue and recovery funds being distributed around the world in response to the economic fallout of the crisis, economic growth is currently been called for being inclusive and green in light of growing awareness of inequality and climate change. Finance after the Great COVID-19 Reset cherishes resilience finance in sustainable development. Responsible investment trends continue to rise with a focus on social equity and inequality alleviation given the attention to the disparate impact of the external shock on the finance world and the real economy. Finance has also become political in funding of political crises resilience and divestiture acts as never before in the history of modern times. Active stakeholder engagement and green regulation— ranging from community investment projects in the finance world after the COVID-19 pandemic up to finance diplomacy on a global scale—are shaping the new era of resilient finance. This book provides an outlook on the future of resilient finance leadership. The monograph offers prospective future developments on how the field of finance may evolve in the short run, long run, and the very far future. The book features vivid case studies of how finance innovates into unprecedented extensions. In addressing the new role of capital during contemporary world events, finance will be portrayed as a novel political and international relation means. Resilient finance leadership raises hope to make the world a © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. M. Puaschunder, The Future of Resilient Finance, Sustainable Development Goals Series, https://doi.org/10.1007/978-3-031-30138-4_2

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safer, fairer, more sustainable place, in which the economic benefits of our times are distributed more equitably. Overall, the book sets out to contribute to the current quest on how to align economic interest with justice and fairness notions in our turbulent world—driven by pandemics, economic turmoil, the ongoing climate change and, more recently, the re-emergence of East–West tensions. The future of finance outlook will analyze the contemporary international economic climate of high inflation levels in the Western World triggering a crisis of unaffordability, monetary pressures as well as mounting trade and economic sanctions between the Eastern World and the Western World. How finance can be pegged to ideologies and thereby become an ethical choice will be covered in historical examples that will inform the current political events. The book will also present insights into how the COVID-19 bailout and recovery packages can potentially provide a unique opportunity to develop fairer and more sustainable societies if well-designed and properly used. Finance will be shown to be intertwined with responsibility in the post-COVID-19 era—for one in negative screenings and sanction mechanisms in international law infringements—for another in the establishment and fortification of the current Sustainable Development Goals. In analyzing the growingly important role of social online media, finance will be understood as a new democratized form of voicing opinion. On the most futuristic account, the book will also serve as one of the first resources that thematizes the most future-oriented finance resilience domains in advocating for a democratization of access to revenues in social media and cryptocurrencies. Space travel investments and cryptocurrency’s role in the invasion of Mars will be thematized from an ethical perspective. The discussion acknowledges that resilience finance is a novel and worldwide phenomenon with international variations and diverse implementation strategies. The COVID-19 crisis represents the most unforeseen external shock for modern economies. Starting from the beginning of 2020, the novel Coronavirus caused a dramatic downturn in trade, human mobility and international service industries (Gössling et al., 2020; Puaschunder et al., 2020a, 2020b). From April 2020, more than half of the world’s population faced some sort of lockdown and/or consumption constraints and economic shortages, which disrupted economic productivity substantially (International Monetary Fund, 2020a, 2020b). These lockdowns

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led to a slump in general consumption and reduced trade by an estimated 10% (The Economist, 2020). In the first half of 2020, global foreign direct investments plummeted by 49% and were even around 75% suppressed in the developed world (United Nations Conference on Trade and Development Committee for the Coordination of Statistical Activities, 2020). Human social interaction constraints in all major world economies coupled with a halt of human transport and trade shortages around the globe spilled over into an unprecedented international economic decline (Sachs et al., 2020; United Nations Conference on Trade and Development Committee for the Coordination of Statistical Activities, 2020). The global economy is estimated to have contracted by 3–5% of general world economic output in 2020, which is six times the economic magnitude of the 2008–2009 world recession (International Monetary Fund, 2020a, 2020b; World Bank, 2021). The International Monetary Fund (IMF) captured that the world economy, as measured by real Gross Domestic Product (GDP), shrank by as much as 3.5% in 2020 (Alpert, 2021). Rising poverty levels put an additional 150 million children at risk worldwide (UNICEF, 2020). The COVID-19 global recession is the deepest since World War II, with the largest fraction of economies experiencing declines in per capita output since 1870 (Kose & Sugawara, 2020). The economic external shock seems to end globalization and international exchange if considering the World Bank expecting the sharpest decline in remittances in recent world history (World Bank, 2020c). All these measures resemble the onset of a lasting economic crisis with fundamental changes for society (International Monetary Fund, 2020a, 2020b; Puaschunder & Beerbaum, 2020a, 2020b). Global governance institutions and governments around the globe set out on a course to avert the negative impetus of the COVID-19 pandemic economic shock (Cassim et al., 2020; The White House of the United States of America, 2021). During the 2022 World Economic Forum address of United States Secretary of the Treasury Janet Yellen, the post-COVID-19 economic growth was called for being inclusive and green (United States Department of the Treasury, 2022). In a modern supply-side economic growth, inclusion and diversity are meant to bring economic growth potential. Inclusion can breed social harmony. A diverse workforce allows diversification of potentials and complementary skills cross-pollination. Finance after the Great COVID-19 Reset may include three trends of resilience finance in the largest-ever wave of governmental rescue and

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recovery funds given out all over the world. In a climate of all-time-high inflation and unprecedented employment and supply chain disruptions, resilient finance will redefine the conduct of firms, economic governance and sustainable development. Responsible investment trends continue to rise with a particular focus on social equity and inequality alleviation with attention to the disparate impact of the external shock on the finance world and the real economy. Lastly, finance has become political in divestiture. Active stakeholder engagement and green regulation ranging from community investment projects in the finance world after the COVID-19 pandemic up to finance diplomacy on a global scale are shaping the new era of resilient finance. This book provides an outlook on the future of resilient finance. The monograph will offer prospective future developments on how the field of finance may evolve in the short run, long run, and the very far future. In vivid case studies of how finance innovates into unprecedented extensions and an analysis of the new role of capital during contemporary world events, finance will be portrayed as a novel political and international relation means to make the world a safer, fairer, more sustainable place, in which the economic benefits of our times are distributed more equitable. Overall, the book sets out to contribute to the current quest on how to align economic interest with justice and fairness notions in our turbulent world—driven by pandemics, economic turmoil, the onset of climate change and, more recently, the re-emergence of East–West tensions. The future of finance outlook will analyze the contemporary international economic climate of high inflation levels in the Western World, monetary pressures as well as mounting trade and economic sanctions between the Eastern World and the Western World. How finance can be pegged to ideologies and thereby become an ethical choice will be covered in historical examples and that will inform the current political events. In analyzing the new role of social online media, finance will be understood as a new democratized form of voicing opinion. On another longer-term account, the book will also present insights into how the COVID-19 bailout and recovery packages can potentially provide a unique opportunity to develop fairer and more sustainable societies if well-designed and properly used. Finance will be shown to be pegged to responsibility in the post-COVID-19 era—for one in negative screenings and sanction mechanisms in international law infringements—for another in the establishment and fortification of the current Sustainable Development Goals.

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The book will argue that the COVID-19 crisis accentuated some existing challenges, such as inequality, and accelerated other novel ones, such as the finance versus the real economy performance gap in the aftermath of the COVID fallout. The recovery and rescue packages can provide powerful financial tools to overcome those challenges all over the world. The book intends to grant an overview of the measures taken in the different world regions in the wake of political tensions to set the stage to discuss how financial institutions can contribute to addressing the main contemporary challenges in climate change, healthcare, digitalization and social justice pledges. On the most long-term horizon and with a speculative edge, the book will also inform about future financial advancements of our times. The role of online social media for market performance will be thematized with particular attention to decentralized financial networks. Cryptocurrencies’ peculiar use for commercialized space travel will become addressed. The role of global financial redistributions mechanisms to fund the Sustainable Development Goals will be outlined in the world’s transition to clean energy. The enormous potential of all these financial advancements and the risk of societal downfalls imbued explicitly or implicitly in some of the mentioned developments will become scrutinized. Overall, the book captures the modern dynamics of resilient markets to determine the future of finance in its multiple facets and manifold implications. The book offers a comparative Behavioral Law and Economics approach to understanding the most contemporary international finance politics and responsible investment trends around the world. The book starts with a description of the different terms of future finance regarding green investments, sustainable finance and resilience finance in an overview of definitions and conceptional overlaps. Sustainable finance will be understood as the overarching term to integrate environmental, social and governance (ESG) aspects in finance and investment decisions. Green finance will thereby be depicted as a subset of sustainable finance with particular attention to environmental concerns. Climate finance will be outlined as a concrete financialization of public and private investments that seek to support the mitigation and adaptation to climate change with financial means and a green transition of the economy. The book also presents a theoretical comparative corporate governance analysis of the state-of-the-art of war finance as an international relation means in today’s world. The book will embark on the history, current

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state and future perspectives of responsible investment and sustainable finance, focusing on the most pressing developments of our lifetime. Historical snapshots of why responsible investment funds (bonds or equities) that integrate social, environmental and governance criteria have emerged as an en vogue topic for corporate executives, governmental officials, international public servants and stakeholder representatives will be given. This book captures the positive and negative screenings of finance markets by the examples of finance politics in international relations and rescue and recovery aid pegged to the accomplishment of Sustainable Development Goals. The contemporary tensions of war finance and sanctions imposed on international law aggressors will leave the world in a different place than it has existed since the end of World War II. The book will capture an outline of these novel trends and shed light on the particular features of digitalized currencies with unprecedented global anonymous flow. Finance politics and international relations of economic wars will be defined through the prism of digitalized currencies, the internet sophistication of financial locks and tracing, and the extraordinary performance of the financial markets versus the real economy in the 2020 COVID-19 fallout. In the aftermath of the COVID-19 pandemic and in light of our contemporary digitalization disruption but also in the eye of climate change, the call for Corporate Social Responsibility (CSR) and Socially Responsible Investment (SRI) with a social justice edge have reached unprecedented momentum. Consumers and investors increasingly pay attention to social justice, access to quality healthcare and climate justice worldwide. Current stakeholder pressure addresses the social responsibility of market actors and information disclosure of corporate and financial conduct. Legislative reforms enhance the accountability of financial market operations. The book will outline the idea of responsible investing in the most recent law and economic trends of our post-COVID-19 era: (1) finance as a means of war sanction and politics of divestiture in international relations; (2) a transition to a green economy; (3) our workplace revolution in digitalized productivity with a focus on health and well-being of the human workforce as well as; (4) social equality and social justice pledges in education, corporations and the finance world. With the COVID-19 pandemic having changed markets and society lastingly and in light of digitalization encroaching workspaces and climate

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change arising on the horizon, the reinterpretation of the public–private sector roles in providing financial responsibility has leveraged into the most pressing topic of our times. The Renaissance of attention to responsibility as a prerequisite for the functioning of economic systems portrays sustainable finance as windows of opportunity to sanction international misconduct and grant access to preventive quality care, climate stabilization and capital to alleviate rising inequality in the age of digitalization. The book will present a theoretical comparative corporate governance analysis of the state-of-the-art political markets and sustainable finance, focusing on the most pressing developments of our lifetime with shortterm, longer-term and most temporally-distant implications. From the international perspective, it will cover the international sanctions against Russia and its allies in financial terms, the United States Green New Deal pegged to COVID-19 rescue and recovery funding, the European Green Deal and the European Sustainable Finance Taxonomy but also the dichotomy of European Union efforts (foremost the Next Generation EU) and concurrent European national COVID-19 rescue and recovery packages. On the most futuristic account, the book will also serve as one of the first resources that thematizes the most future-oriented finance resilience domains in advocating for a democratization of access to revenues in cryptocurrencies but also space travel investments and cryptocurrency’s role in the exploration and invasion of Mars from an ethical perspective. The discussion acknowledges that resilience finance is a novel and worldwide phenomenon with international variations and diverse implementation strategies. From the international perspective, the book will provide vivid case studies about contemporary global financial responsibility covering the contemporary tension of finance sanctions between East and West. The long-term prospect of finance evolvement intertwined with public investments will be covered, such as foremost practiced in the United States Green New Deal pegged to COVID-19 rescue and recovery funding. The European Green Deal and the European Sustainable Finance Taxonomy but also the dichotomy of European Union efforts and concurrent European national COVID-19 rescue and recovery packages in the New Generation EU will become subject to scrutiny. From an international perspective, the following book will also touch on: Central Asian recovery funds but also the UN Copenhagen Accord Asian Greening of the Economy funds after COVID-19. Oceania’s first recession in 30 years

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in the wake of the COVID-19 external shock and its implications for connected territories, including small nation island states, in light of climate change and the need for climate refugee legal status, will be covered. The Gulf region’s economic transition during a time of oil and natural gas shortages with attention to Turkey and Russia will become subject to scrutiny. Africa’s natural resource wealth implying a democratization of access to revenues will be thematized. The very far future of finance will be envisioned in space travel finance and cryptocurrency’s role in the exploration and potential inhabitation of Mars driven by corporate and financial market dynamics. In answering whether international finance is equitable, one must acknowledge that the described developments will be novel phenomena worldwide with global variations and diverse implementation strategies. The following book is structured as follows: First, the book will address contemporary finance’s politics and international relations. The book will present concrete examples of how politics and international relations can be played out in finance. The contemporary sanctions on Russia and responsible investment in international finance will be covered in vivid examples. After discussing the most recent sanctions imposed during the RussiaUkraine crisis, more future-oriented facets of finance of the future will be scrutinized. Then responsible investment and sustainable finance matters will be put into perspective by the Sustainable Development Goals. Socially responsible investments and sustainable finance in their multiple implementation facets and international angles will be introduced as diverse topics that require accounting for multi-stakeholder viewpoints. Topics of interest include the Green New Deal in the US, the European Green Deal in Europe, rescue and recovery packages in Asia being pegged to social credit scores, the Gulf region’s attempts to find a new revenue besides natural resources, Oceania’s finance dependence structures impact on regional communities and small nation island states, Africa’s wealth in natural resources pegged to ethical mandates of a democratization of access to revenues as well as the hope of ethical directives in the economic invasion of extraterrestrial land. The book will feature case studies of the most pressing behavioral law and economics challenges of our times in the domains of war finance, negative screening divestiture, climate change, healthcare, digitalization disruption and social justice demands.

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Overall, the book will investigate the nature of international relations in finance and sustainable development imbalances from an economics point-of-view and a legal perspective, and a comparative Behavioral Law and Economics global governance vision to ensure economic justice solutions for advancing global stability. The structure of increasingly-fragile environmental conditions will be captured to derive real-world relevant implications for improving humankind’s overall global ecological conditions worldwide and over time. Climate gain redistribution strategies will be presented by understanding climate change gains and losses. Shedding light on fair global warming gains distribution is meant to aid market economies to be brought to a path consistent with prosperity and sustainability in line with the Sustainable Development Goals. The currently-ongoing introduction of Artificial Intelligence (AI), robotics and big data into our contemporary society has caused an unprecedented market transformation. One part of the book will address the leadership of our recent introduction to AI, robotics and big data. Inferences will be derived in light of changes implied by COVID-19 with particular attention to the healthcare sector. The COVID-19 pandemic is expected to create post-COVID infection long-haul symptoms for many people, which will require massive rescaling of our health, pension and social services schemes. Waves of variant-related COVID-19 outbreaks and the chronic debilitation that may follow a previous COVID infection will drastically change the labor force and our approach to work, rest and recovery. In the wake of the pandemic, the digitalization disruption will change our education and workforce lastingly and provide essential tools for pandemic prevention and telemedical healthcare, such as COVID-19 long-haul alleviation strategy. Responsible investment in the future will also include social justice pledges. Macroeconomic analyses are planned to outline the excellence in social justice. Short- and long-term losses will be captured in discrimination against social justice in economic trickling down and too-big-to-fail arguments with attention to social inclusion. John Maynard Keynes’ multiplier theory will be innovatively applied in endogenous growth theory adjusted for the need for social peace and societal harmony alongside including health and societal risks. The Schumpeterian argument of the innovative pioneers’ role in social transformation as a spring feather of economic growth and improved welfare will be covered in light of our social justice Zeitgeist.

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Overall, responsible finance is predicted to gain even higher importance in the wake of attention to human diversity. The post-COVID era may elevate engagement to luxury in economic diversity and dignity in ethics of inclusion in the path of social justice that inspires and ennobles humankind. Economic prosperity may be grounded in respect for the hope of living in a more just society and societal advancement in diversity and inclusion in our future world. Concluding, clear responsible investment and sustainable finance guidelines will be outlined, and future research prospects will be given. Public policy recommendations will address international relations, politics, finance, climate change, digitalization compatibility and social equity. Overall, the book aims to provide the theoretical foundations for possibilities to make finance a contemporary tool of science diplomacy to make the world a more responsible, sustainable and equitable home. The readers may learn how to monitor and evaluate the inclusion and social impetus of a transition in the economy. The book will provide engaging examples of the most pressing law and economics problems of our times in light of the need for attention to resilience finance powers. Concrete examples will cover contemporary international law tensions, climate justice and environmental equity and a harmonious transition to a digitalized economy. The book will thereby clearly follow ethical imperatives and equity mandates in the wish to democratize finance and redistribute gains within society, between nations and over time.

2.1

Resilient Finance

In response to the worldwide economic fallout of the COVID-19 external shock, which resulted in an economic disruption unwitnessed in living memory, international and governmental rescue and recovery aid triggered resilience finance all over the world to soothe industries with losses and overcome liquidity constraints. In the beginning of the outbreak of the COVID-19 pandemic, central banks of all major world economies—such as Australia, Brazil, Canada, Denmark, Japan, New Zealand, Singapore, South Korea, Sweden, Switzerland, United Kingdom, United States—and the European Central Bank coordinated to lower the price of USD liquidity swap line arrangements in order to foster the provision of global liquidity (Alpert, 2021; European Central Bank, 2020; Federal Reserve of the United States, 2020). The International Monetary Fund (IMF) and the World Bank

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issued economic stimulus and relief efforts in the range of around 260 billion USD with the majority of relief aid being distributed in the developing world (Alpert, 2021; International Monetary Fund, 2020a, 2020b; World Bank, 2020a, 2020b). As of May 2021, all major economies responded to the economic fallout of COVID-19. In response to the COVID-19 crisis, all major economies around the world rolled out economic-assistance packages or recovery releases that by mid-2020 already were summing up to over 10 trillion USD and with continuous renewal and further development (Cassim et al., 2020; The White House of the United States, 2021). Across countries, economic stimulus responses to the COVID-19 crisis outsize those to the 2008 Financial Crisis (Cassim et al., 2020; The White House of the United States, 2021). The qualitative and quantitative stimulus, rescue and recovery aid have surpassed any other similar attempt in human history (Alpert, 2021). Resilience finance mainly comprises international fiscal and monetary stimulus and relief efforts but also direct rescue bailout packages (Alpert, 2021). The governmental fiscal response to COVID-19 is—in the Western World—primarily financed through deficit or debt monetization. Thereby direct monetization involves the central bank financing a fiscal deficit by buying government securities directly from the government in the primary market (Bajaj & Datt, 2020). Indirect monetization involves the government borrowing from the market by selling government securities that are bought in the secondary market through open market operations of the central bank (Bajaj & Datt, 2020). Direct monetization occurred with debt write-off of government securities held by the central bank from the asset side of its balance sheet (Bajaj & Datt, 2020). Monetization injects liquidity into the economy, which led to inflation and a cost-ofliving crisis for the widespread majority of populations in the Western World (Bajaj & Datt, 2020). The size, scope and dimensions of resilience finance in COVID19 rescue and recovery plans are unprecedented and account for the historically-largest concerted effort of action to avert the negative economic fallout of an external economic shock. The implementation rate of economic measures gradually increased over time with the widening the impact of the COVID-19 crisis (Imam & Uddin, 2022). The COVID-19 external shock that released the largest and most widespread economic recovery aid and rescue packages worldwide came at a time of global attention to rising inequality around the world. As the

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crisis unfolded, global inequality in access to affordable medical care but also preventive healthcare became apparent (Puaschunder & Beerbaum, 2020a, 2020b). The Coronavirus crisis truly challenged leaders around the world to argue for economic systems to become equitable and share the benefits of economic prosperity and scientific advancement equally around the globe (Puaschunder & Beerbaum, 2020a, 2020b). As for international nuances, Imam and Uddin (2022) found that countries’ policy response to the crisis depended on the economic situation and financial starting ground. In a 200 countries strong data set from around the world, Imam and Uddin (2022) detect a lower use of technological measures during COVID-19 in low-income countries. Countries with economic strength implemented direct interventions like deficit spending, cash allowances and trade measures to absorb the economic effect of public health policies and support their businesses and workers (Imam & Uddin, 2022). Many low-income countries relied mainly on indirect economic intervention like lowering the interest rate for boosting and sustaining economic growth (Imam & Uddin, 2022). As the overall economic and financial status of a country determined the fiscal space and governmental policy response spectrum, high-income countries were in an advantageous position to brace the crisis (Imam & Uddin, 2022). In the evaluation and monitoring of these unprecedentedly large amounts of governmental stimulus, economic bailout and rescue packages, socio-economic attention was paid to inequality inherent in the COVID-19 shock era. In light of this unequal crisis resiliency scheme and in order to combat global inequality on a global level, higher-income countries and global governance bodies provided financial support to countries with weaker economies or lower financial capability to absorb restrictive public health policies’ economic costs (Imam & Uddin, 2022). Industry-specific inflation patterns as well as urban-versus-rural disposable income differences in the wake of ambitious bailout and recovery plans were considered when choosing bailout targets. The economic focus was coupled with legal insights to adjust to disproportionally-heavy and disparately-severe impacts on certain populations in governmental rescue and recovery in short-term emergency aid. The potential focus of bailouts and recovery ranged from urban-local or national to even global and future-oriented beneficiaries, as pursued in public investments on climate stabilization in the Green New Deal or European Green Deal Sustainable Finance Taxonomy.

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The crisis has also drawn attention to novel social inequalities within society and sharpened our senses of the disparate impact of policies of prevention and recovery for different societal groups. More than ever before in the history of modern humankind were leaders urged to place their policy programs in line with social justice pledges. How to align economic interest with justice notions has leveraged into the most important question of our times. The rescue and recovery programs reflected abruptly-changed demand patterns that had a differing impact on various groups within society. The crisis thereby unexpectedly widened the economic performance gap between the finance sector and the real economy. Differing flexibility and liquidity potentials between finance and the real economy implied sectorspecific affective fallout propensities, which were addressed in the focused payout of recovery funds. Long low interest rate regimes and industryspecific inflation patterns led to a closer analysis of the disparate impact of the COVID-19 pandemic in the distribution decision of resilience finance. Governmental rescue and recovery aid became sensitive to the diversified impact of economic stimulus on specific societal groups. When contemplating on the targeted rescue and relief efforts of governments and public institutions, the focus of the aid became led by a whole-rounded effect analysis. Economic crises in the wake of pandemics are intensified situations with extensive threats to survival, economic resilience and heightened risk of social upheaval. The distribution of funds thus highly depended on the geopolitical and biopolitical locations as well as the socio-economic starting ground. The distinction into social classes of crises also became structural and included the role of affect—which materializes in emotional excitement caused by crises in some parts of the population and emotionless rational response in others that determine health and well-being whole-roundedly and over time. Fast-paced social online media having a growing influence on economics and financial markets has also exacerbated the call for paying attention to social volatility in markets created by the concerted buzz online about certain market trends and options. As a first start in a stratified economic impact analysis, governmental officials faced decisions on whether to target funds and policy aid on the local versus rural versus urban level, national versus international prospect as well as the immediate versus the long-term beneficiaries, as pursued in public investments on climate stabilization efforts underlying the Green New Deal or European Green Deal Sustainable Finance

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Taxonomy (Barbier, 2009; Earthworks, 2019; European Commission, 2019; Pargendler, 2020). The crisis also came during a time when ecological limits had been reached and climate change was on the minds of the global community (Puaschunder, 2021a). The worldwide and long-term impact of CO2 becoming apparent in rising temperatures around the globe changing living conditions massively drove the need for concerted action on climate stabilization (Puaschunder, 2021b). Around the world, global public and private sector entities are nowadays working on a broad variety of climate change mitigation and adaptation and climate stabilization efforts. Like no other concern of our lifetime, the solutions and accomplishment of climate stabilization goals will determine the lives of many generations to come. More than ever are leading Law and Economics scholars currently trying to imbue the idea of environmental justice in a greening economy (Armour et al., 2021; Broccardo et al., 2020; Puaschunder, 2020). COVID-19 rescue and recovery aid echoes all these contemporary concerns in being pegged to green economy efforts and social justice pledges. This is foremost the case in the United States with the U.S. President Biden administration fostering the Green New Deal (GND) but also the European Union Commission sponsoring the European Green Deal and a Sustainable Finance Taxonomy (Barbier, 2009; Earthworks, 2019; Pargendler, 2020; Puaschunder, 2021c, 2021d; The United States Congress, 2019). These ambitious acts and plans account for the most vibrant and large-scale developments in our lifetime if considering the massive amount of funds involved but also the widespread impact energy transition will have (Kemfert et al., 2020) The post-COVID-19 recovery era is also a time of blatant disparities and inequalities in terms of access to healthcare and social justice. In times of rising inequality, the GND has also become a vehicle to determine the COVID-19 economic bailout and recover aid targets. The GND thereby combines former U.S. President Roosevelt’s economic approach with modern ideas of economic stimulus incentivizing industries for a transition to renewable energy and resource efficiency as well as healthcare equality and social justice pledges. The GND is a governmental strategy to strengthen the United States economy and foster inclusive growth (Puaschunder, 2021c, 2021d). The GND directly targets at sharing economic benefits more equally within society (Puaschunder, 2021c, 2021d). The GND thereby addresses the most pressing concerns of our times in the quest to align economic

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endeavors with justice and fairness. Concrete central areas of development tackle environmental challenges, healthcare demands and social justice pledges (Puaschunder, 2021c, 2021d). Ethical imperatives and equity mandates lead the economic rationale behind redistribution in the GND. Social harmony, access to affordable quality healthcare and favorable environmental conditions are thereby pursued in an understanding of their role as prerequisites for sustainable productivity (Puaschunder, 2021c, 2021d). In all these endeavors, the GND offers hope in making the world and society but also overlapping generations more equitable. As a largescale and long-term plan, the GND offers to bestow peace within society, around the world and over time (Puaschunder, 2021c, 2021d). How to align economic interest with justice and fairness notions is the question of our times when considering the massive challenges faced in terms of environmental challenges, healthcare demands and social justice pledges. In the currently implemented GND and European Green Deal (EGD) as the most widespread, large-scale and financially extensive programs, society will first have to define what the GND is, how the GND is implemented and why it matters in its multiple implementation facets and international angles. Ethics of inclusion and a diverse mindset with multiple stakeholders involved can thereby serve as a guiding post and beacon of hope that inclusion offers resilient finance opportunities for everyone. As an avenue of hope, the Green New Deal could be presented as a possibility to make the world and society more equitable in the domains of environmental justice, access to affordable healthcare and social justice excellence. Ethical imperatives and equity mandates lead the economic rationale behind redistribution in the GND as social peace, health and favorable environmental conditions. The GND offers unprecedented opportunities in making the world and society but also overlapping generations more equitable and thus bestows peace and social harmony within society, around the world and over time. In answering the question if the GND is equitable, one has to acknowledge that the GND is a fairly novel phenomenon with international variations and diverse implementation strategies. To determine if these efforts will be successful, the achievement of the GND’s goals features a complex variety of actions that will have to be performed for a longer time horizon than simple economic recovery after system-inherent recessions would require. The multiple implementation facets and various agents involved but also the contested theoretical foundations and long-term

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implications will need more time to monitor and evaluate the effectiveness and equitable growth accomplishments than regular rescue and recovery efforts, such as the 2008/09 World Financial Recession bailout and recovery packages. Tracking the success of these endeavors will be a long-term goal by itself, mainly due to the diversified projects, long-term impetus and the stratified impact of large-scale economic changes. While it is thus too early to tell how successful these projects will be in the grand scheme of complex issues tackled and over time in light of history, already now it is becoming apparent that teaching law and economics with a focus on ethics of inclusion honing a disparate impact lens will become key to ensure our common sustainable development and human progress of the future. Overall, the book aims at providing the theoretical foundations for possibilities to make finance safer, more responsible, sustainable and equitable. Finance intertwined with politics, international relations and Sustainable Development Goals will be discussed in our contemporary post-COVID-19 era with a short-term view, a longer-term focus and a birds-eye comparative Law and Economics perspective. Thereby the book covers political, economic and historical foundations. The monograph also aims at a positive view of COVID-19 reforms and evaluates what developments may be turned into future assets. The readers may learn how to monitor and evaluate the inclusion and social impetus of a transition in the economy. The book will provide engaging examples of the most pressing law and economics predicaments of our times in light of the need for attention to finance in international law, climate stabilization and environmental equity. First, the book will address historical examples of finance as a politics and international relations vehicle. Then, responsible investment and sustainable finance will be introduced in a contemporary snapshot of its multiple implementation facets with a global outlook. Concrete examples will be used to derive historically-unique conservations of our contemporary Zeitgeist, in which leaders around the globe appear to debate how to allocate funds to alleviate and soothe but also to sanction and correct. In addition, the book will cover empirical work on a global action scheme to foster the harmonious transition to a sustainable economy. In a Socratic writing style, the reader will be invited to solve the most pressing issues and ethical predicaments of our lifetime and imagine the power of finance and a better world enacted through the forces of responsible investing and sustainable finance. The book will also follow ethical imperatives and

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equity mandates to democratize finance and redistribute global gains of resilient finance equally within society, between nations and over time.

2.2

Responsible Investment

Socially responsible investments and sustainable finance matters will be analyzed in this book with a broad and economic understanding of those terms. Sustainable finance refers to the process of taking environmental, social and governance considerations into account when making investment decisions in the financial sector (Brühl, 2021). Sustainable finance or green finance lies at the core of a broad set of financial regulations, standards, norms and products that pursue an environmental objective, particularly to facilitate the energy transition. Responsible investments are considered investments (bonds or equities) that integrate social, environmental and governance criteria and financial measures. Concrete sustainable finance considerations include—but are not limited to—financialization of climate change mitigation and adaptation as well as the preservation of biodiversity, pollution prevention and investments toward sustainability and the circular economy (Berrou et al., 2019; European Commission, 2021). COVID-19 has shown rising inequality trends and opened eyes to previously-unnoticed discrepancies within society, around the world but also over time. Social justice pledges have gained unprecedented momentum in the eye of unequal access to health, capital, education, digitalization and environmentally-favorable conditions. In the shadow of inequality, ethical imperatives arise from the humane-imbued care for inclusion and access to equal opportunities. Inequalities drive the demand for creative inequality alleviation strategies that have the potential to bestow the post-COVID era with the notion of a new Renaissance that delivers inclusion. The contemporary COVID-19 economic fallout has heralded a new financial order. In the attempt to alleviate inequality in the socioeconomic consequences of COVID, a deeper understanding of the finance performance versus real economy constraints gap was sought. Social volatility and affective fallout propensity distribution within society were reflected upon. Special attention was paid to the high inflation and historically-longest low interest rates that triggered an unprecedented living expenses crisis for the general populace. Responsible finance in the post-COVID-19 era features targeted rescue and recovery relief aid with

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a redistribution focus on the urban, local, regional, national, global and international levels. In light of the multi-faceted inequality that opened widespread qualitative and quantitative gaps, social justice has become a blatant demand. We are entering the age of corporate social justice and inclusive societies (Zheng, 2020). Ethics of inclusion as a forerunner to inclusive rights and privileges to everyone are natural behavioral ethical laws that herald a post-COVID-19 novel Renaissance based on corporate and financial social responsibility. Short-term changes to the world of finance are currently noticeable in the shift to online spheres and the nature of politics and international relations in financial sanction mechanisms. To draw attention to the power of finance in the wake of modern history, positive and negative investment screening techniques have emerged to dominate international markets. Socially responsible investment thereby pays homage to integrating environmental, social and governance criteria in investment decisions. Sustainable finance aids to consider international political relations, social and ecological demands in investment decision-making. Socially responsible investment serves as an investment strategy that is based on a whole-rounded evaluation of the financial return and social/ environmental good to bring about social change in longer-term and sustainable activities. The book will start with historical writings about socially responsible finance before COVID-19 and the digital age. The monograph will then embark on insights derived from the COVID-19 crisis recovery. The era of New Deals in the Green New Deal in the U.S. and the European Green Deal will be highlighted. Examples include the European Sustainable Finance Taxonomy and the Next Generation EU in their efforts to fund climate mitigation, adaptation and stabilization. The book will present perspectives on responsible investment from different regions of the world. As these regions feature significant disparities in approaches to responsible investment, this book will offer a Law and Economics comparative analysis. Understanding responsible investment worldwide will highlight the role of finance during the most contemporary tensions between Eastern cultures and Western ideologies. Methodologically, the book offers a comparative Law & Economics approach to understand the most contemporary international finance developments in sanctions imposed on Russia, strategic finance alliances emerging and responsible investment trends to rebuild the crisis-struck

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economies around the world. On the one hand, legal and regulatory frameworks for practice and international customs will theoretically be compared with each other. On the other hand, backed by descriptive data, the book will offer a snapshot of socially responsible investment actual practices and market performance worldwide. The consideration of CSR in investment decisions is the basis for Socially Responsible Investment (SRI). SRI is an asset allocation style, in which securities are not only selected for their expected yield and volatility, but foremost for social, environmental and institutional aspects. The most common forms to align financial investments with ethical, moral and social facets are socially responsible screenings, shareholder advocacy, community investing and social venture capital funding. SRI is a multi-stakeholder phenomenon that comprises economic, organizational and societal constituents (Qiang et al., 2013). SRI is a context and culture-dependent phenomenon. In recent decades, SRI already experienced a qualitative and quantitative growth in the Western World that can be traced back to a combination of historical incidents, legislative compulsion and stakeholder pressure. The 2008 World Financial Recession drove SRI demand. Novel inequalities in light of the COVID-19 external shock have further risen attention to the need for social responsibility in markets. In response to the crisis of responsibility in markets, the Bank Recovery and Resolution Directive (BRRD) requires consultation, coordination and synchronization within Europe (LaBrosse et al., 2014). The financial crisis revealed the substantial reform need for member-state bank deposit guarantee schemes and measures to resolve banks in financial distress within the European Union compound (LaBrosse et al., 2014). Within Europe, the banking sector experienced substantial government intervention and support that led to the recapitalization of several systemically important European banks (LaBrosse et al., 2014). Besides capital injection, the rescue and recovery aid also targeted at the reform of bank capital standards to ensure resilience in the financial world. Rescue and recovery funding recipients also had to agree to various austerity measures, such as the increase of national value-added tax, social spending cuts, increase in retirement age and the reduction of the workforce in the public sector (Lengfeld & Kley, 2021). The United Nations (UN) plays a pivotal role in institutionally promoting SRI in guidelining principles and PPP initiatives guiding a

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future outlook in redistribution finance. Political activism finds expression in financial markets through political divestiture, which refers to the removal of stocks from socially irresponsible markets with the greater goal of accomplishing social and political changes. Positive-screened funds are SRI ventures of the future addressing climate stabilization financialization and climate wealth redistribution mechanisms. Today social responsibility has emerged as an en vogue topic for the corporate world and the finance sector. Contrary to classic finance theory that attributes investments to be primarily based on expected utility and volatility, the consideration of social justice and responsibility in financial investment decisions has gained unprecedented momentum (Hilsenrath et al., 2008; The Economist, January 19, 2008; Zheng, 2020). Financial social responsibility is foremost addressed in Socially Responsible Investment (SRI), which imbues personal values and social concerns into financial investments (Schueth, 2003). SRI thereby merges the concerns of a broad variety of stakeholders with shareholder interests (Steurer, 2010). SRI is an asset allocation style, by which securities are not only selected based on profit return and risk probabilities, but foremost in regard to social and environmental contributions of the issuing entities (Beltratti, 2003). SRI assets combine social, environmental and financial aspects in investment options (Dupré et al., 2004; Harvey, 2008). Through the last decades, financial social conscientiousness grew qualitatively and quantitatively. As of today, SRI has been adopted by a growing proportion of investors around the world. The incorporation of social, environmental and global governance factors into investment options has increasingly become an element of fiduciary duty, particularly for investors with long-term horizons that oversee international portfolios. Most recent regulatory advancements include the U.S. Green New Deal and European Green Deal as well as the Sustainable Finance Taxonomy. Socially responsible investors allocate financial resources based on profit maximization goals as well as societal implications. Pursuing economic and social value maximization alike, socially responsible investors incorporate CSR into financial decision-making (Renneboog et al., 2007; Schueth, 2003; Steurer et al., 2008). Socially conscientious investors fund socially responsible corporations based on evaluations of the CSR performance as well as the social and environmental risks of corporate conduct. Thereby SRI becomes an investment philosophy that combines

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profit maximization with intrinsic and social components (Ahmad, 2008; Livesey, 2002; Matten & Crane, 2005; Wolff, 2002). SRI allows the pursuit of financial goals while catalyzing positive change in the corporate and financial sectors as well as the international political arena (Mohr et al., 2001; Schueth, 2003). In the case of political divestiture, socially responsible investors use their market power to attribute global governance goals. Through foreign direct investment flows, SRI relocates capital with the greater goal of advancing international political development (Schueth, 2003; Starr, 2008). As of today, SRI accounts for an emerging multi-stakeholder phenomenon with multi-faceted expressions. SRI practices differ throughout the international arena as SRI emerged out of several historic roots. The 2008 World Financial Crisis has heralded the call for responsible finance around the world. The current economic fallout of the COVID-19 crisis has exacerbated socio-economic disparities and inequalities. The new finance order in the aftermath of the COVID-19 pandemic should leverage responsible finance as a means to alleviate the finance performance versus the real economy gap. The different affective fallout propensities disparately distributed within society create social volatility. High inflation and longest-ever low interest rate regimes dominate the call for responsible finance that targets rescue, recovery and relief aid. Urban, local, regional or national foci as well as global and future-oriented beneficiaries of governmental recovery aid are potential recipients of aid. Institutional frameworks may ground recovery funding with a long-term future-oriented sustainability vision. To align various SRI notions, the UN builds institutional frameworks in respective initiatives. Political divestiture features capital withdrawal from politically-incorrect markets. For example, such as the foreign investment drain from South Africa during the Apartheid regime or the capital flight from Sudan during the humanitarian crisis in Darfur or the search for clean energy and market reaction to Russia’s accession attempts. Positive-screened SRI ventures are future prospective drivers of change to finance and implement the UN Sustainable Development Goals on a large-scale. Green finance is attributed to positive spillover effects on the ecological environment (Li & Gan, 2021). Green finance promises to promote the positive development of ecological environments in booming economies. Empirical evidence shows that the development of green finance promotes

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the improvement of the regional ecological environment (Li & Gan, 2021). Based on 1025 companies with 48 sustainable development concepts in China and using data from 2008 to 2015, the influence of green finance on the ecological environment has a significant positive spatial spillover effect improving the ecological environment in the surrounding areas (Li & Gan, 2021).

2.3

Finance Politics

In the wake of historical and political events, socio-political pressure can evolve that triggers corporations to divest politically-incorrect markets. The impact of socio-political events on financial considerations is attributed to political divestiture—the act of removing funds from politically fractionated markets. Divestiture is an act of removing stocks from a portfolio to screen out socially irresponsible corporations based on social, ethical and religious objections (McWilliams & Siegel, 2000). Political divestiture can cause foreign investment flight from politically incorrect markets based on CSR information (Steurer, 2010). Political divestiture targets at forcing political change by imposing financial constraints onto politically-incorrect regimes that are counterpart to international law resulting in war, social conflict, terrorism and human rights violations. In political divestiture, funds are withdrawn from politically incorrect markets in the wake of stakeholder pressure and global governance sanctions. Sanctions are economic or military coercive measures to put pressure on governments that depart from international law. By cultural neglect and economic trade restrictions—such as tariffs—sanctions yield to adjudication with the greater goal of triggering positive political and societal change (Merriam Webster Dictionary, 2008). Divestiture became a global governance means in the case of the South African Apartheid regime during the 1980s. Subsequent political divestiture sanctions have been imposed on the Sudanese government for implying a humanitarian crisis in Darfur, Israel over conflicts in the Palestine region as well as crude and oil companies for unsustainable natural resource practices and most recently Russia over its war of aggression in the Ukraine. The most prominent cases are South Africa during the Apartheid regime; governmental human rights violations in Burma as well as the humanitarian crises in Sudan’s Darfur region or Yemen’s crisis, the middle

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east political tensions or the invasion attempts of Russia in the Ukraine. Environmental political divestiture is mainly concerned with clean energy supply and sustainability as well as human rights attention throughout the production value chain. In the political divestiture domain, the book will provide concrete examples of what responsible investment can mean in sanction mechanisms but also international finance politics and international relations around the world—for instance, in the current Western financial action against Russia; but also in the Green New Deal in the U.S.; the European Green Deal in Europe pegged to ethical mandates of democratization of access to revenues as well as the hope of ethical directives in the economic invasion of extraterrestrial land. In their role as corporate owners, socially conscientious investors can also target at positively influencing corporate conduct in shareholder activism (Schueth, 2003). The majority of socially screened funds use multiple screens and sometimes complement screening with shareholder advocacy, community investing and political interests. Based on transparent and accountable corporate policies and procedures, shareholder advocacy is the active engagement of shareholders in corporate policymaking, managerial practices and corporate social conduct (Little, 2008). Shareholder advocacy comprises shareholder activism and dialogues as well as active endowments. Shareholder activism refers to shareholder groups engaging in “coordinated action to utilize their unique rights to facilitate corporate change” (Sparkes & Cowton, 2004, p. 51). Positive shareholder activism implies advocating for socially responsible corporate conduct in shareholder meetings. Shareholder resolutions provide formal communication channels on corporate governance among shareholders, management and the board of directors. Resolutions can request information from the management and ask for changes in corporate policies and practices. In resolutions shareholders use their voting right as a means to influence corporate behavior and steer corporate conduct in a more socially responsible direction (Little, 2008). In the U.S. shareholder resolutions are managed by the U.S. Securities and Exchange Commission. Shareholders who wish to file a resolution must own at least US$2,000 in shares in a given corporation or one percent of the corporate shares one year before filing proposals. Resolutions appear on the corporate proxy ballot, where they can be voted on by all shareholders or their representatives either electronically, by mail or in person at the annual meeting. The vast majority of shareholders exercise their

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voting rights by proxy. Proxy resolutions grant third parties rights to vote for shareholders on matters before the corporation (Little, 2008). Proxy resolutions on social issues and corporate governance generally aim at improving corporate policies and practices as well as encourage management to exercise good corporate citizenship with the goal of longterm shareholder value increase. Current trends comprise transparent and accountable proxy-voting policies to support social and environmental responsibility. For example, mutual fund proxy disclosure regulations target at making corporate records publicly available. Negative shareholder activism exerts activist influence and ranges from political lobbying, consumer boycotts and confrontations geared by negative publicity to pressure corporations into socially responsible corporate conduct (Sparkes & Cowton, 2004). Parties engaging in shareholder dialogues seek to influence corporate policies and practices without introducing a formal resolution to their concerns. The corporate management is attentive to shareholder dialogues as for avoiding formal proxy resolutions and investment withdrawal. Active endowments emerged from academics establishing procedures for integrating social responsibility in university endowments. SRI campus advisory committees issue proxy-voting guidelines as recommendations on proxy ballot voting. Community investing started in the 1970s with direct investment in unserved communities. Community investing involves investor set-asides and earmarks of investment funds for community development, but also features access to traditional financial products and services ranging from credits, equity and banking products to low-income and at-risk communities (Schueth, 2003). Community development banks focus on lending and rebuilding lower-income segments. Community development credit unions grant access to credits to unserved communities. Community development loans provide credit for small businesses with a focus on sustainable development and resource conservation, but also sponsor community services. For individuals, community loans open avenues to affordable housing, education, child and healthcare (Little, 2008; Schueth, 2003). Financial empowerment of micro-enterprises helps disadvantaged minorities through financial education, mentoring and technical assistance. Social venture capital funding finances socially responsible start-ups and social entrepreneurs to foster the positive social impact of capital markets.

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Community development venture capital funds provide capital for small start-ups with growth potential in traditionally un(der)developed regions. The very many forms of financial social responsibility expression embrace a wide range of SRI stakeholders and entities. In a climate of corporate governance and global challenges beyond the control of singular nation-states, the idea of promoting political divestiture as a sustainable development incentive and conditionalities tool has reached unprecedented momentum. Departing from narrow-minded, outdated views of the responsibilities of corporations only adherent to making profit for shareholders and abiding by the law (Friedman, 1970); corporate executives nowadays are more prone to act responsibly in meeting the needs of a wide range of constituents. Apart from avoiding unethical societally harmful behavior, such as bribery, fraud and employment discrimination, corporate executives currently proactively engage in corporate governance practice with a wider constituency outlook, including the needs of future generations. The newest political divestiture advancements are targeted at accomplishing sustainable development. Political divestiture in the sustainability domain calls for sustainable development leadership that steers intentional finance executives’ actions to benefit the stakeholders and should-do care for political concerns alongside financial considerations. Not simply considering to avoid unethical behavior by political divestiture, but also adopting a positive and proactive ethics lens through green investments, becomes an ueberethical corporate sector drive to consider the interests of a wider range of stakeholders (Puaschunder, 2011a, 2011b, 2015a, 2015b). Sustainability concerns of the finance world thereby directly reach out to a wider constituency group. Stretching constituency’s attention to future generations is based on voluntary sustainability with respect for future generations’ needs to ensure the long-term viability of society. Surpassing state-of-the-art ethical corporate leadership quests on ethically compliant behavior and avoidance of unethical corporate conduct, incorporating sustainable development into contemporary SRI models may extend the idea of ‘positive political divestiture’—that is outdoing legal and ethical expectations—with respect for the UN SDGs. Going beyond mere compliance involves actions that proactively promote social good, beyond what is required by law. Political divestiture for sustainable development extends SRI as a broader social contract between business and society over time.

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Financial leadership on sustainable development of the future extends social responsibility beyond compliance and encompasses the wider obligation to contribute to societal progress responsibly and sustainably. As a broader definition of corporate responsibility beyond the avoidance of negative downfalls, the call for political divestiture as a sustainable development implementation tool in the corporate world encompasses the obligation to not only withdraw funds from politically-incorrect regimes but to contribute the newly-released funding toward options that steer societal progress with respect for the needs of future generations. Defining novel responsibilities with a broader social contract between finance and society embraces discretionary activities that contribute to sustainable societal welfare thereby providing a range of corporate, social and societal advantages. Socially responsible funds offer crisis-stable market options, as being less volatile and influenced by cyclical changes and whimsical market movements. Especially negative screenings are extremely robust in times of uncertainty—as socially conscientious investors remain loyal to values (McLachlan & Gardner, 2004; Puaschunder, 2011a, 2011b). As for this track record of stability during times of societal and economic downturns, political divestiture nowadays appears as a favorable market strategy for lowering emergent risks and ingraining sustainability in economic market systems (Puaschunder, 2015a, 2015b). Potential obstacles in the implementation of political divestiture include regulations that appear to be lagging behind when considering novel challenges in the eye of interdependent economic, institutional and political networks determining financial market moves. New risks are imposed onto corporate and financial actors by fast-paced information flows that increase the complexity of decision-making contexts and the cognitive overload of fallible financial leaders. On the financial corporate incentive level, sustainable development may be implemented through performance management and reward systems to hold managers accountable for politically irresponsible behavior as well as creating psychological incentives to think about future consequences of current corporate conduct and financial support of irresponsible markets. Best practices studies on political divestiture serve as corporate risk management tools to help build a culture of positive SRI and foster a corporate design that pays tribute to ethical financial leadership. A cadre of sustainable development leaders in the finance world can be created through corporate trainings and team building development but

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also financial social responsibility performance measurement and politicalconscientious decision-making reward systems, which advance sustainable development in the finance sector. At the organizational level, when recruiting, selecting and promoting financial managers, it is essential for organizations to understand how individual-level variables such as personality traits, motives and values may predict managers’ propensity to engage in ethical behavior. For example, firms can use personality tests and integrity tests, along with interviews and assessment centers, to help determine which employees might be more likely to act politically responsibly. They can also assess applicants’ attitudes and values to decide whether they will match the corporate culture, with the assumption that candidates’ formal qualifications and job-related skills may not be the best predictors of responsible behavior on the job. Studying personality traits but also motives and values that steer financial managers’ propensity to engage in politically-conscientious financial decision-making will allow to set up assessment centers that reveal which individuals are more likely to act irresponsibly and if the managerial ethics will likely match the corporate culture on the sustainable development dimension. Sustainable development can also be imbued in financial activities by creating and enforcing financial company policies and codes of conduct, supporting training and development initiatives that are aimed at increasing moral awareness regarding the political conditions of the operating markets. Once the individual has joined the organization, induction programs, individual coaching by the supervisor, training and development programs, and other socialization practices could ensure that newcomers learn values, expected behaviors and social knowledge that is necessary to become politically conscientious financial managers and leaders. In terms of communication and control systems, top management teams and government officials may actively promote responsible behavior and discourage irresponsible behavior by communicating ethical integrity messages. Regarding the specific case of political divestiture, future behavioral decision-making studies may target at unraveling decisions to divest, asking whether corporations were pressured into divestment by shareholders, customers or other stakeholders. First-mover advantage effects may be investigated alongside general SRI questions—such as the authenticity of divestiture.

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Future investigations may also pay attention to the generalizability of former punishment political divestiture cases, such as the divestiture from Sudan, capital flight from Burma, the ongoing capital drain from Iran, the arms embargo of the Israel–Palestine region and the contemporary trend toward positive political divestiture fossil fuel divestment and reallocation toward green funds. Special attention could be paid to developing countries that are most dependent on FDI for aid and especially vulnerable to political infringements, humanitarian crises and sustainable development needs. Comparison studies with different divestment sectors could allow the derivation of a common theory on the corporate implications of divestiture and financial impact in accomplishing sustainable development goals. Most recent political divestiture developments include the divestment from non-renewables, foremost oil and gas. Climate change presents specific risks and challenges associated with system failure. The very logic of increasing globalization carries problems that demand a re-designing of governance structures and institutional arrangements that reduce the probability of such dangers arising (Centeno et al., 2013). Carbon divestiture is an innovative means to fund climate stabilization burden sharing and an implicit climate change mitigation and adaptation means to overcome future socio-economic losses and avert irreversible tipping points. Carbon divestiture thereby instigates a transition to renewable energy and funding of mitigation and adaptation policies (Puaschunder, 2017). In the current implementation of carbon divestiture, deriving recommendations on how to use carbon divestiture as a market mechanism to transition to renewable energy could be based on historical examples. Future research must analyze climate change risks inherent in global environmental conditions (Puaschunder, 2018). Future exploratory climate change literature analyses could clarify what contemporary notions of climate change risks are associated with carbon industries to retrieve a real economy-based climate change risk definition to be used for carbon divestiture acts. In the future, international academic and practitioners’ literature on climate change risk, climate mitigation and adaptation as well as climate justice should be reviewed. A thorough literature analysis will form a foundation of knowledge on climate change, climate mitigation and adaptation as well as climate justice approaches on an international scale to be integrated into a framework of carbon divestiture. A stakeholdernuanced review of corporations with carbon-intensive activities but also

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unnecessary carbon footprint should cover public and private, organizational and societal stakeholders to retrieve notions on global warming risks and climate change mitigation and adaptation stemming from carbon industries. In the international arena, a stakeholder analysis should also hold a special focus on climate funding as well as bond solutions. The results could guide a descriptive analysis of climate change mitigation and adaptation strategies based on carbon divestiture. The theoretical insights gained could also lead to a final semi-structured interview guide to explore climate risk notions based on carbon-intensive industries and success factors to avoid climate change by fossil fuel divestment and gain climate justice by transitioning into renewable energy and climate bond solutions. Practitioners’ bond market actors and finance stakeholders may be recruited comprising of very many stakeholder groups, such as banking executives (e.g., financial executives, managers, bank officials); fiduciaries (e.g., private equity, mutual funds, investment managers); institutional investors from central banks, governmental and rating agencies, universities; private investors (e.g., shareholders, etc.) from financial trade agencies; public policy specialists of global governance networks; labor union representatives; nongovernmental organizations (e.g., NGO executives) contacted online; international organizations (e.g., UN, World Economic Forum, Open Society Institute); academics (e.g., professors, assistants, Ph.D. candidates); and media representatives (e.g., journalists, reporters). These activities could be oriented toward producing an interdisciplinary consensus on global climate change risks stemming from carbon-intensive industries and formulating guidelines for future research on climate change mitigation and adaptation support by carbon divestiture. Subsequent exploratory descriptive and qualitative data collection on climate change mitigation and adaptation should clarify how climate change risks are defined and perceived by various stakeholder groups to retrieve a stakeholder-specific climate change risk definition with focus on climate justice, mitigation and adaptation. Contemporary notions and strategies of climate change risk mitigation will draw a real economyrelevant climate change risk mitigation strategy based on divestiture. What factors contribute to the success of carbon divestiture should be clarified in order to derive success factors of climate change risk mitigation and adaptation means and prospectively favorable interdependencies of divestiture and subsequent clean energy investment.

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Future research may combine theoretical and empirical research featuring qualitative and quantitative methodology. After a literature review of climate change risk, climate justice and climate change mitigation and adaptation strategies, quantitative research should target at gaining an in-depth understanding of climate change risk mitigation and climate change stability implementation and climate adaptation in the international arena through divestiture. Quantitative market analyses aim at capturing international climate change mitigation and adaptation interdependencies regarding divestment. The field-specific perspectives include a nomenclature creation, literature reviews, quantitative and qualitative methods, and public policy information of experts and institutions. The first research endeavors should develop our understanding of climate change risk through the analysis of specific climate threats. Case studies and expert interviews could pursue the goal of developing a multidisciplinary methodological analysis of global climate risks to be proposed to be alleviated through divestment and reinvestment in clean energy solutions as well as recommendations of harmonious climate change mitigation and climate adaptation strategies. Preliminary research should, therefore, aim at better understanding the structure, nature and challenges of these complex interaction and feedback systems of climate, climate change mitigation and adaptation choices and elaborate how it can be funded through refinancing strategies away from carbon-intensives to clean energy. The complexity and number of interactions will also require a qualitative analysis of the challenges of climate policy funding. In this context, it is also important to capture and map what regulatory and policy solutions exist and have been developed in response to climate crises in the financial sector. Academic studies should target climate change monitoring, inspection and surveillance as well as climate change adaptation policies as the basis for further modeling of how to respond with an ethical imperative on market transactions. In the climate change burden-sharing model building, the underlying research question is what sustainable financing methods would assist the implementation and management of climate stabilization via carbon divestiture? In deriving information on climate change mitigation implementation and management strategies, the question should be answered what institutions could issue and sustainable finance regimes manage climate change bonds funded by carbon divestiture. This information is

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essential in order to craft institutional climate change management strategies and define feasible market structures to issue and policies to support climate change bonds. All these endeavors will help following the greater goal to derive viable intertemporal policy strategies based on real market mechanisms. In addition, the fiscal sustainability of climate change bonds over time should be evaluated in order to estimate real-world relevant climate change mitigation market strategies in the finance sector based on future bond prospects funded by fossil fuel divestiture. Future research endeavors should survey the current scholarship on contemporary climate policies and their funding (e.g., cap & trade, carbon tax, green energy). Here also climate change mitigation and adaptation strategies should be gathered in order to prepare the modeling and methodologies of systemic climate risk and climate stabilization based on carbon divestiture. Intergenerational climate change burden sharing through intergenerational fiscal policies and sustainable finance methods could be delineated in order to introduce carbon tax and climate bonds as novel approach to implement intergenerational climate justice. Comparisons of climate change risk reduction means on the international level will help derive insights for global governance experts on how to implement climate justice: Climate change mitigation and adaptation study efforts should investigate how climate change is mitigated on the international level in order to derive international climate change prevention strategies. The adaptation efforts should be scrutinized on a global level in order to unravel interdependencies of climate change mitigation and adaptation based on carbon divestiture on a worldwide basis. This may be done by economic market analyses featuring externality predictions and cross-market comparisons coupled with social network analyses. Community research could present field-specific perspectives on systemic risk mitigation in the finance sector. Expert interviews will allow understanding aspects of climate change bond strategies that stakeholders find most relevant. Case studies on global climate risk mitigation will portray climate change abatement with attention to particular stakeholder perspectives in order to retrieve a real-world relevant climate strategy. Overall, all these endeavors will strengthen the research and design of climate, encourage interdisciplinary exchange on the contemporary complex climate agenda in strategic partnerships, as well as raise awareness and engage the broader international public on multiple climate regimes. Future concrete data collection could feature semi-structured

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telephone or personal interviews with finance experts representing a stakeholder range. Expert interviews will gain a stakeholder-specific definition of climate change, climate risk, climate mitigation and adaptation as well as climate change bond strategies in the finance sector. The acquired information will present stakeholder-specific contemporary notions of climate change, climate change mitigation and adaptation efforts as well as their interdependencies. Revealing the common sense, but also stakeholder-specific nuances of climate change risk perceptions with a special focus on climate change mitigation solutions of the finance sector offers an invaluable opportunity to highlight unknown climate implementation strategies. A meta-analysis of risk and its various meanings held by different constituency groups could provide the basis for global governance and public policy recommendations on how to mitigate and adapt to global warming. A vital research exchange and scholar transfer between various stakeholder groups—featuring external quality control and results presentations—help to discuss risk definitions to continuing to develop ideas and combine the lessons learned in approaches of the forming community. The information will also create a coherent set of papers on systemic climate change risks, mitigation and adaptation as well as policy briefings reflecting the different academic disciplines and viewpoints on the climate agenda. The data gathered should be quantitatively analyzed by descriptive and multivariate methods in order to scrutinize the international climate risk mitigation and adaptation means. Network analyses could capture climate mitigation and adaptation differences to derive climate justice implementation recommendations based on identified success factors. In order to unravel climate change risk mitigation and adaptation success factors of carbon divestiture, economic market data should be analyzed by descriptive and multivariate methods. For instance, network analysis allows investigating risk mitigation factors and climate adaptation interdependencies following the greater goal to outline prescriptive public policies to enhance climate justice. The analysis of climate change risk mitigation means helps develop recommendations on regulatory schemes. Coupled with the study of climate change adaptation strategies through carbon divestiture by institutions, industry actors and policymakers, the results could lead to practical guidelines on how to implement environmental sustainability. The gained insight could elucidate expert discussions and scholarly exchange on how to prevent systemic risks through fossil fuel divestment.

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In addition, an open-access interactive online climate change simulation should be released as an attempt to map the contemporary climate efforts and regimes on a global scale to provide a possible avenue for future work. Overall, these outlined research avenues should innovatively develop new interpretations, understandings and concepts of averting climate risks through carbon divestiture but also help deriving balanced approaches to implement climate justice and adapt to global warming through funding clean energy. In compiling scholarship and theories on risk mitigation strategies in the climate action domain as well as by bringing together experts on climate risk from Europe and North America coupled with the financial sector insights on how to finance climate justice by divestiture plan, research could create a central reference point and resources on aggregate information on the implementation and sophistication of climate justice. Climate justice scholarship could thereby derive implications for climate stability. Emphasizing areas where to apply climate mitigation and where to promote climate adaptation strategies will help gaining practical implications for the private industry and public policy sector to fund specific causes. Understanding the different climate risk attitudes but also shedding light on previously unknown climate mitigation and adaptation interdependencies will aid environmental sustainability to ensure a future humankind. For practitioners, the prospective results will help lowering institutional downfalls of increasingly interconnected and fragile global networks. For academia, the endeavors will spearhead interdisciplinary research on climate justice and lead to invaluable resources on systemic risk with short-term innovative and long-term historic value for this generation and the following. As carbon divestiture serves many purposes and varies over time and by context, future comparative studies will help defining political divestiture in the search for finding an overarching legal framework that unites disparate approaches. A definition of political divestiture will also help drawing inferences about the impact of political divestiture on shareholder wealth. As political divestiture captures transnational foreign investment flows, becoming knowledgeable about the impact of political divestiture on shareholder wealth will help crafting international standards for fiduciaries. Finding evidence for an effect of political divestiture on corporate endeavors will clarify to what degree political divestiture supports or infringes upon shareholder primacy rules and fiduciary responsibilities.

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As of today, there are vast international differences in the legal interpretation of fiduciary responsibility—in Anglo-Saxon fiduciary responsibility is more focused on return on investments, while Western European Roman Law-dominated countries legally grant fiduciaries more leeway in considering the overall societal impact of the asset issuing entities. Prospective insights on the efficiency of political divestiture to serve shareholder goals are a cornerstone in the conceptualization of a standardized international law on fiduciary responsibilities, which appears necessary in a financially-globalizing world that demands for ingraining responsibility in market economies in light of the 2008/09 World Financial Recession. For the international investment community, shedding light on the impact of stakeholder pressure on investment decisions is essential for drawing inferences about the financial market stability. On the global governance level, the prospective results may help predicting future foreign investment flows and outcomes of contemporary political frictions—such as, for example, humanitarian infringements in Burma, Iran’s nuclear proliferation and Sudan’s humanitarian crisis in the Darfur region. Insights on the effectiveness of political divestiture will also help generating public policies for international institutional assistance of political divestiture. With the ‘U.S. Comprehensive Iran Sanctions, Accountability and Divestment Act’ having passed the House vote in April 2010, the downsides of sanctions and political divestiture have been openly debated recently. Critics condemn sanctions as a hostilitybreeding “act of war” and draw attention to unintended consequences of insufficiently-understood negative externalities that may eventually backfire. Libertarians critiqued political divestiture as a misuse of financial markets that undermines free trade and shareholder profit maximization goals. The contemporary Russia finance sanctioning is believed to have caused elevated commodities prices, which impacts in particular the developing world, where oftentimes large percentages of the income are allocated toward food consumption purchases. To contribute to finding a fact-based solution for this political debate, a more sophisticated in-depth understanding of the corporate implications of political divestiture that is based on comparative results is needed. All these endeavors will aid in sophisticating the idea of channeling funds toward renewable energy while improving the ethical imperative of the corporate and financial worlds. In conclusion, this chapter intended to help resolve the questions that emerge from political divestiture’s role for sustainable development. In the age of sustainable development, the demand for ingraining ethicality

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in financial decision-making has reached unprecedented momentum. Overall, political activism in finance releases innovative corporate and financial market potentials to create value for society. A political divestiture for sustainable development framework portrayed the manifold potentials of political divestiture to finance sustainable development in a harmonious interplay of deregulated market systems and governmental control in ensuring market-driven social responsibility. Future research may address ways how to better capture the effects of political divestiture on economic markets and societal systems in order to provide recommendations for a successful rise of sustainable development solutions within modern market economies. All these endeavors are aimed at fostering Financial Social Responsibility as a future guarantor of sustainable economic stability and societal progress throughout the world.

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CHAPTER 3

Resilient Finance in Responsible Investment

Abstract Responsibility is part of the human nature and complements corporate activities and financial considerations. The economic, legal, social and philanthropic responsibilities within the corporate sector are addressed in Corporate Social Responsibility (CSR), which comprises the economic, legal, ethical and philanthropic responsibilities of corporations toward society. Financial social responsibility is based on considerations of CSR in investment behavior. CSR is the foundation for Socially Responsible Investment (SRI) in screenings, shareholder advocacy, community investing and social venture capital funding. As a special case of SRI, political divestiture refers to the investment withdrawal from socially irresponsible market regimes with the greater goal of accomplishing sociopsychological changes. SRI is also enacted in rational profit maximization considerations of positive-screened market ventures that feature the selection of corporations with sound social and environmental records and socially responsible corporate governance. Positive shareholder activism implies advocating for socially responsible corporate conduct in shareholder meetings. Negative shareholder activism exerts activist influence and ranges from political lobbying, consumer boycotts and confrontations geared by negative publicity to pressure corporations into socially responsible corporate conduct. Active endowments emerged from academics establishing procedures for integrating social responsibility in university endowments. Community investing involves investor set-asides and © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. M. Puaschunder, The Future of Resilient Finance, Sustainable Development Goals Series, https://doi.org/10.1007/978-3-031-30138-4_3

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earmarks of investment funds for community development, but also features access to traditional financial products and services ranging from credits, equity and banking products to low-income and at-risk communities. Social venture capital funding finances socially responsible start-ups and social entrepreneurs to foster the positive social impact of capital markets. Globalization, political changes and societal trends after the 2008/2009 World Financial Recession, but also the current state of the post-COVID-19 pandemic world economy, have leveraged a societal demand for ingraining responsibility into markets. The new resilient finance order in the aftermath of the COVID-19 pandemic portrays monetary means to alleviate inequality and pursue sustainable development in Corporate Social Justice and environmental ethicality financing. The newest developments include the Green New Deals in the United States and Europe as well as diversity mandates in finance performance measurement.

3.1

Introduction

Responsibility is part of the human nature and complements corporate activities and financial considerations. The economic, legal, social and philanthropic responsibilities within the corporate sector are addressed in Corporate Social Responsibility (CSR). Financial social responsibility is foremost practiced in Socially Responsible Investment (SRI). Globalization, political changes and societal trends, but also the current state of the world economy, have leveraged a societal demand for ingraining responsibility into market systems. The 2008/2009 World Financial Recession set the path for the “Age of Responsibility.” During the United States presidential inauguration of Barack Obama on January 21, 2009, his inauguration speech called for a new spirit of responsibility that serves the greater goals of society (The White House of President Barack Obama, 2009). In the wake of the 2008 Financial Crisis, past World Bank President Robert Zoellick addressed the “new era of responsibility” featuring “changed attitudes and cooperative policies” steering responsible corporate conduct and socially responsible investment as means of societal progress (Zoellick, 2009). In July 2010 the U.S. Congress approved a sweeping expansion of federal financial regulation in response to the 2008 “financial excesses” causing the “worst recession since the Great Depression” (Appelbaum & Herszenhorn, 2010). The 2300-page legislative catalog of repairs and

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additions to the financial regulatory system reflected mistrust in deregulated markets (Appelbaum & Herszenhorn, 2010). The U.S. government set to ensure responsibility in financial markets and protect from human ethical decision-making failures in this “most important Wall Street reform legislation in 75 years” in the words of the National Economic Council Director Lawrence Summers. In retrospect, the internal crisis of the banking sector that had steered a worldwide recession also held the potential to create a future built upon a renewed attention to social responsibility. A bit more than a decade thereafter, the novel Coronavirus (SARSCOV-2) hit the world as an external economic shock with widespread implications for finance and economics. During the 2022 World Economic Forum address of United States Secretary of the Treasury Janet Yellen, the post-COVID-19 economic growth was called for inclusive growth in harmony with the environment (U.S. Department of the Treasury, 2022). Public equality and corporate social justice have— once again—gained unprecedented momentum given the widespread and exacerbated finance versus real economy disparity opened up by the pandemic. Since the mid-twentieth century, human advancements have risen steadily (Puaschunder, 2022a). Industrialization, technological advancements, technical inventions and capital accumulation remarkably revolutionized the world (Puaschunder, 2022a). Though looking back to an epoch of enormous economic progress in the twentieth century, inequality has grown steadily, quantitatively and qualitatively, sometimes more blatant and in other cases more unnoticingly (Puaschunder, 2022a). The overall improvement of living conditions seemed to be granted to only some. Disparity within society, around the world and over time inbetween generations became apparent as the world evolved (Puaschunder, 2022a). Relative gains and losses distribution patterns shaped and deepened with economic system-inherent and external shocks, such as financial liquidity constraints, climate change and COVID-19 (Puaschunder, 2022a). The impact of crises not only exposed unforeseeable system fragility. Complex interconnections and transactions in the age of globalization drove inequalities faster and stronger than ever before in history (Puaschunder, 2022a). Inequality became the ultimate emergent systemic risk in the wake of exacerbated connectivity and exchange opportunities during our contemporary digitalized times (Centeno & Tham, 2012;

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Puaschunder, 2022a, 2022b). What happens in one part of the world today, impacts around the globe. Economic impacts are visible and felt instantaneously due to constant communication on social online platforms (Puaschunder, 2022a). The global interconnectedness lays open blatant gaps in distribution patterns of wealth, access to affordable healthcare, education and a favorable environment (Puaschunder, 2022a, 2022b). The COVID-19 pandemic has vividly outlined the distribution inequalities. The disparate impact of the same large-scale external shock became felt within society, around the world and over time (Puaschunder, 2022a). Inequality arises in the access to quality healthcare that varies dramatically around the world. In addition, climate change requires attention to fairness that the costs of climate change mitigation and adaptation are spread equally within society, between countries and over time in-between generations (Puaschunder, 2022a). Given all these novel and complex inequalities, the twenty-first century heralded an age of responsible investment. Ethics of finance in harmony with the environmental conditions and natural constraints has become a blatant demand of our times. Obvious inequality creates a need for framework conditions securing parts of the society, the world or generations from negative consequences emerging from inequality. A new web of social, ecological and fundamental transfers on a grand and widespread scale may ease the discrepancies rising in the twenty-first century. The COVID-19 crisis stressed the need for securing everyone to overcome pockets of virus-struck areas reinflaming the contagion of a deadly and debilitating disease. The post-COVID-19 resilience and recovery period underlined the strong pledge that until anyone is safe from the virus, no one is safe (Puaschunder, 2022a, 2022b). PostCOVID-19 financial aid is targeted at rescuing industries that suffer from the abrupt consumption shift to boost their productivity through the alleviation of financing constraints (Sergant & Van Cayseele, 2019). Governmental aid policies now target at enhancing growth and innovation to sustain competitive markets (Sergant & Van Cayseele, 2019). Rescue and recovery aid can also be used to fund R&D expenditures for renewable energy solutions through public support (Sergant & Van Cayseele, 2019). In the aftermath of the Coronavirus crisis, the world, therefore, has the potential to benefit from an exacerbated strive for finance in line with societal needs and wants that embrace everyone with lifting and equalizing

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spirits. Future methods development may try to alleviate the disparate impact risk alleviation through redistribution within society, around the world and over time (Puaschunder, 2022a). Heterodox approaches and novel methods may open eyes for previously unnoticed and less discussed responsible finance solutions in the twenty-first century that lead leadership to create equal financial conditions and general economic improvement opportunities for all.

3.2

Corporate Social Responsibility

Corporate Social Responsibility (CSR) comprises the economic, legal, ethical and philanthropic responsibilities of corporations toward society. Having leveraged into a mainstream feature of the corporate world in recent decades, today the majority of corporations has embedded CSR in their codes of conduct. CSR practices are incorporated into human resources management. CSR is also ingrained in the stakeholder communication. The rising academic literature on CSR is accompanied by professional audits and reports on corporate social performance. The drive toward CSR stems from globalization, economic and political shifts, societal changes and demographic trends. CSR leveraged in the aftermath of the 2008 World Financial Recession and is believed to continuously rise in the age of corporate social justice (Zheng, 2020). CSR comprises the economic responsibility for the corporation in terms of return on the investment; the legal responsibility to abide by the laws of society as the codification of societal moral commitments; the ethical responsibility to do what is right, just and fair beyond economic and legal obligations; and the philanthropic responsibility to contribute to various kinds of social, educational, recreational and cultural purposes to improve the overall societal quality of life (Carroll, 1979, 1991, 1999). In the wider sense, CSR can be seen as a quasi-democratic principle to attribute stakeholder demands within the corporate world. CSR is shaped by progressive corporations, societal pressure and partnership-favoring public policies (Steurer, 2010). As a voluntary engagement, CSR activities complement hard-law social regulations. As a form of “mandated self-regulation,” CSR rather stems from social pressure than regulatory state power (Steurer, 2010). CSR policies pronounce ethical values and moral goals in the domains of environmental protection, health and safety standards, diversity management and human rights. CSR policy instruments comprise

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legal (e.g., legal and constitutional acts, regulations on reporting and information disclosure, prohibitions and sanctions for investments), economic (e.g., subsidies, grants, export credits, incentives), informal (e.g., research and educational activities, information resources such as websites, brochures and reports, guidelines and codes of conduct, campaign material), partnering (e.g., networks, partnerships, agreements, multi-stakeholder forums, contact points) and hybrid means (e.g., centers, platforms, programs, labels, action plans, multi-stakeholder initiatives, awards and blacklists, certifications, policy coordination, sustainable and socially responsible procurement) (Steurer, 2010). CSR is implemented through compliance with discretionary regulations, integration of voluntary norms and ethical principles in leadership models, but also the attention to risks imbued in economic, social and environmental externalities of corporate conduct (Steurer, 2010). CSR social programs and instruments achieve social responsibility goals and weigh the social impacts of responsible working practices. In particular, CSR themes feature raising awareness and building capacities for social and environmental causes; improving disclosure and transparency on reliable information on the economic, social and environmental performance of corporations to stakeholders; fostering socially responsible investment by considering CSR, social and environmental externalities and ethical criteria in capital allocations; and leading by example regarding socially responsible corporate practices (Steurer, 2010). In the international arena, CSR proactively sets the standards to continuously enhance corporate contributions to economic, social and environmental development (Sachs, 2007; World Development Report, 2005). In this light, CSR is an important forerunner for innovative and future-oriented legislation that helps averting future prisoners’ dilemmas in light of scarce environmental resources. Within the last decades, CSR has continuously leveraged into a mainstream corporate phenomenon (Wolff, 2002). Today almost all major corporations have embedded CSR in their codes of conduct, incorporated CSR practices in human resources management and embraced CSR in their stakeholder relationships. Especially corporations that feature transparent outputs and end-customer contact have integrated CSR in their customer relationships. Professional CSR reporting on social, ethical and environmental performance (e.g., standardized ISO or EMOS norms) serves as a best practice guideline that is accompanied by an emerging stream of academic literature and professional auditing on CSR (Livesey,

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2002; Matten & Crane, 2005). Steurer (2010) categorizes the CSR literature to foremost comprise case studies that focus on single CSR initiatives (e.g., Barkemeyer, 2007; Holgaard & Jørgensen, 2005; Konrad et al., 2008); conceptual analyses that capture business-government relations and political aspects of CSR (e.g., Midttun, 2005; Moon, 2002, 2007) as well as exploratory comparative CSR policy analyses (e.g., de la Cuesta & Martinez, 2004; Moon & Vogel, 2007). The manifold CSR expressions are bundled by respective policy frameworks and initiatives—such as the OECD Guidelines for Multinational Enterprises, the United Nations Global Compact (UNGC), the Global Reporting Initiative, AA1000 reports of corporate social impacts, the ISO quality standards and the SA 8000 (Steurer, 2010; Waddock & Graves, 1997). Corporate global governance policies are foremost pioneered at international conventions and conferences—e.g., at the World Summit on Sustainable Development, the World Summit on the Information Society and the World Economic Forum. As a multi-stakeholder phenomenon, financial social responsibility grew with CSR to embrace multiple actors in the ethical practice of financial investments around the globe. While socially responsible investments primarily emerged in the Western World, trust in responsible finance conduct has roots throughout different cultures and time. Modern civilization features socially conscientious market conduct in legal requirements, policy regulation but also on an international level in global governance. For example, the United Nations Global Compact (UNGC) provides CSR best practices principles and fosters CSR public–private partnerships. The connection of responsible finance and global investments is also emphasized in the financialization of climate stabilization as well as the pursuit of the Sustainable Development Goals (SDGs). Most recent developments often focus on inequality alleviation as well as attention to Corporate Social Justice on an international level (Zheng, 2020).

3.3

Financial Social Responsibility

Financial social responsibility stems from attention to CSR in investment behavior. CSR is the basis for Socially Responsible Investment (SRI) in screenings, shareholder advocacy, community investing and social venture capital funding. As a special case of SRI, political divestiture refers to the investment withdrawal from socially irresponsible market regimes with

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the greater goal of accomplishing socio-psychological changes. SRI is also enacted in rational profit maximization considerations of positivescreened market ventures. As a multi-stakeholder phenomenon, SRI comprises economic, organizational and societal constituents. The emergence of SRI within the Western World can be traced back to a combination of historical incidents, legislative compulsion and stakeholder pressure. The fast integration of environmental, social and governance issues into mainstream investments has benefited the maturation of SRI on public financial markets and the impetus of large conventional actors (Crifo & Forget, 2013). Socially responsible investing is characterized by investor engagement and strategically driven by a need for new value-creation sources, increased risk management and differentiation (Crifo & Forget, 2013). According to Eurosif (2020), sustainable and responsible investment is an approach that “combines fundamental analysis with the evaluation of Environment-Social-Governance (ESG) factors in the research, analysis and selection process of securities within an investment portfolio to better capture long-term returns for investors, and to benefit society by influencing the behavior of companies.” Responsible investments were found to reduce market risks in the European context (Morelli & D’Ecclesia, 2021). Responsible investments are considered one of the driving factors of revenue growth enhancing risk-adjusted returns based on the volatility of responsible investment European stock returns, operationalized by the STOXX Europe 600 index (Morelli & D’Ecclesia, 2021). Responsible portfolios are shown to be safer choices to mitigate risks, especially during periods of overall market distress (Morelli & D’Ecclesia, 2021). Companies with higher commitment in terms of social responsibility exhibit lower volatility patterns and therefore overall lower market risk measures (Morelli & D’Ecclesia, 2021). The economic impact of COVID-19 heralded a new finance order. The disparate impact of the socio-economic fallout of COVID-19 drove inequality around the world. The finance performance versus real economy constraints gap created social volatility and affective fallout propensity trajectories, which created silos of inequality within modern societies. Social volatility is exacerbated by COVID-19 and lockdowns (Tan et al., 2022). Sentimentality in markets is related to jumping volatility, which increased during the COVID-19 crisis (Tan et al., 2022).

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Heightened inflation levels and interest rate regime anomalies have offset a wave of responsible finance in targeted rescue, recovery and relief aid. Disparate impact analyses of law and economics may lead in the decision of how to allocate redistribution between urban, local, regional, national, global and future-oriented beneficiaries. Global governance institutions provide an institutional frame for future responsible finance endeavors.

3.4

Socially Responsible Investment

The consideration of CSR in investment decisions is the basis for Socially Responsible Investment (SRI). SRI is an asset allocation style, in which securities are not only selected for their expected yield and volatility, but foremost for social, environmental and institutional aspects. SRI is a multi-stakeholder phenomenon that comprises economic, organizational and societal constituents. SRI features various forms and foci to align financial considerations with ethical, moral and social endeavors. The most common forms to enrich financial investments with ethical, moral and social facets are socially responsible screenings, shareholder advocacy, community investing and social venture capital funding (Steurer et al., 2008). Screenings integrate the evaluation of corporate financial and social performances into portfolio selections. Positive screenings target at corporations with sound social and environmental responsibility. Negative screenings exclude entities featuring morally and ethically irresponsible corporate conduct. Shareholder advocacy is the active engagement of shareholders in the corporate management by voting, activism and dialogue. The majority of shareholders exercise their voting rights by proxy resolutions, in which a third party has the right to advocate for the shareholders before the corporate board. Negative shareholder activism comprises political lobbying, consumer boycotts, stakeholder confrontation and negative publicity. Community investing describes earmarks of investment funds for community development, but also features access to financial products and services to un(der)served communities. Social venture capital supports pro-social start-ups and social entrepreneurs for the greater goal of increasing the social impact of financial markets.

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Socially responsible screenings are ‘double bottom line analyses’ of corporate economic performance and social responsibility. In screenings, financial market options are evaluated based on economic fundamentals as well as social features and corporate conduct externalities (Schueth, 2003). In addition to the traditional scanning of expected utility and volatility, screenings include qualitative examinations of intra(e.g., corporate policies and practices, employee relations) and extraorganizational (e.g., externalities on current and future constituents) features of corporate conduct (Schueth, 2003). In general screenings are based on corporate track records of societal impacts, environmental performance, human rights attribution and fair workplace policies as well as health and safety standards outlined in CSR reports. Consequentially, screening leads to the in- or exclusion of corporations from portfolios based on social, environmental and political criteria. Positive screenings feature the selection of corporations with sound social and environmental records and socially responsible corporate governance (Renneboog et al., 2007). Areas of positive corporate conduct are human rights, the environment, health, safety and labor standards as well as customer and stakeholder relations. Corporations that pass positive screenings meet value requirements expressed in their social standards, environmental policies, labor relations and community-related corporate governance. Negative screenings exclude corporations that engage in morally, ethically and socially irresponsible activities. Proactive negative screenings refrain from entities with corporate conduct counter-parting from international legal standards and/or implying negative social externalities (Renneboog et al., 2007). Negative screenings may address addictive products (e.g., liquor, tobacco, gambling), defense (e.g., weapons, firearms), environmentally hazardous production (e.g., pollution, nuclear power production), but also social, political and humanitarian deficiencies (e.g., minority discrimination, human rights violations). Specialty screens feature extraordinary executive compensations, abortion, birth control, animal testing and international labor standard infringements (Dupré et al., 2004). Post-hoc negative screening implies divestiture as the removal of investment capital from corporations and/or markets. Divestiture is common to steer change in politically incorrect regimes, but also used to promote environmental protection, human rights, working conditions, animal protection, safety and health standards (Broadhurst et al., 2003; Harvey, 2008; McWilliams & Siegel, 2000).

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In the wake of historical and political events, socio-political pressure can evolve that triggers corporations to divest politically incorrect markets. The impact of socio-political events on financial considerations is attributed to political divestiture—the act of removing funds from politically fractionated markets. Political divestiture triggers foreign investment flight from politically incorrect markets based on CSR information (Steurer, 2010). Political divestiture targets at forcing political change by imposing financial constraints onto politically incorrect regimes that counterpart from international law resulting in war, social conflict, terrorism and human rights violations. Political divestiture cases are South Africa during the Apartheid regime; governmental human rights violations in Burma as well as the humanitarian crises in Sudan’s Darfur region or Yemen’s crisis; the Middle East territorial political tensions or the invasion attempts of Russia in the Ukraine. Environmental political divestiture is mainly concerned with clean energy supply and sustainability as well as human rights attention throughout the production value chain (Liu et al., 2022). The majority of socially screened funds use multiple screens and sometimes complement screening with shareholder advocacy, community investing and political interests. Based on transparent and accountable corporate policies and procedures, shareholder advocacy is the active engagement of shareholders in corporate policy-making, managerial practices and corporate social conduct (Little, 2008). Shareholder advocacy comprises shareholder activism and dialogues as well as active endowments. Socially responsible investors allocate financial resources based on profit maximization goals as well as societal implications. Pursuing economic and social value maximization alike, socially responsible investors incorporate CSR into financial decision-making (Renneboog et al., 2007; Schueth, 2003; Steurer et al., 2008). Socially conscientious investors fund socially responsible corporations based on evaluations of the CSR performance as well as the social and environmental risks of corporate conduct. Thereby SRI becomes an investment philosophy that combines profit maximization with intrinsic and social components (Ahmad, 2008; Livesey, 2002; Matten & Crane, 2005; Wolff, 2002). Apart from economic profitability calculus and strategic leadership advantages, information search for socially conscientious investments plays a key role as drivers of SRI (Nilsson et al., 2010). Financially conscientious

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choices are social network-dependent (Qiang et al., 2013). Social influences overcome the lack of technical, cultural or political fit in imported practices into the local context (Gond & Boxenbaum, 2013). Social forces can overcome skepticism and become a driver in the promotion of critical social change and financial transformation toward socially-conscientious market choices (Gond & Boxenbaum, 2013). Socio-psychological motives underlie SRI choices. Altruism, the need for innovation and entrepreneurial zest alongside utility derived from social status enhancement prospects and transparency may steer investors’ social conscientiousness (Puaschunder, 2018). Self-enhancement and social expression of future-oriented SRI options can supplement profit maximization goals (Puaschunder, 2018). Screenings as value-relevant information search imply an extra information search step for investors and may lower the range of options (Humphrey et al., 2016; Ito et al., 2013). Investment trusts provide company information to individual and institutional investors through their lists of recommended funds (Ito et al., 2013). Pension funds follow SRI guidelines and banks offer favorable loan rates to socially responsible, guideline-compliant companies (Ito et al., 2013). At the same time, screened funds appear to be extraordinarily robust during crises, as valuedriven investors remain with their choices even during market upheaval (Puaschunder, 2018). In their role as corporate owners, socially conscientious investors target at positively influencing corporate conduct in shareholder activism (Schueth, 2003). Shareholder activism refers to shareholder groups engaging in “coordinated action to utilize their unique rights to facilitate corporate change” (Sparkes & Cowton, 2004, p. 51). Positive shareholder activism implies advocating for socially responsible corporate conduct in shareholder meetings. Shareholder resolutions provide formal communication channels on corporate governance among shareholders, management and the board of directors. Resolutions can request information from the management and ask for changes in corporate policies and practices. In resolutions shareholders use their voting right as a means to influence corporate behavior and steer corporate conduct in a more socially responsible direction (Little, 2008). In the U.S. shareholder resolutions are managed by the U.S. Securities and Exchange Commission. Shareholders who wish to file a resolution must own at least US $2000 in shares in a given corporation or one

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percent of the corporate shares one year before filing proposals. Resolutions appear on the corporate proxy ballot, where they can be voted on by all shareholders or their representatives either electronically, by mail or in person at the annual meeting. The vast majority of shareholders exercise their voting rights by proxy. Proxy resolutions grant third parties rights to vote for shareholders on matters before the corporation (Little, 2008). Proxy resolutions on social issues and corporate governance generally aim at improving corporate policies and practices as well as encourage management to exercise good corporate citizenship with the goal of long-term shareholder value increase. Current trends comprise transparent and accountable proxy-voting policies to support social and environmental responsibility. For example, mutual fund proxy disclosure regulations target at making corporate records publicly available. Negative shareholder activism exerts activist influence and ranges from political lobbying, consumer boycotts and confrontations geared by negative publicity to pressure corporations into socially responsible corporate conduct (Sparkes & Cowton, 2004). Parties engaging in shareholder dialogues seek to influence corporate policies and practices without introducing a formal resolution to their concerns. The corporate management is attentive to shareholder dialogues as for avoiding formal proxy resolutions and investment withdrawal. Active endowments emerged from academics establishing procedures for integrating social responsibility in university endowments. SRI campus advisory committees issue proxy-voting guidelines as recommendations on proxy ballot voting. Community investing started in the 1970s with direct investment in unserved communities. Community investing involves investor set-asides and earmarks of investment funds for community development, but also features access to traditional financial products and services ranging from credits, equity and banking products to low-income and at-risk communities (Schueth, 2003). Community development banks focus on lending and rebuilding lower-income segments. Community development credit unions grant access to credits to unserved communities. Community development loans provide credit for small businesses with a focus on sustainable development and resource conservation, but also sponsor community services. For individuals, community loans open avenues to affordable housing, education, child and healthcare (Little, 2008;

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Schueth, 2003). Financial empowerment of micro-enterprises helps disadvantaged minorities through financial education, mentoring and technical assistance. Social venture capital funding finances socially responsible start-ups and social entrepreneurs to foster the positive social impact of capital markets. Community development venture capital funds provide capital for small start-ups with growth potential in traditionally un(der)developed regions. The very many forms of financial social responsibility expression embrace a wide range of SRI stakeholders and entities. In recent decades, SRI experienced a qualitative and quantitative growth in the Western World that can be traced back to a combination of historical incidents, legislative compulsion and stakeholder pressure. SRI is a context and culture-dependent phenomenon. In the Western World, SRI grew with stakeholder pressure to imbue religious and ethical notions in investments (Louche et al., 2012). Religious and community values were important drivers around faith-consistent investing (Louche et al., 2012). Religious investors pioneered impact investing implementing ‘faith-consistent investing,’ although practices varied across regions (Louche et al., 2012; Rossetti, 2005). Institutional influences that drove responsible investments are trade unions, green political movements but also legislative initiatives and state interventions (Yan et al., 2019). Political events, environmental catastrophes but also financial crises increased the demand for social conscientiousness in the finance world. The 2008 World Financial Recession strengthened market interest in SRI qualitatively and quantitatively. SRI is a context and culture-dependent phenomenon featuring different nuances around the world. The 2008 World Financial Crisis triggered a heightened demand for corporate social conduct and socially responsible finance. The UN plays a pivotal role in institutionally promoting SRI in guidelining principles and public–private partnership initiatives guiding a future outlook in redistribution finance. As of today, SRI accounts for an emerging multi-stakeholder phenomenon with multi-faceted expressions. SRI practices differ throughout the international arena as SRI emerged out of several historic roots. The 2008 World Financial Crisis has heralded the call for responsible finance around the world. The current economic fallout of the COVID-19 crisis has exacerbated socio-economic disparities and inequalities.

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Today social responsibility has emerged as an en vogue topic for the corporate world and the finance sector. Contrary to classic finance theory that attributes investments to be primarily based on expected utility and volatility, the consideration of social justice and responsibility in financial investment decisions has gained unprecedented momentum (Hilsenrath et al., 2008; The Economist, January 19, 2008; Zheng, 2020). The contemporary COVID-19 economic fallout has heralded a new finance order. Nowadays, resilient finance is seen as a panacea to alleviate inequality in the socio-economic consequences of COVID-19 due to the widening finance performance versus real economy constraints gap. Resilient finance is grounded in the idea to embrace the reorder potential of a crisis and determine positive market developments. While the pandemic has exacerbated social volatility and caused a disparate impact in diverse benefit and burden prospects of inflation, historically-longest low interest rates and affective fallout propensity distribution within society, resilient finance can draw attention to finding financial means to overcome inequality. The new finance order in the aftermath of the COVID-19 pandemic leverages responsible finance as a means to alleviate the finance performance versus real economy gap. The different affective fallout propensities disparately distributed within society create social volatility. High inflation and longest-ever low interest rate regimes dominate the call for responsible finance that targets rescue, recovery and relief aid. Urban, local, regional or national foci as well as global and future-oriented beneficiaries of governmental recovery aid have become drivers of inclusive finance solutions. Responsible finance in the post-COVID-19 era features targeted rescue and recovery relief aid with a redistribution focus on the urban, local, regional, national, global and international levels. Resilient finance is addressed in SRI if it imbues personal values and social equality concerns into financial investments (Schueth, 2003). SRI thereby merges the concerns of a broad variety of stakeholders with shareholder interests (Steurer, 2010). SRI is an asset allocation style, by which securities are not only selected based on profit return and risk probabilities, but foremost in regard to social and environmental contributions of the issuing entities (Beltratti, 2003; Williams, 2005). Through the last decades, financial social conscientiousness grew qualitatively and quantitatively by SRI assets combining social, environmental and financial aspects in investment options (Dupré

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et al., 2004; Harvey, 2008). As of today, SRI has been adopted by a growing proportion of investors around the world. The incorporation of social, environmental and global governance factors into investment options has increasingly become an element of fiduciary duty, particularly for investors with long-term horizons that oversee international portfolios. SRI allows the pursuit of financial goals while catalyzing positive change in the corporate and financial sectors as well as the international political arena (Mohr et al., 2001; Schueth, 2003). In the case of political divestiture, socially responsible investors use their market power to attribute global governance goals. By foreign direct investment flows, SRI relocates capital with the greater goal of advancing international political development (Schueth, 2003; Starr, 2008). Political activism finds expression in financial markets through political divestiture, which refers to the removal of stocks from socially irresponsible markets with the greater goal of accomplishing social and political changes. Contemporary prominent are positive-screened funds for SRI ventures for financing climate stabilization and climate wealth redistribution mechanisms in green bonds. Institutional frameworks may ground recovery aid with a long-term future-oriented sustainability vision. In order to align various SRI notions, the UN builds institutional frameworks in respective initiatives. Political divestiture features capital withdrawal from politically incorrect markets— for example, such as the foreign investment drain from South Africa during the Apartheid regime and the current capital flight from Sudan for the humanitarian crisis in Darfur or the search for clean energy and market reaction to Russia’s accession attempts. Positive-screened SRI ventures are future prospective drivers of change to finance and implement the UN Sustainable Development Goals on a worldwide scale. Most recently, the deeper connection between SRI and environmental justice has been drawn (Reynolds & Ciplet, 2022). The relation between profit maximization and socio-environmental degradation triggered rise in investor initiatives and related activist campaigns to shift the financial industry away from investments in fossil fuels and other socially and environmentally harmful practices during the most recent decades (Reynolds & Ciplet, 2022). Transformative investments are introduced as a framework extension that particularly aim at imbuing socially responsible and environmentally-friendly market practices in the finance industry as the most novel innovation with a political agenda in finance

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(Reynolds & Ciplet, 2022). Most recent regulatory advancements include the U.S. Green New Deal and European Green Deal as well as the European Sustainable Finance Taxonomy. The relation between SRI and environmentally-friendly funds with market performance is—to this day—inconclusive (Ito et al., 2013). Ito et al. (2013) find SRI funds outperformed conventional funds in the EU and US. Successful SRI options include pension funds and community investment, in which financial institutions offer favorable (lower) rates on loans for urban development projects (Ito et al., 2013). Environmentallyfriendly funds do not perform as well as SRI, but perform in manners equal or superior to conventional funds when being highly innovative (Ito et al., 2013).

3.5

Resilient Finance

The economic climate in the aftermath of the 2008/2009 World Financial Recession changed to a heightened attention to socially responsible market demands. The realization of the stability of socially conscientious investments led to an uptick in the qualitative and quantitative market options that consider ethical notions in the realms of environmental, social and governance concerns. In the 2020 Global Risks Report published by the World Economic Forum, which is based on a survey of 800 world leaders and experts, for the first time, environmental threats dominate the top five long-term risks by likelihood including climate change as a systemic risk (Marx, 2020). Financial regulators were urged to ensure the safety and soundness of the financial sector contributing to financial stability (Marx, 2020). The connection between climate risk and financial stability in physical, liability and transition risks was addressed (Marx, 2020). Physical risks arise from the increased frequency and severity of climate and weatherrelated events (Marx, 2020). Liability risks stem from people who suffered a loss due to climate change and seek compensation from those responsible for damage addressing widespread climate justice demands that are rising (Marx, 2020; Puaschunder, 2020). Transition risks grow out of a too sudden and disorderly adjustment to a low-carbon economy (Marx, 2020). In all these risks, the financial sector appears to have an increasing role to play here in re-orienting investments to more sustainable technologies and businesses. Finance growth in a sustainable manner over the

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long-term can contribute to the creation of a low carbon, climate resilient and circular economy (Marx, 2020). The COVID-19 external economic shock now exacerbated the call for resilient finance. Now more than ever before in the history of industrialization, resilient markets feature interests in whole-rounded support of communities. Today’s corporations, regions and economic market endeavors are most concerned about the health and well-being of employees, families and market actors. On the individual level, trends of attention to individualized healthcare are echoed by the disparate impact of COVID on different groups, e.g., different ages, genders, races, employment types, blood types, etc. With the multitude of options to prevent and combat viral infections, a call for multi-faceted solution-finding has arisen. Workplaces now also outsource health prevention and precautious work safety demands more than ever to external consultants, which raised awareness for the widespread need to integrate healthcare into standard workplace economic models. With the advent of governmental attention to healthcare and the outburst of interest in healthcare precautions pegged to international travel, governments have been reminded to focus on health as a prerequisite for economic activity, international trade and societal well-being. The newly emerging literature on workforce participation gaps in the United States points toward a lasting trend of healthcare’s importance in economic outlooks. With the advent of both crises, scientists have become interested in the topic of resilience to combat internal and external shocks to the economy. Resilience was studied in the natural environment drawing from empirical accounts in order to derive inferences for the economic modeling of productivity and societal prosperity (Brunnermeier, 2021; Nowak & Highfield, 2011). Diverse structures as well as vigilant risk-averse cooperative networks were shown to prove resilient dominance (Brunnermeier, 2021; Nowak & Highfield, 2011). From the macroeconomic perspective, the outbreak of the COVID19 crisis triggered the world’s largest-ever wave of governmental rescue and recovery aid. Economic COVID-19 stimulus and relief efforts mainly comprise of international fiscal and monetary stimulus and relief efforts but also direct rescue bailout packages (Alpert, 2021). Unprecedented qualitative and quantitative waves of capital being provided to halted and stagnant industry sectors but also the governmental response to coordinate healthcare needs to maintain supply chains led to a great reset

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opportunity to peg financial and economic efforts to humanitarian and societal demands for prosperity in harmony with the larger environment. Resilient finance became more than ever before a vehicle to pursue social, environmental and ethical causes that enact public responsibility. Across countries, economic stimulus responses to the COVID-19 crisis outsize those to the 2008 Financial Crisis (Cassim et al., 2020; The White House of the United States of America, 2021b, 2021c). The qualitative and quantitative stimulus, rescue and recovery aid have surpassed any other similar attempt in human history (Alpert, 2021). The size, scope and dimensions of COVID-19 rescue and recovery plans are unprecedented and account for the historically largest concerted effort of action to avert the negative economic fallout to an external economic shock. Central banks of all major world economies—such as Australia, Brazil, Canada, Denmark, Japan, New Zealand, Singapore, South Korea, Sweden, Switzerland, United Kingdom, United States—and the European Central Bank coordinated financial relief with social, environmental and governance purposes that targeted at the widespread impact for this generation and the following (Alpert, 2021; European Central Bank, 2020; Federal Reserve of the United States, 2020a, 2020b). The International Monetary Fund (IMF) and the World Bank issued economic stimulus and relief efforts in the range of around 260 billion USD. The majority of relief aid was distributed in the developing world while also paying attention to grand aspirational development goals, such as outlined in the United Nations Sustainable Development Goals (Alpert, 2021; The International Monetary Fund, 2020c; World Bank, 2020a, 2020b, 2020c). In the evaluation and monitoring of these unprecedentedly large amounts of governmental stimulus, economic bailout and rescue packages, socio-economic attention is also paid to quantitative and qualitative features of inequality in our COVID-19 shock era. COVID-19 has become the ultimate inequality accelerator due to changed demand patterns having resulted in economically gaining and losing industries. Sophisticated financial market tools have enabled finance experts to gain from shorting COVID-19-losing industries but also exchanging COVID19 losing for pandemic-winning industries in well-monitored funds and asset allocation options. In addition, the finance industry can use diversification of portfolio components but also hedge against COVID-19 losing industries. The real economy was stuck with less flexible obligations than financial assets. All these features widened an unexpected economic

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performance gap between the finance sector and the real economy that exacerbates an already prevailing trend of inequality between finance and real economy productivity and resiliency. Especially financially vulnerable households of the real economy are exposed to shocks, such as job loss or reduction in working hours, that can eliminate or reduce an income source (Anderloni et al., 2012). In order to overcome liquidity constraints, governments around the world opted for unconditional stimulus payments for vulnerable population groups to overcome their liquidity constraints to make necessary ends met (Kaneda et al., 2021). For instance, the United States employed the Coronavirus Aid, Relief, and Economic Security (CARES) Act cash transfer in the U.S. economy to support low-income groups unconditionally with transfer payments. Industry-specific inflation patterns as well as urban-versus-rural disposable income differences in the wake of ambitious bailout and recovery plans should be considered when choosing bailout targets. The economic lens needs legal insights to adjust to unproportionally heavy and disparately severe impacts on certain populations, which should become the main focus of governmental rescue and recovery in short-term emergency aid. The potential focus of bailouts and recovery ranges from urban-local or national to even global and future-oriented beneficiaries, as pursued in public investments on climate stabilization in the Green New Deal or European Green Deal Sustainable Finance Taxonomy (Puaschunder, 2022a).

3.6

COVID-19-Induced Inequality

The COVID-19 external shock created an economic disparity between nations, industries and societal groups. Rising inequality trends in healthcare, economics and finance, education, digitalization and environmental conditions were exacerbated during the global COVID pandemic (Puaschunder, 2022a). The Union Bank of Switzerland (UBS) currently described the largest economic gap between world economies for at least 40 years during the pandemic (The Economist, 2020a, 2020b, 2021). In contrast to earlier economic turmoil stemming from systeminherent crises creating liquidity constraints, the external COVID shock caused “social volatility”—a collectively depressed mood that largely dampened consumption. The difference to previous systemic recessions

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becomes apparent in the rapid recovery of well-managed financial funds— for example, the S&P 500 recovered 50% of its pre-COVID value within the first three months after the crisis and reached an all-time highs-trend from August 2020 on. Deutsche Bank recorded rising earnings after the onset of the Coronavirus crisis in Europe, especially the investment bank branch of 43% or 2.4 billion euros (Smith, 2020). The clear distinction between COVID-19 profit and loss industries made it possible for today’s highly flexible financial world to quickly exchange weakened market segments—such as oil, public transport and aviation, face-to-face service sectors like international hospitality and gastronomy—with above-average market options—such as pharmaceutical companies and emergency medical devices for healthcare, digital technologies, fintech, artificial intelligence and big data analytics industries, online retail, automotive and interior design industries. All of this has widened an exacerbating finance performance versus the real economy gap that had been growing in previous decades. Inequality has increased in society since the 1990s as a result of the wave of US financial market deregulation (Piketty, 2016). The financial world performance began to diverge massively from the real economy in 2008/2009 and experienced the greatest divergence so far with the Coronavirus crisis that widened the gap between the top performance of financial markets and negative fallout in the real economy (The Economist, 2020a, 2020b). The strong contrasts between COVID-19 winners and losers as well as the deep gap between strongly positive financial market developments and the negative performance of the real economy induced by lockdowns, which exposed the real economy to a wave of private bankruptcies and liquidity bottlenecks, therefore call on governments around the world to reboot financial markets to return to be a service industry—to serve the real economy. In the overall economy, the COVID-19 crisis with lockdowns and urgent healthcare needs has produced a major consumption shift that led to winning and losing industries. The finance world has largely been able to avoid harm by diversifying and flexibly replacing winning for losing industries in well-managed portfolios, as well as by shorting and hedging of industries with a prospective loss during the crisis (Lemmon & Ni, 2014). Hedging of individual investors is heavily impacted by the general market mood and the overall economic situation (Lemmon & Ni, 2014). Well-versed behavioral traders are believed to make more money from the stock market than from other market options (Lemmon & Ni, 2014). It

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was reported that COVID-19 has a more significant impact on the US stock market than other past pandemic, such as, for example, the Spanish flu (Baker et al., 2020). At the same time, the real economy has often been hit by bankruptcy and liquidity constraints as well as rising inflation and living expense unaffordability that played out in harmful choices and negative socio-psychological fallouts. The COVID-19 crisis triggered an unprecedentedly-long low interest rate regime that drove personal debt. The massive amount of stimulus and cash in circulation led to inflation roaring triggering a fierce crisis of unaffordability of living expenses. Systemically-differing liquidity in the finance and the real economy implies sector-specific affective fallout propensities. Longest-ever low interest rate regimes fostered capital flow for innovation in the finance world, while disincentivizing household savings decreased private consumers’ resiliency. Debt burdens and liquidity constraints in private households also bring along negative behavioral aspects and destructive propensities, such as malnutrition, socio-psychological impairment, drug intake and suicidal considerations. In the European context, estimations predict that around 5.5% of European households have been pushed into vulnerability conditions based on the assessment of whether individuals can afford basic expenditures (Midões & Seré, 2022). Midões and Seré (2022) also estimate that 31.2 million individuals—or 12.8% of the population in Austria, Belgium, Finland, France, Germany, Italy and Portugal—are financially vulnerable considering food and utilities, meaning that they would not be able to afford those expenses for three months without privately earned income. Once all COVID-19 unemployment benefits enacted by these European countries are considered, only 1.1% of individuals possibly affected are estimated to be vulnerable to not being able to cover essential expenses (Midões & Seré, 2022). Even with pensions and public transfers, a large number of individuals depend on household privately earned income to cover for their most basic expenses in the short-term. In total, 47.1 million individuals, or 29%, of the population of the seven European countries analyzed by Midões and Seré (2022), cannot cover three months of food, utilities, rent and mortgages by resorting to their deposits, pensions and public transfers. Particularly vulnerable population groups are those who lost employment during the crisis (Solheim et al., 2022). Immigrants, who face language and skill barriers and lack social

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networks in their host countries appear to have a harder time to adapt to external shocks (Solheim et al., 2022). In dual-banking system territories with conventional banks and Islamic banking, change in Islamic banks’ finance income and net income increase significantly more compared to that of their conventional peers when governments install income support initiatives (Alabbad & Schertler, 2022). In an event-study as well as a cross-sectional test of stock price changes, Alabbad and Schertler (2022) find that Islamic banking and Islamic banks’ performance respond more positively to income support initiatives than that of conventional banks (Alabbad & Schertler, 2022). Alabbad and Schertler (2022) conclude that Islamic banks’ stock prices respond more positively to the support actions than the stock prices of their conventional peers. In the post-COVID-19 era, corporate and political power dynamics may shift in light of COVID. Healthcare prevention and precaution at work from reinfection with an endemic virus has changed the broad relation to work. Especially those whose experience with COVID has been negative—e.g., for instance, it is estimated that about 30–50% of COVID infected have longer-lasting symptoms than the ordinary two weeks or asymptomatic reaction—are exposing a heightened appreciation of a healthy environment to be productive. Long COVID is already distorting the labor market and this trend is expected to become more widespread (Iacurci, 2022; Mena, 2022; Puaschunder & Gelter, 2021). Employers, therefore, face pressure to create a safe and secure working environment. There are also rising tort liability risks that may be mitigated by hiring health consultants. Proactive care for maintaining a healthy workforce and the overall long-term well-being of employees, including preventive care in teams, have become an essential corporate feature to attract qualified labor, whose bargaining power increases in the eye of labor shortages in human-facing industries and positions (Whelan, 2021). Government bailout packages being financed by low interest rate policies brought along a crisis of inflation and unaffordability of living expenses to the masses. Low interest rates on savings accounts in the real economy keep people trapped in the debt financing of past dreams (Arora, 2020). Household debt traps are causing massive psychosocial burdens. A so-called ‘deaths of despair’ trend is already noticed in the U.S. for mid-career death spikes induced by alcoholism, drug use and suicide (Case & Deaton, 2020). Living on debt implies psychologically long-term

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external financing of past ideas, which impairs the flexibility of financing future-oriented innovations and may hold back societal progress.

3.7

Corporate Social Justice

COVID-19 has shown rising inequality trends and opened eyes to previously-unnoticed discrepancies within society, around the world but also over time. Social justice pledges have gained unprecedented momentum in the eye of unequal access to health, capital, education, digitalization and environmentally-favorable conditions (Puaschunder, 2022a). In the shadow of inequality, ethical imperatives arise from humane-imbued care for inclusion and access to equal opportunities (Puaschunder, 2022a). Inequalities drive the demand for creative inequality alleviation strategies that have the potential to bestow the post-COVID era with the notion of a new Renaissance. In light of the multi-faceted inequality that opens widespread qualitative and quantitative gaps, social justice has become a blatant demand. We are entering the age of corporate social justice and inclusive societies (Zheng, 2020). Ethics of inclusion as a forerunner to inclusive rights and privileges open to everyone are natural behavioral ethical laws that could herald a post-COVID-19 novel Renaissance (Puaschunder, 2022a). The COVID-19 crisis represents the most unforeseen external shock for modern economies. Drastic downturns for trade, human mobility and international service industries demanded unprecedented governmental intervention (Gössling et al., 2020; Puaschunder et al., 2020a, 2020b; Sachs et al., 2020; The International Monetary Fund, 2020a, 2020b; United Nations, 2020; World Bank, 2020a, 2020b, 2020c). Overall, the COVID-19 global recession is estimated to be the deepest since World War II, with the largest fraction of economies experiencing declines in per capita output since 1870 (Kose & Sugawara, 2020). The economic external shock ended globalization and halted international exchange. A persistent worldwide impact demanded for the largest-ever concerted wave of governmental rescue and recovery aid, which required substantial quantitative easing and monetary control (Congressional Research Service, 2020; National Bureau of Economic Research, 2021a, 2021b). All these measures resemble the onset of a lasting economic crisis with fundamental changes in society (The International Monetary Fund, 2020a, 2020b). The unprecedented size, scope and dimensions of

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COVID-19 rescue and recovery plans have resulted in negative consequences of inflation—such as a crisis of unaffordability of general living expenses—and urge to reflect on the disparate negative impacts of the crisis fallout on marginalized groups. In its uprooting disruption, the crisis also holds enormous potential as governments around the globe have embarked on a course to avert the negative impetus of the COVID-19 pandemic economic shock. These measures resulted in the most concerted long-term international, governance and governmental changes funded by unprecedentedly-large rescue packages and recovery aid (Cassim et al., 2020; The White House of the United States of America, 2021a, 2021b, 2021c, 2021d, 2021e). The short-term impact of COVID-19 has triggered massive financial flows of economic rescue and governance recovery aid around the world already. Coupled with behavioral changes and abrupt shifts in consumption patterns in addition to governmental legal and governance regulatory innovations, was international aid. The International Monetary Fund (IMF) and the World Bank issued economic stimulus and relief efforts in the range of around 260 billion USD with the majority of relief aid being distributed in the developing world (Alpert, 2021; The International Monetary Fund 2020c; World Bank, 2020). All these measures result in an unprecedented opportunity to reimage finance in its function to serve as a resilience vehicle with lasting value for the world (Monck, 2020). Throughout the evolving crisis, all major economies responded to the economic fallout of COVID-19 in financial terms. In light of the ongoing COVID-19 crisis, governments around the world have rolled out economic-assistance packages or recovery releases that by mid-2020 already amount to a total of over 10 trillion USD (Cassim et al., 2020; The White House of the United States of America, 2021a). Given the long-term impetus and the recurrent waves of COVID outbreaks still ongoing, there is a continuous prospect of renewal and further expansion of economic rescue and recovery aid that could be targeted strategically to avert inequality (Puaschunder, 2021). Across countries, economic stimulus responses to the COVID-19 crisis vastly outsize those to the 2008 Financial Crisis (Cassim et al., 2020; The White House of the United States of America, 2021a). The qualitative and quantitative stimulus, rescue and recovery aid packages have surpassed all other programs of this type in human history (Alpert, 2020). The cost of saving the global economy is estimated to have been USD

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834 million per hour for 18 months, including almost 4 trillion in rescue funds spent by the United States Federal Reserve alone (Thomasson & Hirai, 2021). Economic COVID-19 stimulus and relief efforts mainly comprise of international fiscal and monetary stimulus and relief efforts but also direct rescue bailout packages. The size, scope and dimension of COVID-19 rescue and recovery plans account for the historically largest concerted action to avert the negative economic fallout to a worldwide external economic shock. In confronting the crisis and evaluating international and governmental rescue efforts, the size of rescue and recovery aid has gained widespread attention, foremost because of fear of inflationary pressure and subsequent unaffordability of living expenses (Blanchard, 2021; Brunnermeier Academy, 2020). These unprecedentedly-large amounts of governmental stimulus, economic bailout and rescue funds hold the opportunity in financing a great reset (The World Economic Forum, 2021). In strategically setting economic incentives and stimulating societal advancement in the post-COVID era, society is hoped to emerge stronger out of a crisis (Brunnermeier Academy, 2020). The socio-economic trends of our currently-emerging Generation COVID-19 long-haul have the overall impetus to enhance society’s potential for building resilience vigilantly. Acknowledging the rising inequality levels around the world, the unprecedentedly large and widespread rescue and recovery aid could be used to steer positive change in a post-COVID-19 new Renaissance. How to align economic interest with justice and fairness notions is the question of our times when considering the massive challenges faced in terms of environmental threats, healthcare demands and social justice pledges. Already now attempts exist to peg the governmental rescue and recovery aid to noble causes of inequality alleviation. For instance, the United States proposed the Green New Deal that offers a possibility to make the world and society more equitable in the domains of environmental justice, access to affordable healthcare and social justice excellence.

3.8

Environmental Attention

COVID-19 triggered a de-urbanization in the U.S.—a trend to move to environmentally-pleasant surroundings. Given the contagion risk in crowded metropolitan areas and air purification being challenged in city skyscrapers with closed ventilation and elevators, corporate headquarters

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moved to remote work or suburbs. Retail shifted online to lower fixed costs of real estate and health risks. Hygiene and health leveraged into core business of contemporary city scaping—as visible in the New York public transport cleanup and consumer trends to own personal cars or bikes. Art and culture events scaled down to more rural communities or were re-curated for socially-distanced performances or even staged in virtual luxury worlds. Gastronomy order-ins and shared virtual eating experiences are socially-distanced service sector innovations. The sharing economy started offering workspace closer to nature. Moving to cheaper suburbs now allows a remote workforce to build wellness cocoons with attention to healthy living embedded in nature. The environment is also represented in biophilic architecture trends that resemble nature. One of the innovations for broad-scale environmental change was addressed during the COP-26 in sustainable clothing lines made out of natural material. For instance, fungus clothing offers a carbon-negative organic alternative to fast fashion. Hygienic antibacterial surfaces for cleanability and technologically-enhanced kitchens are booming. With precise online retailing and people spending more time at home, minimalism is in as people are getting rid of unnecessary items at home. The de-urbanization is yet not a ruralization, as people are not giving up the luxuries of metropolitan areas, such as the exchange of goods, services and ideas in highly-specialized markets with diverse market actors. Never before in the history of humankind have environmental concerns in the wake of economic growth heralded governance predicaments as we face today. Global warming is having an extraordinary impact on the economic, social and eco-system effects of market economics. In the financing of climate change mitigation and adaptation efforts, the most recent United Nations Conference of the Parties (COP27) on climate change revealed the need for climate justice (Sachs, 2021). Climate change presents societal, international and intergenerational fairness as a challenge for modern economies and contemporary democracies all over the world. The economics and politics of climate change recently gained attention of economic gains and losses in a warming climate being distributed differently throughout the world rising inequality concerns (Puaschunder, 2020; Sachs, 2021). In today’s climate change mitigation and adaptation efforts, high- and low-income households, developed and underdeveloped countries, as well as overlapping generations, are affected differently (Puaschunder, 2016a).

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To address the economic effects of climate change, individual decisionmaking and discounting offer insights in light of environmental impacts and framework conditions. Current empirical trends and international efforts to combat climate change have also shed attention on the role of financing climate change mitigation and adaptation efforts (Sachs, 2021). Climate change-induced inequalities are proposed to be alleviated with a climate taxation-bonds strategy that incentivizes market actors to transform the energy sector and mitigate as well as adapt to climate change. In the financialization of climate policies, fair climate change benefits and burden sharing within society, in-between countries all over the world but also over generations are currently introduced in sustainable finance.

3.9

Green Deals

The Green New Deal (GND) is a governmental strategy to strengthen the United States economy and foster inclusive growth. The GND is targeted at sharing economic growth benefits more equally within society. Ethical imperatives and equity mandates lead the economic rationale behind redistribution in the GND as social peace, health and favorable environmental conditions are prerequisites for productivity. The GND offers hope in making the world and society but also overlapping generations more equitable and thus to bestow peace within society, around the world and over time. In answering the question if the GND is equitable, one has to acknowledge that the GND is a fairly novel phenomenon with international variations and diverse implementation strategies. The European pendant of the Green New Deal (GND) is the European Green Deal (EGD) and the European Sustainable Finance Taxonomy. All these programs are large-scale endeavors with a long-term impact to make the world a more inclusive place. The goal of these deals is to improve the current and future management of outputs, outcomes and impact that works toward creating a more just and inclusive society, economy and future world. Global governance institutions play a crucial role in implementing the proposed relative economic climate change gains redistribution scheme with plurilateral summit capabilities. Comprised of all nations of the world, global governance entities can instigate the idea of a ‘Global Green New Deal,’ which could globalize ideas of the Green New Deal and the European Green Deal to enact a binding taxation-and-bonds solution for climate change. Empirically-driven redistribution schemes could

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thereby build support of all in the international actors involved and imbue a notion of economically-driven rationality in fairness that could win countries to act and comply. Global governance institutions, such as the World Bank, IMF or the United Nations, could act as norm entrepreneurs and action catalysts of a Global Green New Deal that redistributes the unequally-distributed relative economic gains of a warming earth to places that face economically-declining economic prospects. The important role that global governance institutions can play in supporting and implementing a Global Green New Deal targets at redistribution to overcome global inequalities in regards to climate change. Global governance institutions can shape the conduct and array of international actors to contribute to a commonly-agreed global scheme. Economically-driven indices could aid in taking the political nature out of redistribution politics and historically-laden international relations. Drawing attention to the need for future research on this nexus will serve as a first step in finding economically-driven redistribution schemes. The success of these long-term large-scale endeavors will depend on future conditions. Monitoring and Evaluation (M&E) can currently only give a short-term assessment of the performance of projects, institutions and programs by governments, international organizations, nongovernmental organizations (NGOs) as well as social media campaigns. In the continuous assessment of programs, more and more younger generations and the most diverse stakeholders should be included as all these projects grant insights for the controlled evolution of large-scale transformation to a more inclusive world.

3.10

Diversity

Qualitatively, in the area of capital market supervision in the USA, the Securities and Exchange Commission (SEC) is currently proposing mandatory disclosures regarding climate change and climate risks. Disclosures about risks for the company’s business model and initiatives in this area should be specified and standardized to provide investors with better information. This draft is currently being discussed, because the disclosure obligation could lead to an enormous increase in the administrative effort—estimated at up to USD 1 million a year for large companies—for disclosures. This could result in companies withdrawing from the capital market and fewer IPOs.

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In the aftermath of a widespread societal COVID crisis, SEC Chair Gary Gensler is attempting to complete many regulatory projects that have long been on hold. In the United States, there is currently a lot going on in the debate on corporate social responsibility and socially responsible investment. While it is too early to tell how these endeavors will play out on the markets, we can already now derive that the disparate impact of a multi-faceted crisis has ignited a call for diversity and inclusion, which instigated a worldwide trend toward diversifying social aspects and greening the market. On environmental concerns, there is currently an open debate about what kinds of rules independent agencies—like the SEC or the EPA (Environmental Protection Agency)—can make without even consulting Congress. The Supreme Court ruled in West Virginia v. EPA in June 2022 that the EPA does not have the authority to regulate industrial emissions in a form that has a strong reduction in the share of coal in energy consumption overall without a specific legal order and thus results in a restructuring of the energy market. How precise the requirements in the law must be so that an SEC regulation can be issued is being discussed intensively among legal scholars and legal practitioners, also with regard to the question of whether ESG publications are covered by the capital market law objective of investor protection at all. Can the SEC set up ESG rules at all, since its mandate is for investor protection? The pressure to diversity also implies a call for the honest and credible implementation of rules in order to avoid greenwashing and window dressing. Economically, it can be argued that companies with more diversity on the board show better results due to diversification potential and complementary skills bundling advantages. Corporations that promote themselves as leaders on inclusion can establish strategic leadership competitive edges. These agile communities not only embrace diversity as a novel trend that develops at the pulse of time. The flexibility and openness to change imbue them natural resilience competences. The diverse culture may nurture respect for innovative change and opens communication channels for diverse viewpoints. In the outside communication, diverse human capital can serve a broad stakeholder range and sense trends multi-facetedly by tapping into widespread resources. Lastly, attention to a newly forming trend may serve as a signal function that helps attract and bind a generation of flexible workforce participants that derive value beyond pure and simple financial remuneration.

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Most recent developments on diversity and inclusion are noticeable in the NASDAQ, which issued diversity requirements for directors as a listing rule in December 2020, which were approved by the SEC in August 2021. Companies must thereby annually publish diversity compliance in the form of a “diversity matrix” that breaks down directors by gender, “racial” group and LGBTQ+ status based on predefined definitions. There shall be one female director and one member who is from an underrepresented minority or has LGBTQ+ status. “Comply-orexplain” applies, i.e., companies should explain why such a representation is missing if they do not comply with the rule. In implementing this requirement, however, it is to note that legal proceedings are currently under way before a federal appeals court against these requirements. Specifically, plaintiffs argue that the rule encourages corporations to engage in discrimination based on gender and race, and that it interferes with First Amendment freedom of speech by forcing corporations to compel them to condemn their own conduct behavior. As for the overall economic performance and success, in a crosscountry comparison, inclusion of lesbian, gay, bisexual and transgender (LGBT) people was found to be linked to economic performance (Badgett et al., 2018). A study of more than 120 countries between 1990 and 2014 tested inclusion, operationalized by (1) a Legal Count Index (LCI) that counts the number of LGBT-supportive laws, (2) a Legal Environment Index (LEI) that measures patterns of adoption of laws in countries, and (3) a Global Acceptance Index (GAI) that is estimated from public opinion data. A regression study outlined a positive link of inclusion with economic performance. The U.S. State of California also enacted legislation providing for gender and diversity criteria for the board of directors. The laws apply to publicly-traded companies that have their headquarters in the state of California. Depending on the size of the board as a whole, it is determined how many directors must be female (at least one or up to three for a board with six or more members), and how many members should come from an underrepresented minority (at least one, whereby at least three are required if the board has nine or more members). Underrepresented minorities include ethnic or “racial” groups listed in the law, as well as individuals who identify as gay, lesbian, bisexual or transgender. The law provides for fines for the company for violations. The requirements also faced legislative pressures as both laws were declared unconstitutional

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in 2022 because the respective courts found them to violate the principle of equality in the California constitution. The State of California has appealed these decisions. The effect of greater diversity in a supervisory body can also influence management selection and succession planning. A minority representation in a management position can have a certain signal effect on the careers of younger people or promote successors. Effects on the company’s results may also be long-term and wide-reaching, so may occur after years or decades as well as grant lasting societal value. As for a critical reflection, membership in supervisory boards also appears to be less central than, for example, the board of directors or senior management, where operational decisions are made. Quotas in this area should now apply to listed companies in Germany or on the basis of “comply or explain” in many other jurisdictions, for instance, such as Switzerland. From the management perspective, diversity is praised for curbing human biases in multiple ways: First, diversity allows for complementary qualification alignment. For instance, in the financial sector, language barriers were found to be an obstacle to information transfer in markets (Chang et al., 2015). But having analysts with different language skills evaluate market options together actually improves the overall market performance of the mutually-composed fund (U.S. Supreme Court Arguments Students for Fair Admissions v. President and Fellows of Harvard, 2022). Diversity management grants human capital diversification potential and risk management opportunities (UBS Nobel Perspectives, Harry M. Markowitz). From a classic economic point of view, diversity enables risk to be spread and expands the range of qualifications, which brings along resilience advantages naturally, especially in uncertain times. If you go hiking and are unsure about the weather, it is recommended to pack sunscreen and rain gear. The Nobel Prize-winning Harry Markowitz Portfolio Theory describes that diversification in financial markets reduces risk (UBS Nobel Perspectives, Harry M. Markowitz). In nature, too, one can see that vegetation with different structures withstands storms better (Brunnermeier, 2021). This idea of risk minimization through different perspectives in corporate management can also be used for the composition of a company’s decision-making bodies and board directors. After the 2008 recession, the only bank in Iceland to continue relatively unscathed was one with female leadership and more risk-averse strategies (Reuters, 2010). Females may also breed a climate of respect

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for family values that may help in stopping negative ‘old-boys’ behavior that may bleed into harmful scandals for corporations, as many banking or gasoline industry problems of the past have outlined. Diversity also offers a broad stakeholder engagement potential. Demographically-diverse representations on corporate boards and within the corporate leadership and employee structure allow for multiple communication channels with a broad set of stakeholders. Differing opinions and societal groups also grant diverse insights for early trend sensing. During the COVID-19 crisis, different surprises on the disparate impacts of an external shock on various societal groups became blatantly apparent. Having multiple representatives of manifold societal groups within a corporation or institution allows for detecting the newest trends fast and responding efficiently with targeted aid and individualized communication strategies. A well-balanced human capital portfolio also leads to more harmonious and balanced compromises within the organization. As used in court jury decision-making that pursues a well-balanced representation of different demographics—e.g., in age, gender, socio-economic backgrounds, race, religion and sexual orientation—having a multitude of different group adherences represented in one entity allows for coming to more balanced, democratic and the whole society-representing results. In its feature to represent future-oriented choices that symbolize innovation, diversity management stands for flexibility and resilience in uncertain times. Embracing a culture that celebrates diversity breeds an open and flexible corporate culture that fosters creative thinking. Results from scientific investigations in the natural sciences held diverse work groups to be more creative (U.S. Supreme Court Arguments Students for Fair Admissions v. President and Fellows of Harvard, 2022). In nurturing a climate of respect for different viewpoints, diversity, therefore, naturally curbs tendencies of negative groupthink and tunnel vision due to conformity. Diversity as the trend of our times also allows portraying an institution as future-oriented that does not rest in yesterday’s culture but lives for innovations of tomorrow. Diversity management thus helps overcome a harmful presence bias. Diverse institutions count as being agile and not remaining overly obsessed with old trends and clinging to outdated practices due to sunk costs. Diversity thereby can foster the credibility of an institution. Signaling positive values, such as flexibility, creativity, inspiration and trust in one’s own opinion, à la longue, breeds positive

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reputation capital. The appealing reputation of an innovative institution with a diverse culture attracts the most future-oriented and innovative human capital with an open, flexible mind and a diplomatic soul that embraces differences with a noble tact and strategic focus. What are now ingredients of successful inclusion in the modern marketplace? In order to foster successful inclusion and corporate diversity strategies, three components are emphasized: (1) bundling of diverse representations in order to reap the benefits of complementary credentials enhancing diversification, (2) authentic inclusion in order to secure valuable risk management potentials and (3) quantitative and qualitative quality checks of successful diversity management and societal transformation for enhancing meaningful inclusion. (1) Bundling of diverse representations: While the U.S. Supreme Court recently judged against racial preferences in university admissions, diversity remains a hallmark in US educational institutions to train students to become more holistic future colleagues, citizens and leaders (U.S. Supreme Court Arguments Students for Fair Admissions v. President and Fellows of Harvard, 2022). In order to foster diversity potential, the most diverse groups could be brought in close contact with each other at higher education institutions (Puaschunder, 2016b). The diversity bundling strategy is an innovative and real-world relevant approach for societal welfare and intergenerational mobility advancement but also economic network theory development. Value transfer through diversity bundling promises systemic hierarchies to be permeable. Because the highest transfer opportunities are given in dyads with diverting agents, bringing diverse opinions and camps closer together by promoting collaborative exchanges targets at improving many systems, from school to university to corporate culture. For instance, at universities, legacy admits could be bundled with the most excellent strivers that represent social justice-driven diversity admission. Both representatives could be incentivized to exchange ideas and strategies on how to thrive in competitive settings. One can imagine that legacy admits can teach a lesson about social capital and access to networking opportunities, while social justice offers academic excellence alongside the most innovative anti-discrimination resilience strategies. What is essential for this intellectual and cultural cross-pollination to work is a corporate and/or institutional culture that promotes respectful interaction and honest interest in other perspectives to find a common

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denominator for mutual exchange. Diversity must be taken seriously and lived honestly in order to achieve diversification efficiently. Presenting the core idea and main purpose of institutions and corporations as social transformation hubs that can be accessed is also dependent on the authenticity of diversity representatives. (2) Authenticity: Authenticity of diversity management has three layers: within the organization, through the representatives of diversity management and within the wider society. Within the organization, authenticity of diversity management and inclusion mainly addresses the attitude of the board and leadership of the company to engage in true diversity appreciation. This means that the board and leadership honestly embrace differences and diverse standpoints in order to fully tap into the diversification potential diversity has to offer. In the first place to practice authentic diversity management, the corporate leadership must decide on what aspect of diversity the corporation should focus on and align the diversity practice with the corporate goals and corporate culture. The focus the diversity management should be close to the corporate style and preference of its employees as in the end, all employees must carry out the common plan to live an inclusive culture that is open to discourse and accepts differences. In order to make diversity then flourish in the long run, the corporate culture should breed appreciation for differences. Respect for different viewpoints and a culture of trust in the common goals despite different approaches and viewpoints must be harnessed. A fair culture of diversity that is authentic will serve as the best human resources risk mitigation strategy. As for resilience potential, authentic diversity grants the opportunity to naturally ward off litigation risks and scandals of unhappy employees, for instance when it comes to equal pay claims or the danger of explicit or implicit discrimination within the organization. The representatives of diversity management are mainly individuals with extraordinary qualifications and diverse assets. These oftentimes minority representatives are advised to be encouraged to live their diversity to the fullest in order to enhance diversification potentials. These excellently-gifted minority representatives should be connected with each other in order to avert their isolation. They should also be bundled with other diverse representatives in order to foster mutually-lived diverse information exchange. The authenticity of these diversity representatives

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is important to enhance their diverse assets. Only if diversity representatives are encouraged to live their diverseness to the fullest, their role model function in society is granted. If diversity representatives are forced to conformity, not only diversification capital vanishes, but also their role as model to lead other minorities to aspire and strive to follow their path into positions of power weakens. (3) Quantitative and qualitative quality control: Lastly, quantitative and qualitative quality control plays a crucial role to foster credible and sustainable inclusiveness leading to meaningful diversity results in the long run and on a grand societal scale. Quantitative aspects of quality control are concerned when quota requirements come in. How much diversity representation is recommended? One can say that around 25–30% representation, the quotasponsored minority representatives do not feel isolated anymore, which is fundamental for curbing drop-out rates (U.S. Supreme Court Arguments Students for Fair Admissions v. President and Fellows of Harvard, 2022). On the other hand, if the overall societal pool of diversity representatives is low, unreflected quota stuffing with some representatives that claim many slots at different institutions at the same time is rather harmful than helpful for society. In the case of gender quotas on Norwegian boards, for instance, some women held multiple positions at the same time. Two cases, for example, concerned two women who held 90 and 185 board membership appointments concurrently (DNA Farbrot, 2012; India, 2012; Treanor, 2013). These diversity rock stars, who are all over the place, restrict the selection repertoire, which is criticized in the socalled Golden Skirt phenomenon. Multiple appointments at a time may also raise conflicts of interest and due diligence problems. Considering that Norway is one of the most generous countries in the world when it comes to childcare, holidays and time off from work, there may be only a few minutes of supervision per company when dividing net work time through 90 or 185 appointments and potentially little room to help other women through social mingling or networking strategies. And diversity and inclusion, as the basic legitimacy of democracy, suggest that rotation is also needed, apart from the economic efficiency of diversification and the negative dependency that monopoly positions of a rock star result in. And socially, such women tend to be counterproductive because they block too many other women from fair access to supervisory board positions (Treanor, 2013).

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Qualitative quality control concerns the work climate and the possibility of quota representatives’ potential to remain authentic. Is the work climate one that fosters mutual exchange and respect for diversity? Are quota-placed individuals authentic and can they remain credible representatives of their minority (U.S. Supreme Court Arguments Students for Fair Admissions v. President and Fellows of Harvard, 2022)? And are the quota representatives good role models that represent diversity authentically and are they interested in bringing up and sponsoring a pipeline of likewise successful minority representatives in order to accomplish the long-term goal of positive societal change? Delineating explicit and implicit diversity constraints in qualitative quality control will help create cultures that promote and encourage transfers toward meaningful diversity and sustainable inclusion. As for the novelty of the proposed idea, future studies may address particularities of positive transfers between diverse agents within societal networks. In the contemporary extensive writing on inequality, unraveling equity transfers opens ways to steer intertemporal social mobility (Arrow et al., 1999; Becker & Tomes, 1986; Piketty, 2014; Puaschunder, 2015). Power agglomerations based on inequality and how to grant access in a societally-just manner are additional quests arising from the detected research gaps. Investigating transfers from a global governance perspective will help understand the impact of public and private sector contributions on equality. Capturing social transfer triggers will help designing a context that advances social justice mobility. Implicit value transfers should be unraveled in order to complement institutional efforts to solicit direct resource redistribution following the greater goal to advance economic growth, social justice and societal inclusion (Shell, 1967; Tobin, 1967). Outlining public or private sector endeavors in coordinating societal exchange would provide concrete means how to balance benefits between different societal strata in a fair way (Broome, 1999; Puaschunder, 2015). Deriving information on circumstances under which decision-makers are likely to grant access to elite clubs or share their intelligentsia and ambition within social transformation hubs is targeted at outlining ways how to improve ethics of inclusion to alleviate inequality and transform society to a fairer access to opportunities to complement democratic legal enforcement and governmental control. In future studies, the complex interplay of individual and environmental variables on corporate and institutional diversity success should be

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investigated to retrieve contextual influences on equity. Institutional rules, policies and regulations should be analyzed in the search for meritocracyaccessed opportunities in harmony with implementing diversity. Further, light should be shed on how the public and the private sectors can be systematically designed to promote a harmonious interplay of diversity management representatives to retrieve real-world relevant success factors of inclusion. Studying the interplay of individuals’ propensity to engage in transfers and contextual environments to support equal access to transformation hubs will allow controlling the interaction of individual and external variables to steer equality within societal networks. Future research on diversity may help in understanding the sociodynamics of equality transfers as enhanced by social norms, public and private rules, policies and procedures that establish equality transfers as a prerequisite for a harmonious society. The impacts and social dynamics of diverse agent dyads should be studied and successful diversity bundles that lead to creative cross-pollination and complementary skills exchanges should be outlined. Overall, all these measures could aid in improving fair access to economic market opportunities and minimize discrimination. Enhanced knowledge transfers will build trust and hope for equal opportunity and fair inclusion. Respect for diversity as the socio-psychological backbone of a fair democratic society, together with trust in equal access to opportunities, are key drivers of economic productivity, societal welfare and human dignity.

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UBS Nobel Perspectives Harry M. Markowitz. https://www.ubs.com/micros ites/nobel-perspectives/en/laureates/harry-markowitz.html United Nations. (2020). Climate change and COVID-19: UN urges nations to ‘recover better’. https://www.un.org/en/un-coronavirus-communicationsteam/un-urges-countries-%E2%80%98build-back-better%E2%80%99 United States Department of the Treasury. (2022). Remarks by secretary of the treasury Janet L. Yellen at the 2022 ‘Virtual Davos Agenda’ hosted by the World Economic Forum. https://home.treasury.gov/news/press-releases/jy0565 Waddock, S. A., & Graves, S. B. (1997). The corporate social performancefinancial performance link. Strategic Management Journal, 18, 303–319. Whelan, R. (2021, August 30). High pay for Covid-19 nurses leads to shortages at some hospitals: Some hospitals pay signing bonuses of up to $40,000; ‘We’re desperate for nurses’. The Wall Street Journal. https://www.wsj.com/ articles/germany-boosts-already-hefty-coronavirus-stimulus-11598440184 Williams, G. (2005). Are socially responsible investors different from conventional investors? A comparison across six countries (Unpublished working paper). University of Bath. Wolff, M. (2002). Response to “confronting the critics.” New Academy Review, 1, 230–237. World Bank. (2020a, March 3). Press release: World Bank Group announces up to $12 billion immediate support for COVID-19 country response. World Bank. https://www.worldbank.org/en/news/press-release/2020/03/03/worldbank-group-announces-up-to-12-billion-immediate-support-for-covid-19-cou ntry-response#:~:text=WASHINGTON%2C%20March%203%2C%202020% 20%E2%80%94,impacts%20of%20the%20global%20outbreak World Bank. (2020b, March 3). Press release: World Bank Group increases COVID-19 response to $14 billion to help sustain economies, protect jobs. World Bank. https://www.worldbank.org/en/news/press-release/2020/03/17/ world-bank-group-increases-covid-19-response-to-14-billion-to-help-sustaineconomies-protect-jobs World Bank. (2020c, April 22). Press release: World Bank predicts sharpest decline of remittances in recent history. https://www.worldbank.org/en/news/pressrelease/2020/04/22/world-bank-predicts-sharpest-decline-of-remittancesin-recent-history World Development Report. (2005). A better investment climate for everyone. The World Bank. Yan, S., Ferraro, F., & Almandoz, J. (2019). The rise of socially responsible investment funds: The paradoxical role of the financial logic. Administrative Science Quarterly, 64(2), 466–501. Zheng, L. (2020, June 15). We are entering the age of corporate social justice. Harvard Business Review. https://hbr.org/2020/06/were-entering-the-ageof-corporate-social-justice

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Zoellick, R. (2009, January 25). Time to herald the Age of Responsibility. Financial Times. https://www.ft.com/content/1348d34e-eb0d-11dd-bb6e0000779fd2ac

CHAPTER 4

Global Perspectives

Abstract Resilient finance springs out of the qualitative and quantitative advent of socially conscientious corporate and finance practices. As a context and culture-dependent phenomenon, international differences in resilient finance stem from differing market practices, governmental and institutional frameworks, societal values and moral obligations that impact on financial market behavior. Socially conscientious market endeavors can be traced back to ethical investing of religious institutions and societal attention to social, environmental and political deficiencies. Financial social responsibility is propelled by stakeholder pressure in connection with legislative action and policy compulsion. Since the nineteenth century, financial markets were attributed a rising share of global governance. Institutional investors increasingly used their clout to influence corporate conduct. Socially conscientious investors became active in demanding corporate governance reforms on societal causes. With the turn of the millennium, the impacts of climate change became more and more apparent in all parts of the world. Increasing interest in Environmental, Social and Governance (ESG) criteria in investment decisions perpetuated the demand for socially responsible market options. International development benefitted from the microfinance and cooperative banking revolution. The 2008 World Financial Recession drove the interest in crisis-robust sustainable finance solutions. Enhanced transparency and accountability of investment options © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. M. Puaschunder, The Future of Resilient Finance, Sustainable Development Goals Series, https://doi.org/10.1007/978-3-031-30138-4_4

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and ethicality of responsible market participants became blatant demands. Corporate governance, information disclosure and monitoring within the corporate and financial worlds leveraged into central concerns of shareholders, policy-makers and civilians. The outbreak of the COVID-19 crisis triggered the world’s largest-ever wave of governmental rescue and recovery aid pegged to social, environmental and ethical causes. The most recent socially-conscientious innovations comprise improved disclosure standards, benchmarking of social codes of conduct, screening for biotechnology as well as environmental funds paying attention to climate change. Future forecast trends are the growth in screened funds, active socially responsible ownership models and community investing innovations in combination with a focus on the Sustainable Development Goals. Resilient finance is a context and culture-dependent phenomenon featuring international differences. Today financial social responsibility is booming in the Western World and Asia. SRI has been adopted in Central Europe and Anglo-Saxon countries throughout the most recent decades. North America, Europe (especially the UK) and Australia account for the most vital socially responsible markets. While Anglo-Saxon capital market systems (such as the U.S. and UK) feature private share- and stockholder investments, European financial markets are significant for governmental and institutional banking. Most recent developments comprise the U.S. Green New Deal and European Union Green Deal, which promise to steer finance in a more socially-conscientious direction. The Next Generation EU and the European Finance Taxonomy are attempts to classify and categorize industries based on social, economic and ecologic contributions. In the sustainability domain, green bonds are currently at the forefront of finance climate change mitigation and adaptation efforts. Resilient finance after the great reset targets at inequality alleviation of the socio-economic fallout of the COVID-19 pandemic. The widening gap between financial market performance and real economy liquidity constraints is exacerbated by the disparate impact of inflation and low interest rate regimes having triggered a crisis of unaffordable living expenses on different groups within society. Social volatility emerges out of the differing emotional propensities in response to the crisis. A prospective post-COVID New Age Renaissance will likely advance equal access to healthcare and environmental sustainability into corporate and financial market responsibilities.

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Introduction

Finance is a global multi-stakeholder phenomenon that comprises economic, organizational and societal actors. Finance stakeholders represent the financial and public sectors as well as academia and media. Primary financial constituents are banking executives, fiduciaries, institutional and private investors, governmental and nongovernmental representatives, labor union members, officials of international organizations as well as academics and media correspondents. Corporate, financial and public constituents are economic (e.g., institutional and private investors), organizational (e.g., labor union representatives, banking executives, fiduciaries) and societal (e.g., representatives of international organizations and nongovernmental organizations, governmental officials, public servants, nonprofits, media representatives, academics) actors. Resilient finance springs out of the qualitative and quantitative advent of socially conscientious corporate and finance practices in the Western World. Socially conscientious market endeavors can be traced back to ethical investing of religious institutions and societal attention to social, environmental and political deficiencies. The early beginnings of modern SRI are attributed to social responsibility concerns emerging from attention to social, environmental and political market deficiencies. The demand for financial social responsibility became blatant in the wake of humanitarian, social and environmental crises (Williams, 2005). SRI was propelled by stakeholder pressure in connection with legislative and policy compulsion. Legislative information disclosure reforms coupled with governmental encouragement of trustees to develop social responsibility drove SRI (Solomon et al., 2002; Sparkes & Cowton, 2004). In the 1960s, shareholder activism of civil rights campaigns and social justice movements drove SRI. Since the 1980s, positive screenings identified corporations with respective CSR policies. In the finance world, positive screenings outlined corporations that meet or exceed certain social and environmental standards based on information from social and environmental records. Negative screenings excluded ethically questionable market options. Political divestiture became prominent in the case of South Africa’s Apartheid regime. Environmental catastrophes triggered environmentally conscientious investment.

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Since the nineteenth century, financial markets increased a share of global governance. Institutional investors increasingly used their clout to influence corporate conduct (Solomon et al., 2002; Sparkes & Cowton, 2004). Socially conscientious investors became active in demanding corporate governance reforms impacting on societal causes. With the turn of the millennium, the impacts of climate change became more and more apparent in all parts of the world and the substantial risk imbued in environmental degradation, irreversible tipping points and terminal lock-ins (Puaschunder, 2020a). Increasing interest in Environmental, Social and Governance (ESG) criteria in investment decisions perpetuated the demand for SRI. SRI was propelled in the wake of the micro-finance and cooperative banking revolution. In 2006, a UNGC division launched ‘The Principles for Responsible Investment’ in collaboration with the NYSE. In the wake of the 2008 World Financial Recession, SRI helped to re-establish trust in financial markets. Stakeholder pressure and changing financial market regulations enhancing accountability and transparency perpetuated SRI. The 2008 financial crisis put a new perspective on the role of financial markets in addressing global governance. Overall, the social, political and economic risks exposed during the 2008 World Financial Recession propelled the interest in crisis-robust sustainable finance solutions in SRI (Trevino & Nelson, 2004). As an implication of the crisis, citizens became more attentive to social responsibility within market systems. Media coverage of financial fraud, fiduciary responsibility breaches, astronomic CEO remunerations and financial managers’ exuberance increased stakeholder calls for the inclusion of transparency and accountability control in financial markets. To avoid a recurrent scenario in the future, enhanced transparency and accountability of investment options and ethicality of responsible market participants became blatant demands. Corporate governance, information disclosure and monitoring within the corporate and financial world leveraged into central issues of concern of shareholders, policy-makers and civilians. As direct implications of the crisis, corporate executives were increasingly forced by stakeholders to pay attention to financial social responsibility. SRI featuring direct attention to corporate accountability and transparency in screenings, resolutions and stakeholder dialogues became a remedy to re-establish trust in corporate and financial market conduct (Social Investment Forum Report, 2006).

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The 2008 financial crisis leverage SRI into a more common financial investment option (Selten, 2008). The post-2008 world financial turmoil era saw a deepened interest in financial market stability, which drove the idea of responsibility as a prerequisite for functioning and sustainable markets (Connaker & Madsbjerg, 2019). At the beginning of 2018, US $11.6 trillion of all professionally managed assets in the U.S. were pursuing some sort of ESG strategy, which equals approximately one-fourth of the market (Connaker & Madsbjerg, 2019). Accompanied by the rise of SRI in practice was a growing academic and public debate on the influence of public and private actors in administering social responsibilities within market systems. In the aftermath of the crisis, stakeholders re-discussed the role of economic and financial markets in providing and administering global governance (Little, 2008). The manifold expressions of the interplay of governmental, corporate and financial market forces in addressing social responsibility and attributing global governance become apparent during the COVID-19 pandemic comparing various SRI conduct throughout the international arena. The novel coronavirus SARS-CoV-2 imposed the most unexpected external economic shock to modern humankind, triggering abrupt consumption and behavior pattern shifts around the world with widespread socio-economic impacts. In order to alleviate unexpected negative fallouts from the crisis, attention to governmental bailouts and recovery packages gained unprecedented momentum. The outbreak of the COVID-19 crisis triggered the world’s largestever wave of governmental rescue and recovery aid that is oftentimes pegged to social, environmental and ethical causes that enact public responsibility (Kemfert et al., 2020). Central banks of all major world economies—such as Australia, Brazil, Canada, Denmark, Japan, New Zealand, Singapore, South Korea, Sweden, Switzerland, the United Kingdom, the United States—and the European Central Bank coordinated to lower the price of USD liquidity swap line arrangements in order to foster the provision of global liquidity (Alpert, 2021; European Central Bank, 2020a, 2020b, 2020c; Federal Reserve of the United States, 2020a, 2020b). The International Monetary Fund (IMF) and the World Bank issued economic stimulus and relief efforts in the range of around 260 billion USD with the majority of relief aid being distributed in the developing world (Alpert, 2021; The International Monetary Fund, 2020c; World Bank, 2020a, March 3, 2020b, March 17, 2020c).

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As of May 2021, all major economies responded to the economic fallout of COVID-19. In response to the ongoing COVID-19 crisis, all major economies around the world have rolled out economic-assistance packages or recovery releases that by mid-2020 already were summing up to over 10 trillion USD and have continuous prospects of renewal and further development (Cassim et al., 2020; The White House of the United States, 2021a, 2021b). In confronting the crisis, economic bailout and rescue packages are oftentimes targeted with attention to inequality imbued in our COVID19 shock era. Inequality heightened in the COVID-19 economic fallout in abruptly changed economic demand patterns that have resulted in economically gaining and losing industries, which widened an unexpected economic performance gap between the finance sector and the real economy. Systemically differing liquidity in the finance sector and the real economy during the crisis implies sector-specific affective fallout propensities. Longest-ever low interest rate regimes foster capital flow for innovation in the finance world, while disincentivizing household savings decreases private consumers’ resiliency. The negative emotional consequences in the real economy were exacerbated in households facing a narrowing of liquidity constraints. Industry-specific inflation patterns as well as urbanversus-rural disposable income differences were considered in the wake of ambitious bailout and recovery plans when choosing bailout and recovery beneficiaries and targets. The potential focus of bailouts and recovery ranges from urban-local and national to even global and future-oriented beneficiaries, as pursued in public investments on climate stabilization in the Green New Deal or European Green Deal Sustainable Finance Taxonomy. The COVID-19 external shock brought about an unprecedented concerted wave of governmental aid and recovery packages, which were oftentimes pegged to socio-ecological agendas. The impact of the widespread financing of social and environmental causes in the U.S. Green New Deal and the European Green Deal but also market regulatory action fostering sustainable development is expected to be long-term and substantial. The rise in SRI is accompanied by the upcoming of stock exchange rating agencies, social responsibility impact measurement tools, social reporting and certifications, which the European Sustainable Finance Taxonomy currently tries to categorize. Today, the range of shareholder engagement possibilities is more sophisticated than

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ever. Trends forecasts outline a further maturation of SRI driven by institutional investors, shareholder advocacy, legislative and regulatory compulsion as well as commercial funds. The growth of financial social responsibility expressions has leveraged SRI into an investment philosophy adopted by a growing proportion of investment firms and governmental agencies around the world (Knoll, 2008; Mohr et al., 2001; Sparkes & Cowton, 2004). The sophistication of socially responsible shareholder engagement has triggered an upcoming of social and environmental stock exchange rating agencies, SRI impact measurement tools, corporate social and environmental reporting and certifications (Steurer et al., 2008). SRI has proliferated as a prominent term in the financial literature with business professionals and analysts monitoring and reporting on social, ethical and environmental corporate performance (e.g., Dow Jones Sustainability Index, FTSE4Good Index, OeSFX). This trend is captured in the European Finance Taxonomy endeavors The rise of SRI options goes hand in hand with practitioners and academia studying financial social responsibility as well as stakeholders commenting on social, environmental and ethics impacts of corporate endeavors on social media. The most recent SRI innovations comprise improved disclosure standards, benchmarking of CSR and SRI codes of conduct, screening for biotechnology as well as environmental funds paying attention to climate change. Future forecast trends are the growth in screened funds, active SRI ownership models and community investing innovations in combination with a focus on the SDGs.

4.2

International Developments

Resilient finance is a context and culture-dependent phenomenon featuring international differences. International differences in SRI conduct stem from differing market practices, governmental and institutional frameworks, societal values and moral obligations that impact on financial market behavior. Today financial social responsibility is booming in the Western World and Asia. SRI has been adopted in Central Europe and Anglo-Saxon countries throughout the most recent decades (Sparkes & Cowton, 2004). North America, Europe (especially the UK) and Australia account for the most vital SRI markets. While Anglo-Saxon capital market systems (such as the U.S. and the UK) feature private share- and stockholder

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investments, European financial markets are significant for governmental and institutional banking. Today, North America, Europe and Australia are renowned for the most traditional socially responsible market options but Asia accounts for one of the most booming finance markets in the world. In the U.S., SRI was historically mainly promoted by independent organizations and regulatory institutions that use proxy statement disclosure to rate corporations on their social and environmental performances and impacts. Based on the U.S. model, since 2006 the Canadian Securities Administrators have mandated mutual funds to publicly disclose their proxy voting. The United States (U.S.) economy fell into economic decline in February 2020 in the wake of the news over COVID-19 and a worldwide evolving pandemic (Alpert, 2021; National Bureau of Economic Research, 2021a, 2021b). The U.S. unemployment rate rose as high as 14.8% in April 2020, the highest since the Great Depression (Alpert, 2021; United States Bureau of Labor Statistics, May 13, 2020). As of August 2021, the unemployment rate was 5.4%, which was 1.9% above the 3.5% in pre-pandemic February from the previous year (Alpert, 2021; Statista, 2021). The U.S. economy, as measured by real GDP, fell by 3.5% year-over-year in 2020 exhibiting a shrinking trend for the first time on an annual basis since 2009 (Alpert, 2021; Federal Reserve Bank of St. Louis, 2021). The U.S. federal government responded to the crisis with the most extensive fiscal stimulus packages and emergency relief. The U.S. Congress passed four special appropriations laws for the federal government to use in relief efforts, of which the largest was the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provides approximately 2.08 trillion USD in all-time-highest aid in North American history. Governmental efforts were coupled with the Federal Reserve taking monetary stimulus measures to stabilize and boost the economy in incremental interest rate cuts and discount rate drops down to 0.25% and Federal Reserve repurchase agreement interest rate to 0% (Cox, 2021). Lending programs, loans and asset purchases as part of a 700 billion USD quantitative easing plan and repurchasing options, as well as bonds financing and regulation changes, stabilized the market and fostered liquidity (Alpert, 2021; United States Federal Reserve, 2020; Smialek & Irwin, 2020). The direct aid programs summed up trillions of USD, of

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which 2.56 trillion USD were spent by the U.S. Federal Government as of March 31, 2021 (USASpending.Gov, 2021). A total of four laws included an estimated total of 3.92 trillion USD in funding for credit, loans and loan guarantee programs (USASpending.Gov, 2020). Canada’s dependence on dropping oil and gas prices but also halted raw material exports challenged the Canadian economy, which the Canadian government stabilized with a 75 billion USD relief package including unemployment insurance and wage subsidies (Alpert, 2021). Canadian Monetary Policy included three cuts of the Canadian benchmark interest rate plus inflation targeting and liquidity banking lending facilitation backed by bonds and mortgages (Alpert, 2021; Bank of Canada, March 4, 2020a, March 13, 2020b, March 27, 2020c, May 6, 2020e, June 3, 2020d; Canada Mortgage and Housing Corporation, March 26, 2020). In Europe, SRI booms in Northern and Central European countries, yet is relatively slow to take off in Southern Europe. Within the European Union, institutionalized and governmentally-administered SRI rose in recent decades. Similar regulations are currently considered by the European Parliament and have been passed in Australia, Germany and Sweden. In German-speaking countries, SRI propelled during the 1970s green wave. In the aftermath of the COVID-19 crisis, the European Union had a concerted Eurozone monetary policy administered by the European Central Bank that faced constraints due to an already low interest rate regime (Alpert, 2021; European Central Bank, 2020a, 2020b, 2020c). Recovery plans included the pandemic emergency longer-term refinancing operations, currency swaps, increased lending and Eurodenominated liquidity for central banks outside the Eurozone to provide market stability and financial liquidity partially enacted via bonds in the 128 billion USD range (Alpert, 2021; European Central Bank, 2020a, 2020b, 2020c). The Pandemic Emergency Purchase Programme (PEPP) issued 800 billion USD in bonds and commercial papers throughout the year 2020 that was expanded to a total of 1.5 trillion USD until the end of June 2021 in order to reach a total target of 2.24 trillion USD (Alpert, 2021; European Central Bank, June 25, 2020c). The European Union concerted action to avert the economic downturns of the COVID-19 pandemic in a common fiscal stimulus proposal funded by Eurobonds triggers what experts already call the Next Generation EU bringing member states closer together in a fiscal union and

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stability solidarity pact (Alpert, 2021; Nagarajan, 2020; Stevis-Gridneff, 2020; Strupczewski & Abnett, 2020). The Next Generation EU is scheduled to be funded with e750 billion until 2027 from the EU and e2.5 trillion aspired to be acquired by the private sector (Brühl, 2021). Governmental regulatory framework conditions and incentives are meant to promote a harmonious public and private sector financialization of environmental conditions (Brühl, 2021). In addition to concerted European Union action, the national governments of the Eurozone countries passed fiscal and monetary policy acts in line with directives from the European Central Bank. Germany enacted the—by far—largest fiscal stimulus and Economic Stabilization Fund within the Eurozone with liquidity constraint relief summing up to around 950 billion USD (Alpert, 2021; Anderson et al., 2020; Benoit & Fairless, 2020; German Federal Ministry for Economic Affairs and Energy, 2020; German Federal Ministry of Finance, 2020; Reuters, 2020). Similar European Central Bank-conducted monetary and fiscal policy measures were performed in France, Italy, Spain, Austria and the Nordic countries with several subsequent stimulus and relief packages as the COVID-19 economic crisis unfolds (Alpert, 2021). European aid tends to strengthen the relatively more publicly-administered healthcare system and union-protected workers throughout Europe—for instance, when thinking about the Kurzarbeit model that provides governmental funds for the industry to not lay off workers during the pandemic but shorten their work time (Gelter & Puaschunder, 2021). In addition, Europe tends to support households directly, alongside granting business liquidity and social security aid (Gelter & Puaschunder, 2021). In the United Kingdom (UK), SRI was historically perpetuated by governmental legislation encouraging shareholder voting and formal consultations with fund holders on the adoption of social, ethical and environmental policies. The UK faced economic turmoil due to Brexit and trade renegotiations during the onset of the pandemic. The Bank of England cut its benchmark interest rate twice to 0.1% and issued governmental and non-financial, investment corporate bonds in the range of 567 billion USD (Alpert, 2021; Bank of England, March 11, 2020a, 2020b, March 19, 2020d, June 5, 2020f, June 18, 2020g, June 19, 2020h, November 5, 2020i). Lending and asset-purchasing programs of the Bank of England aided to extend credit during the crisis, especially to small and mediumsized enterprises, with collaterals for the central bank (Alpert, 2021;

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Bank of England, March 11, 2020a, 2020b). For instance, the British Covid Corporate Financing Facility (CCFF) set out to purchase commercial paper and counter-cyclical capital buffers to provide liquidity in the banking sector (Alpert, 2021; Bank of England, March 17, 2020c, March 19, 2020d, April 9, 2020e; Jones & Milliken, 2020). The UK fiscal stimulus comprised six packages totaling up to 18% of the UK GDP (Alpert, 2021; Szmigiera, 2021). The 2002 Australian Financial Service Reform Act introduced social responsibility disclosure statements for financial services followed by the Australian Securities and Investment Commission issuing SRI disclosure guidelines. Australia entering a recession for the first time in almost thirty years in the wake of the COVID crisis, led to a subsequent lowering of its interest rate. The Austrialian Government launched three relief packages worth a total of around 300 billion USD (Alpert, 2021; Reserve Bank of Australia, March 2, 2021; Karp, 2020; Martin, 2020; Murphy, 2020). Emerging SRI markets are Central Asia with respective extensions to Hong Kong, Taiwan and Singapore. COVID-19 response, rescue, and long-term monetary aid started in China. In the early days of the detection and outbreak of the novel coronavirus, the China Monetary Response was first a 506 billion USD stimulus package for short-term aid, followed by 732 billion USD in discretionary fiscal measures and 198 billion USD additional support and long-term monetary interest rate lowering (Alpert, 2021). Hong Kong adopted three major fiscal stimulus and relief packages totaling over 30 billion USD with additional smaller stimulus measures following (Alpert, 2021). Three stimulus packages were launched in Japan with the highest share of GDP and additional plans to boost liquidity totaling up to 1 trillion USD in liquidity plus fiscal spending bills increased for business loans (Alpert, 2021; Bank of Japan, 2020; Szmigiera, 2021). India started with interest rate lowering and an injection of almost 100 billion USD into the financial system and facilitated market loans loosening bank lending restrictions (Alpert, 2021; Reserve Bank of India, May 20–22, 2020). The COVID pandemic in India triggered additional monetary stimulus packages of 266 billion USD and fiscal spending of 27 billion USD (Alpert, 2021; Saha, 2020). Additional relief spending was promised in the range of 50–100 billion USD and is on its way to boost consumption through direct payments and tax incentives (Alpert, 2021; Kazmin, 2020; The Hindu, 2020).

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South Korea cut interest rates, enacted financial stability and liquidity packages in the range of up to 10 billion USD, also operated via bonds and fiscal stimulus, recovery and relief packages of over 100 billion USD (Alpert, 2021; Bank of Korea, February 7, 2020a, March 16, 2020b, March 26, 2020c, April 9, 2020d, April 16, 2020e, May 28, 2020f; Hana, 2020; Hyunjung, 2020; The Straits Times, March 4, 2020). Brazil and Africa feature attention to microfinance and community investing. Brazil tackled the COVID-19 economic fallout with statutory limitations on its fiscal spending, lowered the benchmark interest rate and added around 300 billion USD in liquidity to credit markets, including a fiscal stimulus package (Alpert, 2021; Ayres, 2020; Central Bank of Brazil, 2020; Geist-Benitez et al., 2020; Government of Brazil, 2020). Russia and the Gulf Region faced a drop in oil and gas export revenues, which were answered in Russia by lowered interest rates (Alpert, 2021; Bank of Russia, April 24, 2020c, 2020d, June 19, 2020e, 2020f, July 24, 2020g). The Bank of Russia allocated financial aid around 70 billion USD through direct aid plus additional lending programs to stimulate the economy (Bank of Russia, March 27, 2020a, April 3, 2020b, June 19, 2020d; The Moscow Times, June 2, 2020). The size, scope and dimensions of COVID-19 rescue and recovery plans are unprecedented and account for the historically largest concerted effort of action to avert the negative economic fallout to an external economic shock. In confronting the crisis and evaluating international and governmental rescue packages, the size of rescue and recovery aid has gained widespread attention for potential negative consequences, such as long-term debt and inflation. For instance, the quantitative dimensions and largess of governmental financialization of aid have led to economists Lawrence Summers and Paul Krugman arguing over the right size of the governmental intervention in economic stimulus (Coy, 2021; Princeton Bendheim Center for Finance, 2021). Summers points out the sheer amount of stimulus that could set off inflationary pressures—a concern shared by other economists, such as Olivier Blanchard, a macroeconomic expert on inflationary pressure (Blanchard, 2021; Schneider, 2021). In the evaluation and monitoring of these unprecedentedly large amounts of governmental stimulus, economic bailout and rescue packages, socio-economic attention should also be paid to inequality in our COVID-19 shock era. COVID-19 has become the ultimate inequality accelerator due to changed demand patterns having resulted in economically gaining and losing industries. Sophisticated financial market tools

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have enabled finance experts to gain from shorting COVID-19-losing industries but also exchanging COVID-19 losing for pandemic-winning industries in well-monitored funds and asset allocation options. In addition, the finance industry can use diversification of portfolio components but also hedge against COVID-19 losing industries. The real economy is stuck with less flexible obligations than financial assets. All these features widened an unexpected economic performance gap between the finance sector and the real economy exacerbating an already prevailing trend of inequality between finance and real economy productivity and resiliency. Systemically-differing liquidity in finance and the real economy implies sector-specific affective fallout propensities. Longest-ever low interest rate regimes fostered capital flow for innovation in the finance world, while disincentivizing household savings decreased private consumers’ resiliency. Debt burdens and liquidity constraints in private households bring along negative behavioral aspects and destructive propensities, such as malnutrition, socio-psychological impairment, drug intake and suicidal considerations. Industry-specific inflation patterns as well as urban-versus-rural disposable income differences in the wake of ambitious bailout and recovery plans should be considered when choosing bailout targets. The economic lens needs legal insights to adjust to unproportionally heavy and disparately severe impacts on certain populations, which should become the main focus of governmental rescue and recovery in short-term emergency aid. The potential focus of bailouts and recovery ranges from urban-local or national to even global and future-oriented beneficiaries, as pursued in public investments on climate stabilization in the Green New Deal or European Green Deal Sustainable Finance Taxonomy (Puaschunder, 2020c, 2021c). Most recent developments comprise of the U.S. Green New Deal and European Union Green Deal, which promise to steer finance in a more socially-conscientious direction. The Next Generation EU and the European Finance Taxonomy are attempts to classify and categorize industries based on social, economic and ecologic contributions. In the sustainability domain, green bonds are currently at the forefront to finance climate change mitigation and adaptation efforts.

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4.3

Resilient Finance After the Great Reset

4.3.1

Inequality in the Socio-Economic Fallout of COVID-19

Already now it becomes apparent that the COVID-19 crisis is an accelerator to already existing inequality patterns. The COVID-19 external shock heightened economic disparity between nations, industries and societal groups that often have already existed prior to the crisis, but are now more accentuated (Puaschunder & Beerbaum, 2020a, 2020b). While COVID-19 created significant health and security risks as well as economic costs, the pandemic also brought about unanticipated opportunities for specific market segments (Puaschunder et al., 2020a, 2020b). Some industries actually profited economically from the pandemic due to a changed demand (Lerner, 2020; Agrawal et al., 2020; Monck, 2020). The crisis created a great divide between winning and losing market actors, societal groups, industries, nations and potentially also generations (Espitia et al., 2020; World Bank, 2021). The crisis appeared to have widened the gap between financial market performance and real economy liquidity constraints. Inequality between financial markets and real economy activities has already increased in society since the 1990s, in the U.S. in the aftermath of financial market deregulation (Chetty & Brunnermeier, 2020; Milanovic, 2016; Piketty, 2016). The financial world performance began to diverge massively from the real economy in 2008/2009 and experienced the greatest increase with the Coronavirus crisis that widened the gap between the top performance of financial markets and negative socio-economic fallout in the real economy (The Economist, 2020a, 2020b, 2020c). While the finance world seized its opportunity to benefit from the COVID shock winning opportunities, the real economy experienced a liquidity crunch induced by lockdowns and halted consumption opportunities triggering waves of private bankruptcies and liquidity bottlenecks. While the real economy faced economic constraints, the clear distinction between COVID-19 profit and loss industries made it possible for today’s highly flexible financial world to quickly exchange weakened market segments—such as oil, public transport and aviation, face-to-face service sectors, such as international hospitality and gastronomy—with above-average market options—such as pharmaceutical companies and emergency medical devices for healthcare, digital technologies, FinTech, artificial intelligence and big data analytics industries, online retail, automotive and interior design industries. Financial portfolio managers

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could simply diversify risks and exchange market-losing segments for Coronavirus-winning industries in well-managed funds and diversified flexible market options. Financial managers could use sophisticated techniques to short or hedge against an obvious decline in the price of clear COVID-19 losing industries. The finance world was thus able to turn market losses into gains. Finance professionals were in a quicker-and-easier-to-regain position once the crisis hit and certain consumption propensities became apparent. Whereas the real economy just started to adapt to changing conditions as in most cases real economy agents were more bound by long-term obligations. Just imagine the difference in capital mobility between portfolio investment and being a restaurant owner with complex long-term leases, on-the-job-trained employees and locked-in order contracts. Deep sociopsychological divides opened between strongly positive financial market developments and the negative socio-economic fallout that increased harmful lifestyle propensities of the real economy world. Ann Case and Angus Deaton provide evidence for the negative emotional consequences of economic disparate impacts and rising inequality in the American society (Case & Deaton, 2020; Ngai, 2020; Piketty, 2016). Different emotionality propensities in the eye of market communication about the overall economic state are grounded in different opportunity conditions and flexibility degrees of freedom that vary between different social groups. The intensity and nature of emotionality propensities changed dramatically during the COVID-19 pandemic between those invested in financial markets and those who derive income from real economy labor activities, especially in the service sector or professions with large crowd entertainment. Social volatility captures the social dimension of market uncertainty. Social volatility stems from the disparate social affect and collective moods of emotional market actors, who react to information flows. Social volatility levels and emotional fallout from economic crises differ drastically within society. The emotional ebbs and flows during times of crises vary by professional challenge. The extent and intensity of sensations about contemporary events create a gap between capital and labor. The same events are experienced in differing emotional states due to high market profits for financial gains and liquidity constraints imposed in the real economy. In light of the current economic situation, the ebbs and flows of affective intensities thereby form certain decision-making qualities and

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affectual propensities that draw silos of experiences, which differ between societal classes. This prepares the argument that flow underlines the distinguishing factor between those who can afford long-term considerations in markets whereas others become negatively emotional in their decision-making under tight constraints. Volatility is thereby grounded in a flow model driven by affect that creates a differing sense of time. Different societal groups face different propensities to be holders of opportunities and to have a long-term view in personal finance and opportunities to derive personal gains from overall market losses. Other distinguishing factors are the turnover time and need for capital as well as the obligation to pay for the production and consumption goods of workers in the real economy. Time plays a crucial role in the social division of affectual propensities. Financial market proponents or capitalist-industrialists appear to have more long-term possibilities and constant financial streams than consumption-constraint individual consumer-workers. The finance world is specialized in discounting future value and can thereby maintain longerterm planning, whereas real economy agents are more prone to depend on a constant salary stream, which is required to consume and maintain a standard of living. It is therefore assumed that financial analysts are the ones prone to rational thinking capacity during times of economic upheaval. In the real economy, employees and workers are bound to work for a salary in order to fulfill their day-to-day needs and wants. The holders of the means of production—for instance, factory owners and service sector managers— are likely facing long-term contracts and obligations that they cannot exit or ward off easily. The ones engaged primarily in capital gains have the luxury of flexibility to exchange losing for winning stocks in well-managed funds or diversify their portfolio. They are the ones who can wait out and suspect the implied volatility of underlying market options as better estimators of future market performance. And the finance world can turn market downers into profits in shorting and hedging options over time. For all these flexibilities, the finance world stays detached from emotionality given the possibility to hedge, short against and spread risks via diversification of more fungible assets that are not needed to be liquidated to cover day-to-day expenses. The anthropologist Caitlin Zaloom (2006) describes the riding on the ebbs and flows of socially-shared affects constructing economic up and

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down swings (Lee, 2021). Instincts of traders and market actors’ engagement in capital for investment determine the better understanding and profit from natural rhythms of financial fluctuation (Lee, 2021; Zaloom, 2006). Dynamic traders can thereby outperform the market in understanding of collective moods bleeding into collective action influencing market outcomes (Ayache, 2008; Lee, 2021). Surfing volatility thereby becomes a skill of those using money to make money (Csikszentmihalyi, 1990; Lee, 2021; Zaloom, 2006). While the finance world experiences a confidence boost thanks to diversification, shorting and hedging potential during economic frictions triggering rescue and recovery aid during the Coronavirus outfall, the real economy suffers from closeness to real-world experiences and realworld salary stream dependency. Real economy proponents have real skin in the economic game as their everyday living expenses are more likely to depend on salaries. Facing a propensity to a loss of confidence during a pandemic in the eye of real-life constraints, real economy-dependent market actors have therefore a propensity to negative emotional fallouts during economic crises. Real economy-dependent producers and workers are more likely to react emotionally negatively given their constrained budgets and perceived lack of degrees of freedom. Industrialist-capitalists enjoy a longer time horizon but are also more likely stuck in long-term obligations and constrained by budget lock-ins. The problem of a gap between the finance world and the real economy highlights a distinction of classes within society. The propensities of classes in markets determined by either being a finance world agent or real economy worker are either emotionless or filled with affect in the eye of a pandemic. These two classes that either gravitate toward wealth and relaxation flow or poverty and negative excitement during crises determine either ego-boosting or self-depleting behavioral response propensities during a crisis. While economic crises are absolved by awareness and relatively less emotional content in the finance world, the hypervigilance and tension of the real economy due to real-world constraints and inflexible obligations create an unequal emotional outburst that is related to certain patterns of involuntary reflexes and behaviors. The real economy seems to suffer from loss of confidence with personal affective states in times of crises given their threats to well-being, while the finance world has a powerful anti-affective force of crisis gain potential that invigorates flow in control of the situation. The affective reconstruction of the reality varies between the two worlds of finance with hope and real economy facing

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loss and risk aversion during a crisis. These two propensity trajectories and narratives exist concurrently in experiencing a common crisis together. Affective states taint the conditions of life and how decisions play out in the lived time. The affective moments saturate the cognitive processes that lead to different subjectivities of reality and guide different behaviors. A common historical moment thereby appears as diverse visceral moment in assessing the diverse opportunities and risk prospects of different professional groups. A shared atmosphere of a cluster of opportunities determines a pattern of navigating in markets. The different patterns of affective responses thereby leverage into the structural divide in economies struck by an external shock (Nikiforos, 2020; NassifPires et al., 2020). The convergence between the affective response and economic differences creates zones of inequality in society inherent in external shocks and subsequent crises’ differing outfall (Nassif-Pires et al., 2020; Nikiforos, 2020). The inequalities of contemporary capitalism lie in the emotional state of the real economy and the rational mastery of the finance world that gets exacerbated in the dynamic relations of social crowds and clans. While the finance world is more likely to be detached from real-world financial constraints, the real economy suffers from a collective trauma in the face of threats and catastrophes in their everyday lives and the higher risk propensities of precarity. The slow death of despair analogy refers to the emotional fallout in the eye of time and money constraints of the real economy working class (Berlant, 2011; Case & Deaton, 2020). Slow deaths occur due to the emotional mindset of the working class, who are more prone to lack peace of mind for reproduction and/or preventive care in exercise or healthy food intake during an economic crisis (Berlant, 2011; Case & Deaton, 2020; Ngai, 2020; United States Centers for Disease Control and Prevention (CDC), 2020). Consumption and self-medication are more likely to become the stress relief mechanism in order to cope with the difficulty of contemporary life, which varies between different professional groups. Real economy profit extraction of workers exhausts the workers’ bodies and feeds the affect to give in to impulsive everyday pleasure consumption, which can amalgamate to slowly growing diseases or chronic debilitating conditions (Berlant, 2011; Case & Deaton, 2020). This socio-economic fragility also plays out in novel digital media handling divides. In today’s unprecedentedly digitalized world, online media consumption and affect elicited through online virtual media

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news on insecurity and uncertainty may have a profound impact on individual’s lives and determine the individual’s consumption patterns. Collective moods created online in instant and global information sharing constituting social volatility are a sign of our globalization time, in which reflexive communication on social media tools has created novel socio-economic pressures (Lee, 2021; Harvey, 2008). As the internet offers unprecedented opportunities to blast information instantaneously and truly globally, there seems to be volatility introduced by digital technologies in the contemporary culture and politics of finance (Lee, 2021). The internet with its social media and search engine information flow has steadily increased the turnover time of information (Lee, 2021). Lee (2021, p. 70) therefore concludes that the “fractal butterfly effects become increasingly commonplace.” The overflow of “availability cascades” has become the norm rather than the exception (Lee, 2021, p. 70). Digital technologies speed up widespread transmission of information about volatility. Social contexts then echo the collective sensual activity in light of events that get transmitted and reinforced in social media. Affective scenarios are emphasized in social discourses via instant messaging within social bubbles and group-specific silos that reciprocate emotions and feelings about the economic outlooks and cultivate social norms sector-specifically. The representation and transmission of positivity or negativity about the same event is constantly updated in real time within different societal groups. So while the overall narrative may be similar— such as an external shock in a pandemic—the different social groups may create differing social representations that are laden by a set of different emotions that echo in social online platforms about them (Puaschunder, 2021a, 2021b). Emotions and moods thereby build up in large mass cultures and subgroups via new technologies that are constantly and reflexively scanned for news and information and that change on a periodic basis. Instant communication media thus proliferates world realities about the current state of the world in our common modes of living. The financial traders notice implied volatilities and can use it for their favor in their long-term vision; while the real-world dependent worker gets emotionally-laden and is turned to self-destructive choices. This kind of novel social volatility, and also the class divide in those who can handle social volatility more relaxed versus emotional, account for an increasing phenomenon as digital

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technologies unfold around the globe exponentially and information transfer speeds up unprecedentedly. Inequality of emotionality accounts for the rising social trend of our pandemic times, which is almost not captured in the standard economics and finance literature but has vast impacts on the individual behavior determining collective well-being and hence welfare of society (Puaschunder, 2021a). The emotional fallout propensities are exacerbated by a disparate impact of inflation and low interest rate regimes on different groups within society. “Inflation is the decline of purchasing power of a given currency over time” (Fernando, 2021). This sustained increase in the general level of prices for goods and services in a country occurs when a national money supply growth outpaces economic growth (Fernando, 2021). Inflation, measured as an annual percentage change, indicates that a unit of currency effectively buys less than it did in prior periods (Fernando, 2021). In inflation, prices of goods and services rise over time, purchasing power decreases and people are incentivized to spend money, which boosts the circulation of money and thereby market activities and subsequently economic growth. The post-COVID-19 economic fallout featured a period of heightened inflation due to the central bank money supply boom, demand-pull, cost-push and monetary debasement (Crescat Capital, 2021). Inflation is also widening of the finance market versus real economy gap in terms of the unaffordability of costs of living for the employed population parts. A potential wage-price spiral—such as the one in the 1970s— is likely to be followed in the decades to come, driving investment in raw materials, real-estate and innovative finance options, such as cryptocurrencies (Crescat Capital, 2021). Inflation affects different people in different ways. Obviously, creditors (the lenders of funds) are in a less favorable position when it comes to the value of money than debtors (the borrowers of funds) economically if considering the overall purchasing power of creditors declines over time, while the overall debt burden for the borrower declines with time. Higher inflation thus harms savers because it erodes the purchasing power of the money they have saved in their accounts and benefits borrowers because the inflation-adjusted value of their outstanding debts shrinks over time (Fernando, 2021). However, when people are spending their real economy lives hunting the shadows of their past consumption choices, life goes backwards and rests in the

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yesterday. Savers, on the contrary, see the real value of their savings erode, limiting their ability to spend or invest in the future (Fernando, 2021). In the international arena, inflation is a double-edged sword for import and export industries. Inflation declines a nation’s currency’s value, which benefits exporters by making their goods more affordable when priced in the currency of foreign nations. Inflation at the same time harms importers by making foreign-made goods more expensive (Fernando, 2021). Inflation hits metropolitan populations harder than rural populations, not only in the general price levels but the relative income spent on living expenses. Inflation effects also depend on whether inflationary changes are anticipated or unanticipated. People living off a fixed-income or social welfare payment beneficiaries—such as those on food stamps, governmental welfare programs, retirees and annuitants, see a sticky— hence hardly-or-slowly-change over time, or non-renegotiable decline in purchasing power that is likely not adjusted for inflation fast enough or at all. People being able to renegotiate their terms or—again—people with savings that can wait out negotiations benefit more from inflation than those who are constraint and pay off old mortgages under tight budget constraints, resulting in decreased negotiation power and likely facing high costs for refinancing or personal bankruptcy, which may lead to social misery and self-harming choices. Those with tangible assets—like property or stocked commodities— benefit from moderate inflation as these asset holdings’ values are likely to increase with inflation (Cassim et al., 2020; Passy, 2021; The White House of the United States of America, 2021b). People holding cash may typically prefer no inflation, as it erodes the value of their cash holdings (Fernando, 2021). Homeowners and landlords rather benefit from inflation, especially if homeownership is built on a fixed-interest or no mortgage. Housing prices tend to rise in inflationary markets and homeowners are able to raise the rent each year or lease term (Cassim et al., 2020; Passy, 2021; The White House of the United States of America, 2021b). 4.3.2

Resilient Finance as the Great Equalizer

The COVID-19 external shock that released the largest and most widespread economic recovery aid and rescue packages worldwide came at a time of global attention to rising inequality around the world

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(Piketty, 2016). As the crisis unfolded, global inequality in access to affordable medical care but also preventive healthcare became apparent (Puaschunder & Beerbaum, 2020a, 2020b). The Coronavirus crisis truly challenged leaders around the world to argue for economic systems to become equitable and share the benefits of economic prosperity and scientific advancement equally around the globe (Puaschunder & Beerbaum, 2020a, 2020b). Global governance has taken a leading role in arguing for access to affordable vaccinations around the world (Puaschunder & Beerbaum, 2020a, 2020b). The crisis has also drawn attention to novel social inequalities within society and sharpened our senses of the disparate impact of policies of prevention and recovery for different societal groups. More than ever before in the history of modern humankind are leaders urged to place their policy programs in line with social justice pledges. How to align economic interest with justice notions has leveraged into one of the most important questions of our times. The crisis also came during a time when ecological limits had been reached and climate change was on the minds of the global community (Puaschunder, 2020a). The worldwide and long-term impact of CO2 becoming apparent in rising temperatures around the globe changing living conditions massively, drove the need for concerted action on climate stabilization (Puaschunder, 2020a). Around the world, global public and private sector entities are nowadays working on a broad variety of climate change mitigation and adaptation and climate stabilization efforts. Like no other concern of our lifetime, the solutions and accomplishment of climate stabilization goals will determine the lives of many generations to come. More than ever are leading Law and Economics scholars currently trying to imbue the idea of environmental justice in a greening economy (Armour et al., 2021; Broccardo et al., 2020). COVID-19 rescue and recovery aid echoes all these contemporary concerns in being pegged to green economy efforts and social justice pledges. This is foremost the case in the United States with the U.S. President Biden administration fostering the Green New Deal (GND) but also the European Union Commission sponsoring the European Green Deal and a Sustainable Finance Taxonomy (Barbier, 2009; Earthworks, 2019; Pargendler, 2020; Puaschunder, 2021b, 2021d; The United States Congress, 2019). These ambitious acts and plans account for the most vibrant and large-scale developments in our lifetime if considering the

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massive amount of funds involved but also the widespread impact energy transition will have. The GND is a governmental strategy to strengthen the United States economy and foster inclusive growth (Puaschunder, 2021b, 2021d). The GND directly targets at sharing economic benefits more equally within society (Puaschunder, 2021b, 2021d). The GND thereby addresses the most pressing concerns of our times in the quest to align economic endeavors with justice and fairness. Concrete central areas of development tackle environmental challenges, healthcare demands and social justice pledges (Puaschunder, 2021b, 2021d). Ethical imperatives and equity mandates lead the economic rationale behind redistribution in the GND. Social harmony, access to affordable quality healthcare and favorable environmental conditions are thereby pursued in an understanding of their role as prerequisites for productivity (Puaschunder, 2021b, 2021d). In all these endeavors, the GND offers hope in making the world and society but also overlapping generations more equitable. As a large-scale and long-term plan, the GND offers to bestow peace within society, around the world and over time (Puaschunder, 2021b, 2021d). To determine if these efforts will be successful, we have to acknowledge that they are fairly novel and include the most complex variety of actions that will have to be performed for a longer time horizon than simple economic recovery after system-inherent recessions would require. The multiple implementation facets and various agents involved but also the contested theoretical foundations and long-term implications will need more time to monitor and evaluate the effectiveness and equitable growth accomplishments than regular rescue and recovery efforts, such as the 2008/2009 World Financial Recession bailout and recovery packages. Tracking the success of these endeavors will be a long-term goal by itself, mainly due to the diversified projects, long-term impetus and the stratified impact of large-scale economic changes. While it is thus too early to tell how successful these projects will be in the grand scheme of complex issues tackled and over time in light of history, already now it is becoming apparent that teaching law and economics with a focus on ethics of inclusion honing a disparate impact lens will become key to ensure our common sustainable development and human progress of the future. We live in the age of responsible investment. The time for a reset of finance after the 2008 World Financial Recession and the 2020 global pandemic has come. In the aftermath of two major economic crises, the

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societal call for responsible market behavior has reached unprecedented momentum. As the novel Coronavirus SARS-COV-2 hit the world, the external economic shock has widespread implications for finance and economics. In the private sector, the COVID-19 shock triggered a wave of sustainable green financial environments (Fu et al., 2022). The heightened attention to health and environmental well-being triggered a favorable sustainable green financial environment for economists, financial analysts, commercial and central bankers, accountants and finance managers from public/and private sectors, local and international community, and researchers (Fu et al., 2022). These sustainable investment solutions are experienced as stability-enhancing for a country’s robust economic environment. In particular, socially responsible investments are meant to support the economy to absorb inequality shocks in the wake of global economic, financial or pandemic crises. As for the individual personal resilient finance of families and individuals, COVID-19 strengthened awareness of the connection between health and wealth. Individual well-being was experienced to be connected to the prevention and precaution of the pandemic in the individual sphere but also in the corporate sector. In the eye of a worldwide healthcare crisis impacting economics on a massive scale, the need for understanding the connection between health and capital on the individual, nuclear family level, corporate community standards and conduct as well as the overall economy became blatant. Interestingly, in the individual finance and investment literature, personal expenses due to sickness and work impairments due to chronic diseases are hardly mentioned. On the family level, unhealthy individual dynamics may lead to additional cognitive complexity that deters from reaching full productive potential as well as may cause critical life events, such as divorce, which can have drastic financial outcomes with long-term implications. On the corporate level, COVID-19 has opened the gates for corporations focusing on the overall health status of employees fostering prevention and health safety precautions as never before in the history of industrialization. Lastly, over entire populations, there is a strong connection between health levels and productivity, which directly influences the Gross Domestic Product of countries. Despite all the mentioned connections, hardly any economic literature concerns the dependence of health on the Keynesian multiplier. Governmental money spent on healthcare may have a multiplied multiplier effect on the overall economy

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but—to this day—economic literature remains scarce on the economic effect of healthcare-dependent multipliers. Attention to the importance of health and well-being for individual financial success, familial functioning as well as entire populations and overlapping generations may innovatively leverage health capital and health wealth into a category of Socially Responsible Investment and Sustainable Finance in the post-COVID-19 era. The new Coronavirus COVID-19 pandemic accounts for the most severe health and economic threat since about a century. The human, medical and economic shock with major fallout in social, humanitarian and international development domains is the most tragic event having occurred since the Great Plagues of the medieval times, the Great Depression and the two World Wars. Yet in every crisis and lasting economic, societal and humanitarian shock, there are always positive externalities as well. A digitalization disruption with a particular focus on healthcare, preventive medicine and whole-rounded eco-friendly lifestyles was perpetuated by COVID-19. The currently skyrocketing digitalization disruption in the wake of COVID-19 holds the potential for digital medical care. The ethics of inclusion will become future key qualifications to succeed in international student pools and digitalized global careers. The future after the COVID-19 pandemic holds the potential of ethical imperatives of inclusion to ennoble our prospected future post-COVID-19 world to come. Overall, these trends aim at providing a glimpse of hope in despair and grievance over COVID-19 and allow to advocate for equal access or redistribution of the merits of the gains from COVID-19 for living the dream of a better, more beautiful society than the world before COVID19. A prospective post-COVID New Age Renaissance will advance healthcare (Piper, 2020; Puaschunder, 2020b, 2022b). With the COVID-19 pandemic, the connection between preventive medicine, general health and prevalence has gained unprecedented attention. In the novel Coronavirus crisis, prevention and general, holistic medicine can determine whether COVID-19 puts patients on a severe or just mild symptom trajectory. Lifestyle and the general status of the immune system are decisive in whether the Coronavirus becomes a danger to the individual. Due to a weakened immune system being significantly related to a severe COVID disease trajectory propensity, preventive medical care has become more

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important for societal well-being and a precursor to avoiding emergency medicine attention. In light of the heightened health risks of COVID-19, in the corporate world, employers will naturally select healthier workers (Gelter & Puaschunder, 2021). Already during the early onset of the pandemic, elder and chronic patients’ passing and vulnerabilities risk estimates changed labor market demand toward favoring young, healthier and Coronavirus-survivors, who may benefit from natural immunity, and being more virus-resistant (Older Workers Report: Over Half of Unemployed Older Workers at Risk of Involuntary Retirement, 2020). On the corporate level, those corporations that manage to build a healthy environment that is attentive to prevention will gain from COVID-19 in the long run. Corporations that invest in hygiene but also group learning and team skills of hygienic working conduct will likely see long-term labor-driven economic growth. In light of pre-existing conditions and obesity determining the likelihood of COVID severity trajectory, corporations may also focus on fostering a healthy and ecological diet for their employees. Measures that can guarantee continued health in employment will account for corporate success and economic growth. Corporate governance could also promote self-monitoring of the state of health of employees and the comprehensive prevention in a holistic lifestyle. For instance, the German Prevention Act of 2015 of the German Federal Government compensates corporations to foster prevention self-care but also team learning of healthy lifestyles in the workforce, acknowledging the power of preventive care for economic productivity. Focusing on collective health as a common good will in the long run make labor components more productive. All these means of a hygienic environment, healthy preventive care and workplace interactions may be summed up in learning-by-preventing economic growth potential. The expected economic growth should also be considered to be taxed and the extra fiscal space used to offset the socio-economic losses and social misery implied in inequalities in market selection. As for outside working conditions, those corporations that are placed in benevolent health-promoting territories will have a competitive advantage and gain in terms of labor quality (Puaschunder & Beerbaum, 2020a, 2020b; Puaschunder, 2022b). Countries around the world have started paying attention to preventive medical care in the wake of pandemic monitoring. Those nations that can offer technological advancements to monitor pandemic outbreaks but also the medicine of the future that

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helps prevent diseases instead of just treating their consequences will produce positive labor advantages (Salzburg Declaration, 2020, 2021). Responsible investment has flourished in the aftermath of the 2008 World Financial Recession and the 2020 global pandemic. Though looking back to an epoch of enormous economic progress in socially responsible investment and sustainable finance; interestingly, hardly any connection is made to health as a key influence factor on individual financial success, familial wealth accumulation, corporate profitability and general productivity of nations. The COVID-19 pandemic has recently vividly outlined the importance of health for individuals, families, corporations but also nation-states. The disparate impacts of health responses to the same large-scale external shock became transparent between individuals, families and society around the world (Puaschunder, 2022a). Inequality arises in the access to quality healthcare that varies dramatically around the world (Puaschunder & Beerbaum, 2020a, 2020b; Puaschunder, 2022a). The post-COVID-19 resilience and recovery period holds the potential to create economic productivity and wealth via novel economic growth drivers, such as health and well-being on the individual, familial, corporate and larger-scale societal levels (Puaschunder, 2021c, 2022a). The twenty-first century has heralded an age of responsible investment which has also created a blatant demand of our times to understand the connection between health and well-being and financial management success. Unraveling the complex interaction between health and financial well-being promises to alleviate inequality and create necessary framework conditions securing economic stability and resilient finance for the individual, family compound but also society. In the aftermath of the Coronavirus crisis, the exacerbated need for finance to be in line with societal needs and wants could instigate positive advancement in health capital and health wealth. Health capital addresses the connection between health and individual financial success and the wealth accumulation of families. Health wealth also considers health as a prerequisite for the economic prosperity of corporations and nations. The emergence of human social responsibility in modern economies leveraged global markets and international corporations to continuously increase corporate social responsibility and socially responsible investment endeavors around the world (Chua, 2003; Fitzgerald & Cormack, 2007; Micklethwait & Wooldridge, 2003; Rothkopf, 2008). The ascent

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of multinationals strengthened the corporate role in society and placed a greater share of social responsibility onto the corporate sector. Throughout recent decades, Corporate and Financial Social Responsibility have steadily gained worldwide recognition in the wake of globalization, digitalization and political and societal trends fostering transparency and ecologic sustainability. As governmental liberalization and globalization led to a progressive deterritorialization of social, political, economic interaction, governmental agencies’ ability to protect citizenship rights, fulfill social obligations and avert global crises gradually declined. Global concerns beyond the control of singular nation-states—such as climate change, cybersecurity and global pandemics—imposed new levels of social responsibility onto corporate actors. A societal call for responsible corporate conduct developed in advanced societies, in which the expectations of corporate conduct and market obligations sophisticated. With the IT revolution providing heightened degrees of easily-accessible information, corporate societal impacts became subject to scrutiny by an affluent, internationally-focused “Weltgesellschaft” who demanded to consume with respect for business ethics around the globe (Nelson, 2004; Sichler, 2006, p. 8; The Economist, January 19, 2008; Werther & Chandler, 2006). The emergence of NGOs further contributed to corporate conduct disclosure and the integration of social responsibility into corporate practices. As for all these trends, multinational corporate conduct started exhibiting higher levels of responsibility vis-à-vis society. Having gained economic weight and political power, the majority of corporations tapped into improving societal conditions by contributing to a wide range of social needs beyond the mere fulfillment of shareholder obligations and customer demands (De Silva & Amerasinghe, 2004; Kettl, 2006). Global players stepped in where traditional governments refrained from social service provision—foremost through privatization or welfare reforms. International corporations also filled opening governance gaps when governments could not administer or enforce citizenship rights, new regulations were politically not desirable, feasible or even when governments had failed to provide social services (Steurer, 2010). By striving to meet citizenship goals, corporate executives integrated responsibility into ethical leadership that served multiple stakeholders by balancing economic goals with societal demands (DeThomasis & St. Anthony, 2006).

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Today Corporate Social Responsibility (CSR) has leveraged into a pivotal factor to align profit maximization with concern for societal wellbeing and environmental sustainability. Corporations contribute to social causes beyond mere economic and legal obligations (Elkington, 1998; Lea, 2002; Livesey, 2002; Matten & Crane, 2005; Wolff, 2002). By ingraining economic, legal, ethical and societal aspects into corporate conduct, CSR attributes the greater goal of enhancing the overall quality of life for this generation and the following (Carroll, 1979). Nowadays almost all corporations have embedded social responsibility in their codes of conduct, introduced CSR in their stakeholder relations and incorporated socially conscientious practices in their management (Crane et al., 2004; Werther & Chandler, 2006). The emergence of CSR as a corporate mainstream is accompanied by CSR oversight by stakeholders advocating for corporate social conduct. Under the guidance of international organizations, CSR has developed into a means of global governance and social service provision in innovative public–private partnerships (PPPs) that tackle social deficiencies. International organizations thereby bridge the gap between ethical standards and institutionalized ethical corporate conduct. In line with these trends, CSR has become an en vogue topic in academia. Academics investigate innovative PPPs to contribute to social welfare (Moon et al., 2003; Nelson, 2004; Prahalad & Hammond, 2003). Socially Responsible Investment and Sustainable Finance Concurrent with corporations having started to pay attention to social responsibility, ethical considerations have become part of the finance world. Developing an interest in corporate social conduct, conscientious investors nowadays fund socially responsible corporations (Ahmad, 2008; Sparkes, 2002; Hilsenrath et al., 2008). In Socially Responsible Investing (SRI) securities are not only selected for their expected yield and volatility, but also for social, environmental and institutional aspects. With trends predicting continuing globalization, corporate conduct disclosure and societal crises beyond the control of single nation-states, the demand for corporate and financial social responsibilities is believed to continuously rise (Beck, 1998; Bekefi, 2006; Fitzgerald & Cormack, 2007; Livesey, 2002; Scholte, 2000). In the aftermath of the 2008 World Financial Recession, the call for responsibility within corporate and financial markets grew as the neglect of corporate and financial responsibility in a liberal market climate featuring an absence of regulatory and accountability control had

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weakened the world economy and caused the real world to face extraordinary liquidity constraints. Media coverage of corporate scandals, fiduciary breaches, astronomic CEO remunerations and financial managers’ exuberance perpetuated stakeholders’ skepticism of the performance of unregulated, trust-based market systems. The announcement of the recapitalization of the banking system in October 2008 halted worldwide liberalization trends and created a demand for ingraining social responsibility in the corporate and finance world that is regulated by a “watchful eye over the marketplace (Obama, in speech, January 21, 2009). With the US President Barack Obama dedicating his inauguration speech to responsibility and the subsequent massive recapitalization of the banking system, the roles of governmental, financial and corporate actors in addressing social responsibility were defined (Duchac, 2008). Governmental bailouts in the wake of corporate bankruptcy contributed to stakeholder pressure and hold the potential to re-establish governmental oversight in the corporate and financial worlds (Greenspan, 2007). In the wake of the 2008 World Financial Recession, corporate social misconduct and financial fraud steered consumers and investors to increasingly pay attention to democracy and social responsibility within market systems. Stakeholder pressure addressed social responsibility of market actors and information disclosure of corporate and financial conduct. Legislative reforms enhanced the accountability of financial market operations. With the era of liberalization being halted by the 2008 financial crisis, the reinterpretation of the public–private sector roles in providing social services has leveraged social responsibility into a pressing topic of debate. The renaissance of attention to responsibility as a prerequisite for the functioning of economic systems portrayed CSR and SRI as windows of opportunity to re-establish trust in fallible market systems (Little, 2008; Livesey, 2002; Matten & Crane, 2005; Trevino & Nelson, 2004). The shift of public and private sector forces in addressing social responsibility coupled with regulatory oversight of economic transactions was meant to reclaim trust in markets. In the aftermath of the 2008 World Financial Recession, transparency of private sector activities, accountability of financial market operations and responsibility of market actors by political and financial leaders grew. Mainstream economic theories started a critique of neoclassical assumptions of markets being largely efficient, unregulated market forces working toward the

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best interest of the single-market participant and the collective of societal constituents. Financial crisis theories were opened up for sociopsychological notions of economic systems, emotional facets of market participants and their emotional decision-making fallibility imposing risk onto economic systems. As for gaining an accurate understanding of economic markets, heterodox economics research widens the interdisciplinary lens to consider socio-psychological motives in corporate, economic and financial theories and models. Following a build-up of attention to financial responsibility and socially conscientious investments, the Coronavirus crisis and pandemic outbreak situation since 2019 exacerbated attention to ethics of inclusion and sustainable finance (Puaschunder, 2022a). Inequality in the economics and finance realm severed with the outbreak of the COVID-19 crisis. The COVID-19 pandemic rose a finance world and real economy performance gap. The external shock of a worldwide pandemic that changed consumption drastically laid open hidden inequalities. In the post-COVID-19 era, the enormous rescue and recovery aid distributed around the world was often pegged to responsible finance. The massive amount of government spending to alleviate the economic impact of the crisis also brought along unprecedented levels of inflation and low interest rate regimes for an extended period of time. The current inflation alleviation efforts open novel opportunities to enact responsible investment. The U.S. Inflation Reduction Act of 2022 and the U.S. Student Loan Forgiveness are—for example—a critical step forward in making taxation fairer and alleviating inequality. In the post-COVID-19 era, there is also growing attention to health capital and health wealth. The realization of the connection between health and economic productivity as a financial asset has largely been left out of the contemporary finance literature. The overall well-being underlying human workforce productivity has become a hidden driver of economic growth in the eye of global contagion risks. With the growing awareness of the long-term implications of COVID-19—for instance in COVID long haulers, who have prolonged health impairment after an initial infection—but also with climate change pressuring healthy living conditions around the globe, the time has come to peg financial recovery and inflation targeting to higher social and environmental causes that may steer capital toward a pro-social direction and humans into healthier lives.

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The realization of the deeper connection of health with productivity calls for further attention to health in standard economic growth theories. Health capital should be explored in the personal relation between health and financial outcome of individuals and families but also the macroeconomic foundation of a healthy workforce and population for the overall wealth of corporations and the development of nation-states. In the contemporary individual finance and investment literature, attention to Socially Responsible Investment has been rising in the previous decades. Coverage of the importance of health and well-being for individual financial success, familial functioning as well as entire populations and overlapping generations, however, remained scarce. With the growing awareness of the importance of health for productivity in the aftermath of the COVID-19 pandemic featuring a wave of COVID Long Haul suffering, whose productivity levels have taken a toll, the time has come to consider the pivotal role of health for personal financial success but also understand health as a prerequisite for productive nations. The post-COVID-19 era may leverage health capital and health wealth into a category of sustainable investment and finance. Health capital and health wealth may become features of Socially Responsible Investment and Sustainable Finance. The connection between health and personal finance appears hardly discussed. Especially when it comes to personal wealth management and finance leadership advice. The direct influence of health and well-being with financial success and personal expenses yet appears obvious. One can imagine that a life-changing accident but also a chronic disease or mental wellness directly influence the capacity to form positive relationships and be present parts of families. Poor health may not only bring along mounting financial expenses for recovery or symptom easement in the case of chronic diseases. Sickness is also associated with cognitive tolls and limited time for being active members of households— e.g., in child-raising or support of other family members. Physical diseases and chronic pain may also lead to addiction and destructive behavior, such as drug abuse and suicidal risk. While the insurance literature covers risks of health impairments, behavioral economics informs about human discounting fallibility underestimating the likelihood of negative events happening, such as accidents but also chronic health impairments. One reason for this underestimation of risks is the overly positive view of the world and the future. These positive traits of human beings come with the downside to underinsuring for possible risks, occurrences and accidents.

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Behavioral insights hold a large account of decision-making errors and discounting failures when it comes to choices toward healthy food, exercise, personal healthcare, prevention or safety precautions. Future finance literature may draw more attention to the relation between health and financial security. Costs could be discussed due to sickness and work impairments due to chronic diseases. The neoclassical analysis frame of monetary measurements may be opened up for behavioral insights to understand the complex dynamics of socio-economic costs and socio-psychological burdens of diseases materializing in financial drawbacks. On the family level, unhealthy individual dynamics may lead to additional cognitive complexity that deters from reaching full productive potential as well as may cause critical life events, such as educational dropouts or divorce, which can have drastic financial outcomes in the long run. Here, again, too positive notions of the future and control over family dynamics may hinder people from taking precautions—such as insurance or prenuptial agreements—or saving for a potential separation early on. When it comes to retirement, ample evidence exists that people tend to save too little for a healthy and stress-free retirement. Attention to facts that in the US, it is estimated that 70% of all healthcare costs are spent during the final years of one’s life, could create awareness for the exponentially-rising healthcare costs for individuals. Saving during productive and healthy life years for times of debilitation and heightened disease risk may be an obvious advice, which is yet often not given early or focused-on enough in the finance literature. Health as a prerequisite for individual financial accumulation and support of an active family life should therefore also be considered in the resilient finance literature as well as become part of Socially Responsible Investment and Sustainable Finance. The currently ongoing COVID-19 crisis has challenged healthcare around the world. The call for global solutions in international healthcare pandemic outbreak monitoring and crisis risk management has reached unprecedented momentum. The novel coronavirus SARS-CoV2 imposes the most unexpected external economic shock to modern humankind, triggering abrupt socio-economic impacts in the corporate sector. A prospective post-COVID era advances preventive healthcare as a prerequisite for safe workplaces. The attention to preventive medicine,

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general health and prevalence has gained attention with the prolonged pandemic bleeding into becoming endemic. Prevention and general, holistic medicine determine whether COVID19 puts patients on a severe or just mild symptom trajectory. The general status of the immune system, is decisive in whether the Coronavirus becomes a danger for the individual. Due to a weakened immune system being significantly related to a severe COVID disease trajectory propensity, preventive medical care has become more important for societal well-being and a precursor to avoiding emergency medicine attention. In light of the heightened health risks of COVID-19, in the corporate world, employers will naturally select healthier workers (Gelter & Puaschunder, 2021). Large-scale and future-oriented governmental investments are valuable macroeconomic multipliers that can benefit society as a whole in the short run and long term. Economic multipliers trickle down positively in society since governmental spending incepting projects lead to increased salaries, opportunities to support a family and employ other people in the consumption of goods and services, to name a few economic multiplying growth potentials in the wake of governmental spending. While ample evidence exists on the economic impetus of multipliers, multiplier effects may vary based on the causes that receive governmental funding. Although research has proven country differences in multiplier effectiveness, hardly any connection was studied between economic productivity boosts due to multiplier effects after investment in overall governmental healthcare. Problematic appears that industry-specific multiplier measurements were primarily focused on industries such as construction and education. In addition, multipliers appear to trickle down in society with a certain time lag. Future research may concern multiplier effects in the healthcare domain. Hypothesis testing opportunities for investigating healthcare-dependent multipliers. Given the enormous amount of governmental COVID rescue and recovery aid in the aftermath of the COVID-19 crisis and the blatant importance of health in the eye of the pandemic, the time has come to investigate the concrete corporate resilience and financial stability imbued in preventive care in the corporate sector and on a national accounting level. In regards to the Keynesian multiplier, future research may empirically investigate if there is a certain effect of governmental spending on healthcare that influences the multiplier. In order to understand a potential multiplier effect of government spending on healthcare,

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a healthcare-dependent multiplier effect could test if healthcare-related governmental spending leads to a higher or lower than 1.6 multiplying factor. If a relation between multiplier effects and healthcare exists, a future step would be to investigate if it also holds or varies for particular governmental investments in prevention and preventive healthcare. If there are effects for governmental spending on healthcare, well-being and social welfare are potential moderators of the effect. In the twenty-first century, healthcare is directly related to digitalization and technological advancement, which could be other moderators to control for. Lastly, corruption is negatively related to quality healthcare and may also be accounted for in future healthcare-related multiplier investigations. Socially conscientious finance strengthens trust in responsible market actors and governmental oversight control as vital ingredients for functioning market economies and democratic societies. Real-market responsibility phenomena serve a well-tempered balance of public and private social contributions within modern market economies. In the interplay of public and private responsibility, legislation and regulation as well as socially-conscientious leadership serve as favorable structures for social responsibility within the finance sector. Responsible investment around the world addresses the long-term impact of the 2008 World Financial Recession economic transition as well as the widespread and lasting impacts of COVID-19 around the globe. Future Socially Responsible Investment and Sustainable Finance research may employ a comparative approach to understand the connection between health, well-being and health-conscientious finance. Health has leveraged into the most pressing demands in the twenty-first-century post-pandemic era. Most recent law and economics developments include practical concerns over fair access to healthcare and financial stability within society and in the international compound. Elucidating the deeper connection between health and personal finance as well as familial stability may aid on the individual level to overcome personal bankruptcy and debt traps. Understanding the power of prevention-focused corporations and healthcare-dependent multipliers may change modern management but also public policy and legal impetus toward granting attention to health as a prerequisite of stable economies and successful societies.

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Kettl, D. F. (2006). The global public management revolution. The Brookings Institution. Knoll, M. S. (2008). Socially responsible investment and modern financial markets (Unpublished Working Paper). University of Pennsylvania Law School. Lea, R. (2002). Corporate social responsibility: Institute of Directors (IoD) member opinion survey. IoD. Lee, B. (2021). Volatility. In C. Borch & R. Wosnitzer (Eds.), Routledge handbook of critical finance studies (pp. 54–68). Routledge. Lerner, S. (2020, March 13). Big pharma prepares to profit from the Coronavirus: Pharmaceutical companies view the Coronavirus pandemic as a once-in-alifetime business opportunity. The Intercept. https://theintercept.com/2020/ 03/13/big-pharma-drug-pricing-coronavirus-profits Little, K. (2008). Socially responsible investing: Put your money where your values are. Penguin. Livesey, S. (2002). The discourse of the middle ground: Citizen Shell commits to sustainable development. Management Communication Quarterly, 15, 313– 349. Martin, S. (2020, March 11). What the Australian government’s $17bn coronavirus stimulus package means for you. The Guardian. https://www.the guardian.com/business/2020/mar/12/what-australian-governments-corona virus-stimulus-package-means-for-you-explainer Matten, D., & Crane, A. (2005). Corporate citizenship: Toward an extended theoretical conceptualization. Academy of Management Review, 30, 166–179. Micklethwait, J., & Wooldridge, A. (2003). A future perfect: The challenge and promise of globalization. Crown Business Press. Milanovic, B. (2016). Global inequality: A new approach for the age of globalization. Harvard University Press. Mohr, L. A., Webb, D. J., & Harris, K. E. (2001). Do consumers expect companies to be socially responsible? The impact of corporate social responsibility on buying behavior. Journal of Consumer Affairs, 35(1), 45–72. Monck, A. (2020, June 3). The great reset: A unique twin summit to begin 2021. World Economic Forum. https://www.weforum.org/press/2020/06/ the-great-reset-a-unique-twin-summit-to-begin-2021/ Moon, J., Crane, A., & Matten, D. (2003). Can corporations be citizens? Corporate citizenship as a metaphor for business participation in society. Research Paper Series of ICCSR, 4, 2–17. Murphy, K. (2020, March 21). Scott Morrison to announce $66bn stimulus, including income support for workers. The Guardian. https://www.thegua rdian.com/business/2020/mar/22/scott-morrison-to-announce-66bn-sti mulus-including-income-support-for-workers Nagarajan, S. (2020, May 30). The European Union’s $826 billion stimulus plan to battle the coronavirus is ‘too small and too late,’ analysts

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say. Business Insider. https://www.businessinsider.com/what-eu-826-billioncovid-19-stimulus-package-means-2020-5 Nassif-Pires, L., de Lima Xavier, L., Masterson, T., Nikiforos, M., & RiosAvila, F. (2020, April 2). We need class, race, and gender sensitive policies to fight the COVID-19 Crisis. Multiplier effect: The Levy Economics Institute Blog. http://multiplier-effect.org/we-need-class-race-and-gender-sensit ive-policies-to-fight-the-covid-19-crisis/ National Bureau of Economic Research. (2021a, July 19). Business Cycle Dating Committee announcement. https://www.nber.org/news/businesscycle-dating-committee-announcement-july-19-2021 National Bureau of Economic Research. (2021b, July 19). US business cycle expansions and contractions. https://www.nber.org/research/data/usbusiness-cycle-expansions-and-contractions Nelson, J. (2004). Leadership, accountability and partnership: Critical trends and issues in corporate social responsibility. Report of the corporate responsibility initiative. Harvard University. Ngai, S. (2020). Theory of the Gimmick: Aesthetic judgment and capitalist form. Harvard University Press. Nikiforos, M. (2020). When two Minskyan processes meet a large shock: The economic implications of the pandemic, The Levy Economics Institute of Bard College Policy Note, 29, 1, http://www.levyinstitute.org/pubs/pn_2020_1. pdf Older Workers Report: Over Half of Unemployed Older Workers at Risk of Involuntary Retirement. (2020, August 5). The Schwartz Center for economics policy analysis. https://www.economicpolicyresearch.org/jobsreport/overhalf-of-older-workers-unemployed-at-risk-of-involuntary-retirement Pargendler, M. (2020). The rise of international corporate law (European Corporate Governance Institute Legal Working Paper No. 555/2020). https://ssrn. com/abstract=3728650 Passy, J. (2021, June 11). An inflation storm is coming for the U.S. housing market. MarketWatch. https://www.msn.com/en-us/money/realestate/aninflation-storm-is-coming-for-the-u-s-housing-market/ar-AAKWtdx?ocid=mse dgntp Piketty, Th. (2016). Capital in the twenty-first century. Harvard University Press. Piper, N. (2020, April 10). Die Ökonomie des Todes. Süddeutsche Zeitung. https://www.sueddeutsche.de/wirtschaft/pest-coronavirus-wirtschaft-1.487 3813. Prahalad, C. K., & Hammond, A. (2003). Serving the world’s poor profitably. Harvard Business Review on corporate responsibility. Harvard Business School. Puaschunder, J. M. (2020a). Governance and climate justice: Global south and developing nations. Palgrave Macmillan and Springer Nature.

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Puaschunder, J. M. (2020b, September 28–29). The future of the city after COVID-19: Digitionalization, preventism and environmentalism. In Proceedings of the ConScienS conference on science & society: Pandemics and their impact on society (pp. 125–129). Puaschunder, J. M. (2020c, October 30). The Green New Deal: Historical foundations, economic fundamentals and implementation strategies. The FinReg Blog: Global Financial Markets Center Duke University School of Law Blog. https://sites.law.duke.edu/thefinregblog/author/julia-m-puaschunder/ Puaschunder, J.M. (2021a). Alleviating COVID-19 inequality. In ConScienS conference proceedings (pp. 185–190). Puaschunder, J. M. (2021b, June 21). Equitable Green New Deal (GND). In Proceedings of the 22nd Research Association for Interdisciplinary Studies (RAIS) conference (pp. 27–32). Puaschunder, J. M. (2021c). Focusing COVID-19 bailout and recovery. Ohio State Business Law Journal, 16(1), 91–148. Puaschunder, J. M. (2021d, March 1). Monitoring and evaluation (M&E) of the Green New Deal (GND) and European Green Deal (EGD). In 21st research association for interdisciplinary studies (RAIS) conference proceedings (pp. 202–206). Puaschunder, J. M. (2022a). Ethics of inclusion: The cases of health, economics, education, digitalization and the environment in the post-COVID-19 era. Ethics International. Puaschunder, J. M. (2022b). The future of Artificial Intelligence in international healthcare: Integrating technology, productivity, anti-corruption and healthcare interaction around the world with three indices. Journal of Applied Research in the Digital Economy. Puaschunder, J. M., & Beerbaum, D. (2020a, September 28–29). Healthcare inequality in the digital 21st century: The case for a mandate for equal access to quality medicine for all. In Proceedings of the 1st unequal world conference: On human development. United Nations. Puaschunder, J. M., & Beerbaum, D. (2020b, August 17–18). The future of healthcare around the world: Four indices integrating technology, productivity, anti-corruption, healthcare and market financialization. In Proceedings of the 18th research association for interdisciplinary studies conference (pp. 164– 185). Princeton University. Puaschunder, J. M., Gelter, M., & Sharma, S. (2020a, September 28–29). Alleviating an unequal COVID-19 world: Globally digital and productively healthy. In Proceedings of the 1st unequal world conference: On human development. United Nations. Puaschunder, J. M., Gelter, M., & Sharma, S. (2020b, August 22). COVID-19 shock: Considerations on socio-technological, legal, corporate, economic and governance changes and trends. In Research association for interdisciplinary

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The United States Congress, 116th Congress, 1st Session, House Resolution 109. (2019, February 7). Recognizing the duty of the Federal Government to create a Green New Deal. Washington, DC. https://www.congress.gov/116/ bills/hres109/BILLS-116hres109ih.pdf The White House of the United States of America. (2021a, July 26). Fact sheet: Biden-Harris administration marks anniversary of Americans with disabilities act and announces resources to support individuals with long COVID. https:// www.whitehouse.gov/briefing-room/statements-releases/2021/07/26/factsheet-bidenharris-administration-marks-anniversary-of-americans-with-disabilit ies-act-and-announces-resources-tosupport-individuals-with-long-covid/ The White House of the United States of America. (2021b). President Biden announces American rescue plan. https://www.whitehouse.gov/briefingroom/legislation/2021/01/20/president-biden-announces-american-rescueplan/ Trevino, L. K., & Nelson, K. A. (2004). Managing business ethics: Straight talk about how to do right. Wiley. United States Bureau of Labor Statistics. (2020, May 13). Unemployment rate rises to record high 14.7 percent in April 2020. https://www.bls.gov/opub/ ted/2020/unemployment-rate-rises-to-record-high-14-point-7-percent-inapril-2020.htm?view_full United States Centers for Disease Control and Prevention (CDC). (2020, December 17). Overdose deaths accelerating during COVID-19: Expanded prevention efforts needed (Newsroom releases). https://www.cdc.gov/media/ releases/2020/p1218-overdose-deaths-covid-19.html USASpending.Gov. (2020). The federal response to COVID-19. https://datalab. usaspending.gov/federal-covid-funding/#fn1. Last updated October 1, 2020. USASpending.Gov. (2021). https://www.usaspending.gov Werther, W. B., & Chandler, D. (2006). Strategic corporate social responsibility: Stakeholders in a global environment. Sage. Williams, G. (2005). Are socially responsible investors different from conventional investors? A comparison across six countries (Unpublished Working Paper) University of Bath. Wolff, M. (2002). Response to “confronting the critics.” New Academy Review, 1, 230–237. World Bank. (2020a, April). World Bank predicts sharpest decline of remittances in recent history (Press release). https://www.worldbank.org/en/news/ press-release/2020/04/22/world-bank-predicts-sharpest-decline-of-remitt ances-in-recent-history World Bank. (2020b, March 3). World Bank Group announces up to $12 billion immediate support for COVID-19 country response (Press release).

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CHAPTER 5

Environmental Financialization

Abstract This chapter captures the evolution of resilient finance in the environmental domain. Starting with the foundation of the United States Environmental Protection Agency (EPA), since the 1960s there has been a growing wave of public policies being evaluated on their whole-rounded socio-economic and ecological impact. The field of ecological economics and related topics in environmental economics, climate economics and political economies nowadays cover basic approaches to the relationships between ecological and economic systems. Behavioral economics started with outlining human decision-making deviations from rationality. Mental heuristics and biases were studied in field and laboratory experiments but also with the help of big data and online observations to retrieve powerful nudges to curb the harmful consequences of human decision-making or improve human fitness to adapt to the environment. For a bit more than 15 years, the behavioral economics approach was applied to the political context in the behavioral insights revolution. Behavioral Economics and Finance Leadership demonstrated how economics can be employed for the greater societal good. Most recently, leadership and followership directives make use of nudging and winking for the promotion of CSR and SRI. The most recent advancements of economics with an application in the public domain target at contemporary micro-, meso- and macroeconomic analyses of public choices in environmental decision-making. Leadership trainings more and more discuss environmental concerns © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. M. Puaschunder, The Future of Resilient Finance, Sustainable Development Goals Series, https://doi.org/10.1007/978-3-031-30138-4_5

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and the youth appears to take a stance on environmental preservation. Sustainable finance embraces a broad range of concepts such as socially responsible investing, climate financing, ESG investments, green financing, impact investing, carbon financing, energy financing, sustainable corporate finance as well as governance of sustainable financing and investing. Most recently, the research literature features impact investing and innovative financial instruments, such as microfinance and decentralized financing in cryptocurrencies as well as an emphasis on the implementation of the SDGs in the general mainstream market. Since the financial response to the Coronavirus crisis from 2020 on, sustainable finance has become center stage of the US Green New Deal and EU Sustainable Finance Taxonomy reform agenda. Particularly in Europe and the United States, the financial world has most recently seen a regulatoryenhanced transformation to sustainable finance. Advancements of the sustainable finance strategy or sustainable corporate finance are respective financial regulation and the standardization of sustainable finance practice. The EU Sustainable Finance Taxonomy holds the most comprehensive classification system to define sustainable or green investment product criteria. The Sustainable Finance Disclosure Regulation (SFDR) imposes mandatory ESG disclosure obligations for asset managers and other financial market participants. The European Green Bond Standard creates a voluntary European high-quality standard for public and private bond issuers to help finance sustainable investments. The EU Climate Transition Benchmarks address sustainability-related disclosures for benchmarks. Climate stabilization financialization pursues climate justice through fair burden-sharing strategies within society, between countries and over time. Most recently, green bonds have been discussed as innovative ways to enact climate justice. Green finance has become linked to economic development and environmental quality preservation. Contemporary Law & Economics analyses dissect climate inequalities and provide viable means in order to enact climate justice via financial redistribution and compensation patterns.

5.1

Economics of the Environment

In recent decades, there has been a growing interest in the role of economics in understanding and valuing environmental problems. Current environmental issues, such as climate change, biodiversity loss,

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land degradation, ocean acidification and freshwater use are introduced to be evaluated from an economic perspective. Starting with the foundation of the United States Environmental Protection Agency (EPA), since the 1960s there has been a growing wave of public policies being evaluated on their whole-rounded socio-economic and ecological impact. The hidden externality costs of environmental degradation were outlined in clean air, respiratory biohazards, environmental pollution and dirty drinking water or unhealthy food and cooking practices around the globe. From there followed a wave to guide economists to understand and capture the environmental impacts of economic policy-making through multiple approaches and analytical frameworks developed historically and by unconventional economists to frame and interpret these issues. Economics became a tool to better understand and value environmental protection. The application of ecological economic principles to environmental problem-solving guided policies targeting areas such as pollution and natural resources management around the globe. Economic analysis helped understanding and valuing the environment in order to examine problems of social and economic development with respect for environmental protection. The field of ecological economics and related topics in environmental economics, climate economics and political economies nowadays covers basic approaches to the relationships between ecological and economic systems, both traditional and alternative economic theories and worldviews. Ecological economics embraces environmental topics in economics and political economies. Basic approaches to the relationships between ecological and economic systems are addressing both traditional and alternative economic theories and worldviews. Today, the application of ecological economic principles to environmental problem-solving is presented in a set of policies targeting areas such as pollution and natural resources management. The relationship between the economy and the environment is scanned by stakeholder activism. The role of economic analysis in understanding and valuing the environment has been stressed in academia to examine approaches to problems of social and economic development, environmental and related policies. The United States National Academy of Sciences is seeking innovative ways how to include nature in national accounting. In the most recent decades, human decision-making heuristics were studied to show how nudging and winking can help citizens to make

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rational choices (Puaschunder, 2017d). Behavioral economics started with outlining human decision-making deviations from rationality, so-called heuristics or mental shortcuts. Heuristics were perceived as failures in the North American Behavioral Economics School, while the European tradition saw human decision-making as a successful strategy to cope with an overly complex world (Puaschunder, 2020a, 2021d, 2022a). Mental heuristics and biases were studied in field and laboratory experiments but also with the help of big data and online observations to retrieve powerful nudges to benefit from life and economic markets. Over time, a broad range of nudges and winks were developed to curb the harmful consequences of human decision-making or improve human fitness to adapt to the environment. Some techniques were communicated openly, while other behavioral insights informed more subliminal change strategies. For a bit more than 10 years, the behavioral economics approach was applied to the political context in the behavioral insights revolution (Puaschunder, 2020a). Behavioral Economics and Finance Leadership demonstrated how economics can be employed for the greater societal good. Most recently, leadership and followership directives on nudging in digitalized spaces emerged that appeal to scholars and policy-makers interested in rational decision-making and the use of nudging and winking for the promotion of CSR and SRI favorable choices (Pilaj, 2017). Nowadays, also digitalization and digital nudges offer unprecedented human advancement and democratization potential free from corruption to promote ethical choices (Puaschunder, 2020a). At the same time, shifting marketplaces to online virtual spaces opens gates for misinformation and disinformation being used in a competitive sense. Ethics of inclusion, Law and Economics advocacy and interdisciplinary dialogue building but also human-artificial intelligence algorithm compatibility are expected to become key advancements in behavioral economics and finance leadership with a humanitarian and democratizing flavor of the future. For instance, decentralized energy grids for a sharing economy that exchanges clean energy generated through solar panels are advancements that could revolutionize the energy sector. Sharing self-generated clean energy within communities and decentralized grids would help the broad masses to become more energy-independent of gas and oil. Avoiding energy storage problems and energy transportation costs could save on clean energy expenses and make developed economies more energy-efficient and hence more productive.

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The most recent advancements of economics with an application in the public domain target at contemporary micro-, meso- and macroeconomic analysis of public choices in environmental decision-making. By drawing from the historical foundations of political economy, environmental economics has also developed a critical stance on behavioral, economic and social sciences use for guiding on public concerns. Today’s students of economics are taught to investigate and scientifically propose analysis strategies on how to innovatively use and teach economics for the greater societal good. Heterodox economics take a stance in order to search for interdisciplinary improvement recommendations for the use of economics for global governance. Multi-methodological approaches help gain invaluable information about the interaction of economic markets with the real-world economy with direct implications for policy-makers alongside teaching upcoming scholars a broad variety of research methods and tools to conduct independent research projects for community development to live in harmony with the environment. Leadership trainings more and more discuss environmental concerns and the youth appears to have taken a stance on environmental preservation. The relationship between the economy and the environment becomes most apparent in climate change. Climate flexibility as the range of temperatures a country enjoys is believed to be a future wealth of nations and comparative advantage trade asset (Puaschunder, 2020b).

5.2

Sustainable Finance

Sustainable finance refers “to the process of taking due account of environmental and social considerations in investment decision-making, leading to increased investments in longer-term and sustainable activities” (Ahlström & Monciardini, 2022; European Commission, 2018, p. 2). Sustainable finance comprises the integration of sustainability in the finance world. As a means to implement sustainability but also as a stakeholder dialogue with the larger society on the role of finance for society, sustainable finance gives voice to a wide range of social constituencies and is a multi-faceted phenomenon of our times (Ahlström & Monciardini, 2022). Sustainable finance embraces a broad range of concepts such as socially responsible investing, climate financing, ESG investments, green

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financing, impact investing, carbon financing, energy financing, sustainable corporate finance as well as governance of sustainable financing and investing (Cui et al., 2020; Kumar et al., 2022). The evolution of sustainable finance is captured by Kumar et al. (2022), who content analyzed big data from research literature in the following chronology: Stemming from socially responsible investment from 1986 onwards, the concept of sustainable finance progressed into ethical investing and green financing (Kumar et al., 2022). From 2005 onwards came a wave of carbon financing literature and climate financing as well as conscious capitalism in CSR and ESG practices (Kumar et al., 2022). The 2008 World Financial Recession emerged an EU strategy to integrate ESG investments and sustainable finance practices into mainstream investment conduct (Ahlström & Monciardini, 2022). In the aftermath of the 2008 World Financial Recession, SRI grew due to sustainable finance reforms in the US and the EU in order to stabilize the macroeconomic performances of markets and as an alternative to short-term focused financial performance logic (Ahlström & Monciardini, 2022). Most recently, the research literature features impact investing and innovative financial instruments, such as microfinance and decentralized financing in cryptocurrencies as well as an emphasis on the implementation of the SDGs in the general mainstream market (Kumar et al., 2022). Over the last ten years, the European Union has engaged in regulatory initiatives to have a much more robust and resilient financial sector (Brühl, 2021). Since the vast response to the Coronavirus crisis from 2020 on, sustainable finance has become part of center stage of the US Green New Deal and EU Sustainable Finance Taxonomy reform agenda. The EU Sustainable Finance Taxonomy holds the most comprehensive classification system to define sustainable or green investment product criteria (Brühl, 2021). The Sustainable Finance Taxonomy highlights climate change mitigation and adaptation efforts, sustainable use and the protection of water and marine resources, the transition to a circular economy, the prevention of pollution and the protection of biodiversity and ecosystems (Brühl, 2021). The taxonomy aims at supporting investor decision-making, avoiding greenwashing and helping channel capital flows into meaningful and credible green products (Brühl, 2021). Although the Taxonomy Regulation came into force in July 2020, it is still considered a work in progress with Delegated Acts to follow (Brühl,

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2021). The broad-based recognition has leveraged sustainable finance options to nowadays account for a growing, sizeable share of the financial sector. The Sustainable Finance Disclosure Regulation (SFDR) imposes mandatory ESG disclosure obligations for asset managers and other financial market participants (Regulation (EU) 2019/2088). The SFDR requires asset managers and financial advisors to disclose how they consider sustainability risks in their investment process (Brühl, 2021). They also have to disclose principal adverse impacts (PAIs) on sustainability factors that an investment decision or advice might have (Brühl, 2021). The European Green Bond Standard (COM (2021)) creates a voluntary European high-quality standard for public and private bond issuers to help finance sustainable investments. Thereby green bonds qualify in which the funds raised by the bond have to be fully allocated to economic activities that are sustainable according to the Taxonomy Regulation (Brühl, 2021). Fund issuers must also report to a European Green Bond Allocation Report annually (Brühl, 2021). Compliance monitoring is external by reviewers registered and supervised by the European Securities and Markets Authority (Brühl, 2021). The EU Climate Transition Benchmarks addresses sustainabilityrelated disclosures for benchmarks (Regulation (EU) 2019/2089), which entered into force in December 2019 (Brühl, 2021). The Delegated Regulations ((EU) 2020/1816 and (EU) 2020/1817) for ESG disclosure came into effect in December 2020 (Brühl, 2021). The introduction of such benchmarks targets at enhancing transparency and comparability. These benchmarks are supposed to facilitate investments into diversified ESG portfolios with assets from issuers committed to decarbonization (Brühl, 2021). Advancements of the sustainable finance strategy or sustainable corporate finance are respective financial regulation and the standardization of sustainable finance practice (Soppe, 2004). Particularly in Europe and the United States, the financial sector has most recently seen a regulatoryenhanced transformation to sustainable finance (Ahlström & Monciardini, 2022). The European Union Sustainable Finance Taxonomy targets at reporting on the sustainability of finance issuers and originators of financial products (Zetzsche & Anker-Sørensen, 2022). Regulatory dynamics depend on the hybrid configuration of the social constituencies supporting sustainable finance reforms. Regulatory

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compulsion creates a shift toward an overall prevalence of social, environmental and ethical notions in business and finance as the most vital drivers of the vital sustainable finance revolution (Ahlström & Monciardini, 2022). Financial regulation is attributed to playing a key role in the emergence of sustainable finance (Ahlström & Monciardini, 2022). Financial organizations are also essential in supporting the rise of responsible investments (Lounsbury & Crumley, 2007). Academic discourse aids in identifying and measuring the socio-economic effects and impact of sustainable finance policies (Ahlström & Monciardini, 2022). Sustainable finance is a multi-stakeholder endeavor to meet public interests in resilient sustainability in the finance and banking world (Chiu, 2022). The Sustainable Finance Taxonomy requires financiers to make allocative decisions based on sustainable considerations, in order to steer economic activity toward sustainable outcomes (Chiu, 2022). The Sustainable Finance Taxonomy targets at measuring the sustainability impact and achievement of social goals of financial products and investment options in order to provide the market with information to make relevant decisions on the resilience of an option or financial entity. Apart from environmental footprints, corporations and investment issuing entities are thereby screened on a wider extent, for instance, if they follow good governance practices. Corporate governance with respect to sound management structures, employee relations, remuneration of staff and tax compliance are drivers of resilient finance solutions (Chiu, 2022). All these indicators and parameters are used to benchmark corporations in relation to each other. Overall, all these regulatory efforts to promote a resilient finance sector are exemplary and will likely advance into international standards in the future. Obstacles remain in the lack of incentive on the part of private sector actors in metrics development to deviate too much from short-term efficient market structures and conduct. All sustainability metrics measures must be placed in consistency with the governance of economic activity in general and uphold investment fund market standards. Oversight control in monitoring and evaluations as well as sanction mechanisms for greenwashing are potential ways to curb market downfalls in the implementation of the sustainable finance framework. Chiu (2022) proposes the European Securities and Markets Authority (ESMA) to lead a multi-stakeholder framework or committee, besides its stakeholder panel that feeds into general policy and rule-making, to be dedicated to the monitoring of sustainability metrics development for the

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holistic agenda of regulating corporate disclosure and financial product evaluation. Academia’s role in the sustainability metrics development may be to attract private sector leaders to engage with policy-makers and ESMA in the EU (Chiu, 2022). The EU leadership governs the Sustainable Finance Taxonomy metrics development in a multi-stakeholder manner in exchange with the key information intermediaries (Chiu, 2022). Data analysis on the profitability of sustainable investments in combination with an investigation of the relation and causation of sustainability factors with financial performance is needed. The adopted rules and standards may benefit from clear monitoring and accountability control (Zetzsche & AnkerSørensen, 2022). Additional work in sustainability metrics development may inform the investment sector of sustainable performance in the seed funding of FinTech and cryptocurrency development. Innovative sustainable financing instruments are found to become popular in financial markets if they are supported by formal and informal institutions raising consumer and corporate investors’ awareness, understanding and demand for benefits and costs of such financing and investing options in financial markets (Cui et al., 2020; Kumar et al., 2022). The disclosure rules are adopted throughout the cross-sectoral Sustainable Finance Disclosure Regulation (EU) 2019/2088. This EU regulation introduces mandatory disclosure for financial market participants and financial advisers on sustainability factors defined by the Taxonomy Regulation (hereafter SFDR) in all EU financial law legislation (Zetzsche & Anker-Sørensen, 2022). The revised Benchmark Regulation (EU) 2019/ 2089 added provisions on sustainability benchmarks to the EU rules on benchmark providers (Zetzsche & Anker-Sørensen, 2022). The proposed revisions to EU product distribution rules demand that sustainability factors are considered when assessing financial products by insurance distributors and investment firms (Zetzsche & Anker-Sørensen, 2022). An additional regulation addressing sustainability in finance in Europe is the proposed revision of Directive 2014/95/EU on non-financial reporting (NFRD) (Zetzsche & Anker-Sørensen, 2022). Zetzsche and Anker-Sørensen (2022) credit the Sustainable Finance Taxonomy Regulation to enhancing legal certainty and prospective comparability of sustainability-related disclosures. The authors yet remain skeptical toward the implementation of the taxonomy, which is speculated to require years and a concerted multi-stakeholder effort.

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Respective data is meant to validate emerging new sustainable finance benchmarks and models for investment as well as a risk management tool (Zetzsche & Anker-Sørensen, 2022). As the success of SRI was attributed to early first-mover advantages, regulators could foster sustainable finance through smart regulation tools, such as sandboxes and innovation hubs (Puaschunder, 2010; Zetzsche & Anker-Sørensen, 2022). In addition, waiver programs benefiting early adopters of sustainable finance modeling and models could become governmental tools to foster successful green technologies (Puaschunder, 2010; Zetzsche & Anker-Sørensen, 2022). Early first-mover advantages could also be enhanced via experimental financial regulation in FinTech and RegTech (Puaschunder, 2010, 2022a; Zetzsche & Anker-Sørensen, 2022). Further disclosure advancements could foster academic frameworks and scientific methodologies used for assessing the sustainability risks and the impact of their decisions on sustainability factors (Zetzsche & AnkerSørensen, 2022). The reliance on indices for capturing sustainability and carbon reduction throughout investment but also the benchmarking of sustainable finance products are areas of future regulatory and market development. Zetzsche and Anker-Sørensen (2022) advocate for sustainable finance reporting standards to aim at generating data and expertise on sustainability factors for regulators and financial intermediaries in order to support a transparent and profitable mainstream sustainable investment market. In the near future, the application of reporting standards should adopt new environmental regulation and standards (Zetzsche & AnkerSørensen, 2022). The Sustainable Finance Taxonomy should work toward the integration of these standards in generally-accepted reporting tools and standards—e.g., such as IFRS to streamline sustainability reporting (Zetzsche & Anker-Sørensen, 2022). Reporting entities should build expertise of meaningful and effective disclosures enhanced by respective software tools in place that collect, aggregate and report the data requested under the new frameworks (Zetzsche & Anker-Sørensen, 2022). Information brokerages and benchmark providers should help in the development and implementation of a useful scoring methodology and software in place that fosters consistency of new scoring models (Zetzsche & Anker-Sørensen, 2022). Financial intermediaries will build expertise in integrating sustainability investment decisions and risk management, which will stretch the spectrum of sustainable portfolios and risk management models (Zetzsche & Anker-Sørensen, 2022). Software

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advancements are advised for sophisticating data aggregation, analysis and application (Zetzsche & Anker-Sørensen, 2022). Supervisors of reporting entities can aid in developing and implementing data-driven supervisory tools but also train qualified and skilled staff for quality control and sanction enforcement (Zetzsche & Anker-Sørensen, 2022). Future long-term sustainable finance advancements comprise of improving the sustainable finance taxonomy in regulation on labeling as well as including new sectors and financial products (Zetzsche & Anker-Sørensen, 2022). Streamlining definitions and supporting green loans and mortgages as well as stretching the social taxonomy are additional action items to prosper sustainable finance in the future (Zetzsche & Anker-Sørensen, 2022). Sustainability risk measurement to further economic and financial resilience but also promoting financial reporting standards as well as including sustainability risks in credit rations are future endeavors to enhance sustainable finance. The future of sustainable finance will also benefit from modifying capital requirements for credit institutions and insurance undertakings in order to complement risk management environments for sustainability awareness with macro-prudential and environmental tools (Zetzsche & Anker-Sørensen, 2022). As a quality control, financial supervision should be enhanced and cooperation between all public authorities to monitor greenwashing strengthened (Zetzsche & Anker-Sørensen, 2022). Academia can aid in furthering knowledge exchange between researchers and the financial industry in order to advance the promotion of international sustainable finance initiatives and standards (Zetzsche & Anker-Sørensen, 2022).

5.3

Climate Stabilization Financialization

A warming earth under climate change is pressuring future generations’ living conditions. Never before in the history of humankind have environmental concerns in the wake of economic growth heralded governance predicaments as we face today (Puaschunder, 2020b). Climate change warranted a call for a fair climate stabilization solution and burden-sharing strategy within society, between countries and over time. Intergenerational equity to provide an at least as favorable standard of living to future generations as currently enjoyed challenges traditional economic utility discounting models. Trade-offs arise for today’s consumers and taxpayers between individual profit maximization and

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future societal welfare improvement under conditions of uncertainty and unperceivable outcomes for future beneficiaries. Climate change presents societal, international and intergenerational fairness as a challenge for modern economies and contemporary democracies. In today’s climate change mitigation and adaptation efforts, highand low-income households, developed and underdeveloped countries and overlapping generations are affected differently (Puaschunder, 2017a, 2017c). Public policies and monetary aid appear as the most common and efficient transfer mechanisms to alleviate environmental injustice. Innovative GND strategies unleashing a sustainable economy in harmony with equity pledges for a healthy population have become the core of COVID-19 rescue and recovery aid. Implementing the social cost of carbon has already been part of the U.S. President Obama administration’s plans for addressing climate change. The beginnings of the GND idea are attributed to Senator Edward Markey and Representative Alexandria Ocasio-Cortez pushing for transitioning the United States to use 100% renewable, zero-emission energy sources including investment into electric cars and high-speed rail systems (Puaschunder, 2020c, 2021a). In January 2019, a letter signed by 626 organizations in support of a GND was sent to all members of the United States Congress (Puaschunder, 2021a). The GND encourages to create jobs in green industries, thus boosting the world economy and curbing climate change at the same time (Puaschunder, 2021a). Economic foundations are grounded on John Maynard Keynes’ (1936/2003) spending multiplier effect, which proves governmental spending to trickle down in the economy and ignite positive transformative change at the same time via innovation and social equity. On the international level, emissions trading plays a role in order to incentivize corporations around the globe to reduce greenhouse gas emissions (Braga et al., 2020b). Green bonds are another strategy in the wake of the environmental efforts of the GND in order to raise funds internationally and over time for green transition innovations but also fund climate change mitigation and adaptation (Orlov et al., 2018). Within the country level, environmental pricing—foremost enabled via ecotaxation—curbs harmful emissions and sets incentives to reduce energy or transition to a renewable solution (Braga et al., 2020b). In the environmental sphere, the U.S. GND fosters global governance efforts in fiscal

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policy strategies targeted at a carbon tax to fund climate change mitigation and adaptation efforts (Braga et al., 2020a). Monetary and credit policies—foremost enacted by the Federal Reserve and implemented by public policy officials—foster the financialization of climate change mitigation and adaptation while counterbalancing inflation rate rises in the eye of climate disasters and their recovery financing (Braga et al., 2020a). GND insurance policies are trying to back underserved communities’ resilience that is challenged by ongoing environmental crises. The GND funding for R&D and governmental infant industry grants target at green market solutions, such as absorbing CO2 or ecowellness solutions. Behavioral insights can be used to steer positive change and environmental conscientiousness during purchasing decisions and living choices (Puaschunder, 2020a). As such sustainability can become lived throughout working, leisure and healthcare activities. Examples include sustainable tourism, intergenerationally conscientious living as well as asset allocation styles in socially responsible investment. Portfolio managers and asset funds management executives have caught up on this emerging trend of a rise in interest to align financial goals with sustainability pledges (Braga et al., 2020a; Puaschunder, 2013, 2015, 2018a). The results whether the environmental edge in economic stimulus will be successful or not will become visible long-term. Most of the measures and changes implied are long-term goals that will not be easily captured with our contemporary stress test methodology or public policy monitoring and evaluation tools. In order to get a sense of whether inequality is alleviated and the GND goals accomplishment plans are successful, it will be necessary to derive inference from two other major areas of change instigated by the GND and—of course—the passage of time. To structure the GND vigilantly, intergenerational decision-making is recommended that embraces the opinions of younger generations, who likely lead society in the long run (Puaschunder, 2017a, 2017b, 2018a, 2018b, 2019a, 2019b, 2019c). Most recently, green bonds have been discussed as innovative ways to enact climate justice. Bonds have been used throughout history to finance long-term strategies with unknown outcomes (Puaschunder, 2021c). In addition, banks could be encouraged to use the current profits for future large-scale investments that add societal long-term value. For example, large construction projects but also innovation in research and development are valuable macroeconomic multipliers that can benefit society

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as a whole in the short- and long-term (Epstein, 2020; Keynes, 1936/ 2003). Governments and intergovernmental bodies, like the European Union, have the long-term vision and financial freedom to operate on deficits but also the regulatory means to enact large-scale redistribution and long-term wealth creation in grand investments for the future. Green finance has become linked to economic development and environmental quality preservation (Zhou et al., 2020). Green finance was found to significantly improve the relationship between economic development and the environment as well as governments playing a crucial role in fostering this relationship (Zhou et al., 2020). Governments can provide the necessary policy support for green financial development in underdeveloped regions, lower the issuance and trading thresholds for green bonds and green securities, as well as prioritize initial public offerings of green concept companies, such as sustainable business endeavors and clean energy (Zhou et al., 2020). Since 2007 there has been a steady rise in carbon taxation and green bond issuance (Flaherty et al., 2017; Heine et al., 2019; Semmler et al., 2021). Throughout the world, some countries engage primarily in carbon pricing, some in green bonds. Foremost the U.S., Europe, China, Australia, South Africa, and the Southern parts of Latin America feature a mixture strategy comprised of carbon pricing and green bonds (Semmler et al., 2021). Portfolio and hedge fund managers strive to reduce risks to the overall portfolio with green bonds in the short and long run (Braga et al., 2020b). Capital markets can expedite green investments by de-risking innovative green finance (Braga et al., 2020b). The financial benefits of green bonds include a de-risking of investor portfolios and a diversification strategy against market volatility (Semmler, 2021). Braga et al. (2020b) find that empirical beta pricing and yield estimates reveal some public involvement in the green bonds market, especially for long-maturity bonds. Investment options—based on renewable energy— can reduce the risks and political dependencies on commodities associated with non-renewables (Gevorkyan & Semmler, 2016). Renewable energy is a crisis-stable market option for being chosen based on ethical values (Puaschunder, 2010). Climate bonds incentivize a transition to renewable energy solutions (Semmler, 2021). Subsidies and carbon taxation can complement the role of the de-risked interest rates and expedite the energy transition (Braga et al., 2021). The recent World Bank Report on green bonds and climate taxation (Semmler et al., 2021) outlines that carbon pricing and green

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bond initiatives are growing but still concentrated in high-income countries (especially Europe) and China (classified as upper-middle income). A tax-and-bonds strategy, in which relative climate change gains are redistributed, could open the market and motivate even internationallydeveloping parts of the world to participate in order to be funded for their low CO2 emissions production and consumption levels in comparison with advanced countries. To this day, most green bonds tend to be project-specific and a new infant market operation (Semmler, 2021). Governance on green bonds and the current experience with sustainability and resilience financing in the Green New Deal, European Green Deal, and the Next Generation EU will determine the future of green energy in learning-by-doing of sector-specific but also long-run outcomes (Semmler, 2021). Most recently green bonds have been promoted as an innovative climate stabilization strategy (Puaschunder, 2016, 2017a; Sachs, 2014; Semmler et al., 2021). Green bonds are, in most cases, governmental bonds. Issuance of a bond is taking a loan or getting credit to be repaid in the future. The issuer of bonds establishes the bond for bond buyers. Investors who purchase these bonds can expect to make a profit as the bond matures. The bond pricing and yields of bonds depend on the underlying cause and/or asset risk. An issuer of bonds that show high yields indicates that the fund carries high risks of being repaid. Borrowing money can only be issued by paying a risk premium, which entails the yield containing a risk premium. Risk can also mean negative externalities that others have to pay sometimes in the future, which is already internalized in the bond yield today. In green bonds, borrowers issue securities to secure financing for projects with positive environmental impact, such as climate stabilization and a transfer to renewable energy solutions. Green bonds are mainly issued by central banks, which identify qualifying assets or loans which meet sustainability criteria. Tax benefits are often granted for investing in green bonds. In climate bonds, funds with high risk are often those with uncertain outcomes of climate protection, new green energy innovations, disaster risk, etc. Financing climate change mitigation and adaptation will have different targets—while mitigation has global effects, adaptation is more focused on overcoming the adverse local impacts of global warming, such as disasters that tend to be more regional. Climate bonds can reduce global

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climate risk and contribute to the overall economy, for example, in environmental protection and de-risking the economy (Bolton et al., 2020; Braga et al., 2020b). Green bonds can also be used for transitioning to a clean energy economy or funding innovation (Puaschunder, 2016). For example, green bonds can kick-start ideas representing green energy and/ or avoiding disasters, thus carrying a high yield and rewards in the long run. Another approach to raising funds for transitioning to a green economy takes a closer look at the macroeconomic impacts and economic growth prospects under global warming. Effects of climate change vary around the world and are likely to impose considerable economic prospect changes, which will increase over time as global temperatures increase (Lomborg, 2021). Global warming will likely cause relative economic gains and losses, distributed unequally throughout the world and over time (Lomborg, 2021; Puaschunder, 2020b). Economic research has elucidated the economic impact of climate change on the world and found stark national differences (Burke et al., 2015; Puaschunder, 2020b). Burke et al. (2015) estimate how climate change will affect GDP per capita. In addition, the International Monetary Fund (IMF) conducted a cross-country analysis of the long-term macroeconomic effects of climate change and found country inequalities in global warming effects (Kahn et al., 2019). One translation of climate change gains and losses in burden-sharing contribution schemes is usually defined in Nordhaus’ Regional Integrated model of Climate and the Economy model (RICE model). This regional, dynamic, generalequilibrium model of the economy integrates economic activity with emissions levels as the primary driver of human-made climate change (Orlov et al., 2018). Puaschunder (2020b) measured the Gross Domestic Product (GDP) prospect differences under climate change worldwide and found exacerbating climate inequalities. Puaschunder (2020b) introduced a climate change winners and losers index, representing relative economic climate change windfall gain reaper and victim countries, based on the economic prospects under climate change around the world and over time. The model assumes that there are relative economic climate change reapers that have a windfall gain from a warming globe while other relative economic climate change victims face immediate disadvantages due to global warming. The model primarily focuses on shedding light on the inequality in countries and regions of the world exacerbated by climate

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change determining economic prospects. The index attributed relative economic gain and loss prospects based on the medium temperature per country and the optimum temperature for economic productivity per GDP agriculture, industry, and service sector, and the GDP sector composition per country to determine how far countries are deviating from their optimum productivity levels on a time scale (Puaschunder, 2020b). It is to note that the ‘relative economic climate change windfall gain reapers and victims’ are categories on a spectrum, that the gain and loss perspective addressed only concerns GDP growth and that the gains/ losses distribution are windfall/victim categories that countries did not accomplish or chose willingfully. Gains and losses are somewhat random distributions throughout the world. It is sheer luck in the birth lottery where one falls into. Climate justice addresses inequalities inherent in global warming with a mandate to alleviate imbalances and enact fairness regarding climate benefits and burden sharing. To alleviate inequalities in climate change impacts between countries, ethical imperatives of Immanuel Kant’s categorical imperative (1783/1993) and John Rawls’ veil of ignorance (1971) but also economic calculus as put forward in Kaldor-Hicks’ compensation criteria guide redistribution schemes (Law & Smullen, 2008). Following ethical considerations of Immanuel Kant’s (1783/1993) categorical imperative and John Rawls’ (1971) veil of ignorance, the climatorial imperative was formulated to advocate for the need for fairness in the distribution of the global earth benefits among nations (Kant, 1783/1993; Puaschunder, 2022b). Based on Kant’s imperative proposing to “Act only according to that maxim whereby you can at the same time will that it should become a universal law,” no climate harm should be done to any country independent of a country’s position on the relative economic climate change gains windfall reapers and victims’ spectrum (Kant, 1783/1993, p. 30). Passive neglect of action on climate mitigation is an active injustice to others based on the climatorial imperative (Puaschunder, 2022b). Moral and ethical guidelines may be enhanced with the Kaldor-Hicks Compensation Criteria. The Kaldor-Hicks test for improvement potential within a society aims to move an economy closer toward Pareto efficiency (Law & Smullen, 2008). Kaldor-Hicks’s criteria assume that any change usually makes some people better off and others worse off

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at the same time and tests if this imbalance can be alleviated by relative economic climate change windfall gains reapers compensating climate change victims for the change in conditions. Applying the Kaldor criterion in the context of taxation and bonds would serve as an example by which the economy moves closer to Pareto optimality if the maximum number of gainers are prepared to pay the losers and to agree that the change is greater than the minimum amount losers are prepared to accept. In the Kaldor-Hicks’s criteria, both sides must also agree that the benefits exceed the costs of such action. The fungibility of compensation (money will always be there) while there are irreversible lock-ins and tipping points in environmental degradation (climate may be irreversibly locked in and degrade living conditions in a nonlinear trajectory) point to action against climate change at the expense of repayable monetary costs. The Kaldor-Hicks compensation can be applied to environmental constraints regarding climate change. As economic gains and losses from a warming earth are distributed unequally around the globe, ethical imperatives lead to the pledge to redistribute gains to losing territories in the quest for climate justice. Climate justice comprises fairness between countries but also over generations in a unique and unprecedented taxand-bonds climate change gains and losses distribution strategy. Climate change winning countries are advised to use taxation to raise revenues to offset the losses incurred by climate change. Climate change victims could be incentivized to receive bonds that have to be paid back by future generations. Regarding taxation within the winning countries, foremost, the gaining GDP sectors should be taxed. Those who caused climate change could be regulated to bear a higher cost through carbon tax combined with retroactive billing through a corporate inheritance tax to map benefits from past wealth accumulation that potentially contributed to global warming. A corporate inheritance tax could raise funds if there is a merger and/or acquisition or a takeover of a corporation, which would allow quasi-retroactive taxation of past corporate activities that may have caused greenhouse gas emissions. Climate justice within a country should also pay tribute to the fact that low- and high-income households share the same burden proportional to their dispensable income, for instance, enabled through progressive carbon taxation and a carbon consumption tax.

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For the Kaldor compensation to work effectively, the relative economic climate change windfall gain reapers and climate change victims must also agree that the benefits of a commonly agreed-upon compensation scheme exceed the costs of such action. International cooperation and/or significant participation are crucial ways to internalize global externalities, avert climate change, and agree upon a commonly-pursued rescue and resilience plan (Nordhaus, 1994; Puaschunder, 2022b; Semmler, 2021). Aside from free-rider problems and penalties for non-compliance, a novel climate taxation-and-bonds strategy could help to redistribute climate change gains and raise widespread momentum for a transition to a zerocarbon global economy based on the notion that the redistribution is fair. A novel policy recommendation for enacting climate justice entails a taxation funding strategy coupled with a climate bonds repayment based on the following influence factors: (1) the country’s initial position on the relative economic climate change windfall gains and losses index spectrum as well as (2) a country’s climate flexibility as a broad economic degree of freedom spectrum and future trade benefit and (3) the country’s human-made contribution to climate change as measured by CO2 emissions but also the (4) ability and willingness of a country to change its CO2 emissions in relation to others and (5) the estimated bank lending rate of bonds in that country as well as (6) the consumption-based, tradeadjusted CO2 emissions of a country. A country’s responsibility to act on climate change could be determined by (1) the past financial crisis intervention expertise and (2) its capability to administer future-oriented resilience finance, as well as (3) the country’s science diplomacy and (4) its global connectivity in international trade and human capital flows. As Puaschunder (2020b) found in a worldwide dataset over all countries, being a relative economic climate change gain windfall reaper country and emissions are related. The relation between GDP growth prospects in light of climate change and the percentage of greenhouse gas emissions (GHG) for ratification was investigated based on the total and percent of GHG emissions communicated by the Paris COP21 Parties to the Convention retrieved in their national communications and displayed in GHG inventory reports as of December 2015. Over a global sample of 181 countries, a highly significant correlation between a relative economic climate change gain windfall reaper country and the self-reported percentage of GHG emissions for ratification was found (Puaschunder, 2020b). As a cross-validation check, the percentage of

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GHG emissions for ratification was significantly positively correlated with self-reported GHG emissions per country (Puaschunder, 2020b). This result leads to the conclusion that those countries that emit more GHG are the ones with a positive GDP prospect on the warming earth until 2100. The more time countries seem to have a favorable production climate, the more likely they are to emit GHG and contribute to global warming (Puaschunder, 2020b). All indices build on the insights that relative economic climate change windfall reaper countries are more likely responsible for human-made climate change. Diversified financing of common green bonds with a unique incentive scheme for carbon reduction is a new method to share the burden and the benefits of climate change within society in an economically efficient, legally equitable and practically feasible way. In solving the climate change predicament, the law offers an ethicallygrounded climate justice justification of redistribution mechanisms within society, around the world and between generations in order to avert climate inequality. Intergenerational equity ethics back legal redistribution schemes to avert climate change-induced inequality. From a practical standpoint, legal foundations help global governance and governmental action alleviate inequality. Sophisticated comparative legal analysis methods highlight regulatory peculiarities’ impact on different living conditions on the societal, national and generational levels. Legal disparate impact analyses opening aggregate macroeconomic calculus shed important light on the unequally-distributed burden of external environmental shocks on specific societal groups, various world nations and different generations. Law & Economics can address vulnerable groups on whom sustainability pledges place a disproportionate burden, which fosters the Sustainable Development Goals on a granular but widespread level. Long-term oriented economic prospect discounting and productivity measurement around the world can quantify climate change-induced inequalities. Gross Domestic Product (GDP) prospect differences under climate change based on the optimum temperature for economic productivity and GDP sector composition per country reveal relative country differences on the economic climate change gains and loss spectrum (Puaschunder, 2020b). Climate flexibility—defined as the range of temperature variation per country—determines the future climate wealth of nations based on economic production and comparative trade advantages (Puaschunder, 2020b). The economic analysis of the economic

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gains and losses of a warming earth around the world, but also an economic estimation of future trade prospects in light of global warming, help quantify how to enact climate change burden-sharing fairness in legally-instigated redistribution and compensation schemes. A Law & Economics analysis can dissect climate inequalities and provides viable means in order to enact climate justice via redistribution and compensation. First, climate justice within a country ensures that low- and high-income households carry a proportional burden in terms of disposable income enabled through progressive carbon taxation. Consumption tax curbs harmful behavior. A corporate inheritance tax reaps the benefits of past wealth accumulation that caused climate change. Secondly, fair climate change burden sharing between countries ensures those countries economically benefiting from a warmer environment also bear a higher responsibility regarding climate change mitigation and adaptation efforts. Thirdly, climate justice over time can be enabled in climate bonds financed via debt that is paid back by future generations who inherit a favorable climate in lieu, which distributes the benefits and burdens of a warming earth Pareto-optimally among generations. Direct Law and Economics-driven innovations to find economicallyfeasible and judicially-fair climate financialization methods are introduced in tax-and-bonds strategies. An international climate regime could feature countries raising funds via taxation or becoming bond premium beneficiaries. A country’s propensity to either grant the taxation-and-bonds solution via taxation or be a bonds payout recipient could be determined by a country’s initial position on the climate change economic gains and losses spectrum, regular and consumption-based, trade-adjusted CO2 emissions per country, climate flexibility as the range of temperatures within a national territory as future comparative trade advantage to other nations in the world, the willingness of countries to change CO2 emissions and the historically-determined banking lending regimes of a country. The idea of diversified tax-and-bonds is also extendable to sector-specific bond yield interest rate regimes. Within a country, the bonds could offer industry-specific diversified interest rate maturity bond yields based on the environmental sustainability of an industry, e.g., as measured by the European Sustainable Finance Taxonomy. The bonds could also feature a long-time financialization via debt that can be repaid by future generations for inheriting a stable climate. All these Law & Economics-informed recommendations aim at sharing the burden but

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also the benefits of climate change within society in an economicallyefficient, legally-equitable and practically-feasible way now around the world and also between generations. A country’s starting ground on the relative economic climate gains and losses spectrum, a country’s climate flexibility, and a country’s CO2 emissions contributions to production and consumption levels, as well as a country’s CO2 emissions levels changes and the bank lending rate, will determine whether a country will be on the taxation regime for funding mutual climate stabilization or whether a country will be on the receiving end of climate bonds solutions. Pegging the country’s situation to the initial starting levels on rational grounds and relations to each other allows for turning the general price-cutting competitive race-to-the-bottom into a race-to-the-top for the mutual climate fund allocations. Integrating the CO2 emissions levels changes over time imbues incentives to change harmful behavior to this common climate fund solution. The more a country lacks financial crisis intervention expertise and the less likely a country is able to administer future-oriented resilience finance, as well as the less likely the country engages in science diplomacy and is globally connected in trade and human capital flows, the more the country should follow a climate resilience finance solution that features climate taxation-and-bonds redistribution schemes around the world. An international climate change fund could be based on ten indices that integrated the relative country’s initial position on the relative economic climate change gains and losses index spectrum, and a country’s climate flexibility understood as the future climate wealth of nations trading assets in combination with CO2 emissions production and consumption levels as well as changes in CO2 emissions over time and the bank lending interest rate per country (Puaschunder, 2022b). The more a country has historic financial crisis intervention expertise and is able to administer future-oriented resilience finance, the more a country should face the responsibility to protect from climate change on a global level. The more a country engages in science diplomacy and is globally connected in trade and human capital flows, the more the country should be predestined to support a common climate resilience finance solution that features climate taxation-and-bond redistribution schemes around the world. An overall redistribution key could be introduced to determine per country transfers based on the relative climate change economic windfall

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gain reaper or victim status and climate flexibility as well as the contribution to the climate change problem measured per country and over time by CO2 emissions of production and consumption as well as CO2 emission changes and the bank lending rate per country. For the redistribution scheme to work, those countries with climate change losing prospects and low ranges of climate flexibility, as well as low CO2 emissions in production and consumption as well as decreasing CO2 emissions and high bank lending rates, could be granted climate bonds prospects with high bond yield rates that are financed by countries that have relative economic climate change winning prospect and high ranges of climate flexibility as well as high CO2 emissions in production and consumption as well as increasing CO2 emissions trends and low bank lending rates via taxation. Countries in the middle of the original climate change winners and loser index spectrum with medium climate flexibility levels as well as medium rates of CO2 emissions in production and consumption or non-changing CO2 emissions rates and medium bank lending rates should have a mixture strategy of taxation and bonds with moderate bond yield rates. Those countries that are relatively high climate change economic windfall gain reapers on the winners and loser index spectrum that have high climate flexibility as well as have high rates of CO2 emissions in production and consumption and increasing CO2 emissions level, as well as low bank lending rates, should issue bonds funded by taxation that offer high bond yield rates in countries with climate change losing prospect and low ranges of climate flexibility as well as low CO2 emissions in production and consumption and decreasing CO2 emissions as well as high bank lending rates. The historic financial crisis intervention and future-oriented resilience finance expertise should determine the leadership responsibility a country holds to act on climate change. The more a country engages in science diplomacy and is globally connected in trade and human capital flows, the better the starting ground to lead the world to find a common climate gains redistribution scheme based on climate taxation and bonds. The idea of differing climate bond regimes is also extendable to sectorspecific bond yield interest rate regimes. On a country level, high CO2 emitting industries could face climate taxation in order to set market incentives for a transition to renewable energy. The revenues generated from the taxation of carbon-intensive industries should be used to offset climate change losses and subsidize climate bonds.

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Within a country, the bonds could be offered by commissioning agents, such as local investment banks, who could install industryspecific premium bond payments and maturity bond yields based on the environmental sustainability of an industry, e.g., as measured by the European Sustainable Finance Taxonomy. The more sustainable an industry performs; the higher bond yield should be granted in sector-specific interest rate regimes within a country. This strategy should set positive market incentives via subsidies. Funding industries for not polluting could change the traditional race-to-the-bottom price-cutting behavior driving CO2 emitting energy supply to have industries compete over subsidies for using clean energy. In this way, bond yield differences between industries could set positive market incentives for transitioning to renewable energy and sustainable productivity solutions. An in-between country regime could enact fairness on the different starting grounds of countries as relative economic climate change windfall gain reapers or victims coupled with incentivizing countries and/or corporations to compete over better bond conditions. Incentives could thereby target at lowering CO2 emissions or subsidizing corporations to move production to places that are climate victims in order to help revitalize economies that have a shrinking prospect under climate change. The proposed endeavors account for a first step in balancing out the worldwide climate inequality in alleviating the relative economic climate change windfall gains via redistribution. Future index extensions could also address the CO2 emissions levels per capita and CO2 emissions changes per citizen. Future research could refine the variegated impact of climate, weather and coastal risk as a future economic determinant in order to lead toward a more just balance of economic gains and losses around the world, also per capita on the most granular level. The effectiveness of policies will depend on the national circumstances, the design, interaction, and stringency in the implementation (Kato et al., 2014; Semmler, 2021). Integrating climate policies into broader development agendas will also require to be attentive to the local regulations and standards, the prevailing tax regime and carbon consumption charges, tradable permits, and financial incentives but also voluntary agreements, information instruments, and future research and development (Semmler, 2021). Especially the improvement of new technologies will be essential for transforming the energy sector for a broad-based renewable energy sector establishment (Mazzucato, 2013; Semmler, 2021). Government initiatives to fund and subsidize the transition to renewable energy via

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research and development-enhanced innovations are needed (Mazzucato, 2013). The respective technologies are expected to become more efficient and less cost-intensive over time (Braga et al., 2020a; Flaherty et al., 2017; Heine et al., 2019; Mazzucato, 2013; Semmler et al., 2021). The effectiveness of finance and markets for this transition to a lowcarbon economy depends on attracting investors and removing financial market roadblocks (Braga et al., 2021). While many recent studies find yield differentials between green bonds and conventional funds, Braga et al. (2021) highlight that green bond returns might be mixed with conventional bonds. Braga et al. (2021) emphasize that green bonds protect investors from oil price and business cycle fluctuations as well as stabilize portfolio returns and volatility. In the long run, green bonds benefit the economy and generate positive social returns even if these assets currently may only have lower yields (Braga et al., 2021). Green bonds can thus be justified not only from the point of view of climate protection and climate disasters avoidance but also by endogenous growth theory (Aghion & Howitt, 1992, 1998; Arrow, 1962; Braga et al., 2021; Kaldor, 1961; Lucas, 1988; Romer, 1986, 1990; Uzawa, 1965a, 1965b; Vitek, 2017). The currently-ongoing Coronavirus crisis offers the unique historical potential to peg all-time-high governmental rescue and recovery packages to environmental long-term causes (Puaschunder, 2021b). The United States Green New Deal, as well as the European Green Deal and Sustainable Finance Taxonomy, will grant unprecedented opportunities to scale up green investments through green bonds as part of a fiscal program to move out of the current pandemic recession. While there has been a macroeconomic debate about the monetary size of the current governmental rescue efforts and if the largess of governmental aid may trigger inflation and unbearable debt levels, the heterodox need for a diversified view and disparate impact of inflation and longest-ever, lowest-ever interest rate regime become apparent at the same time (Brunnermeier Academy at the Princeton Bendheim Center for Finance; Puaschunder, 2021b). Future work could address the normative implications of the developed insights. For instance, in future research, the European Taxonomy for sustainable activities could serve as the basis of CO2 emissions per industry measurements and thereby lead to a respective redistribution key between industry contributions to the climate change problem (European Union Technical Expert Group on Sustainable Finance, 2020).

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Additional layers of inequality should be explored in future Law and Economics analyses of the problem, for instance, in disparate impact studies but also international law and development angles, for example, in the different levels of resilience watch of moving coastlines between the developed and undeveloped nations. Migration as a coping mechanism in regard to climate change may offer additional future prospective research avenues and index parameters to be added in future extensions of the presented model. Future open research questions are the economic validation and measurement of positive and negative externalities of all these endeavors over time and a disparate impact assessment, which can be granted by a truly heterodox viewpoint (Woo, 2021). Methodological heterodoxy could open the spectrum of macroeconomic models with a more comprehensive treatment of preferences, the climate sensitivity of infrastructure, as well as different technologies’ impact on the success of climate mitigation and adaptation policies (Mazzucato, 2013). The overall social context should be explored further in post-Keynesian analyses of the presented problem solutions to estimate the political salience of climate change redistribution endeavors and a widespread transition to sustainable resilient finance.

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CHAPTER 6

The Future of Resilient Green Finance

Abstract This chapter provides an overview of recent resilience finance developments that embrace the relation of financial stability in harmony with the environment. Sprung out of SRI and socially conscientious market acts that are of benefit to the greater public, green finance marries the idea of leveraging financial assets for environmental causes. The United Nations Global Compact and the UN Environment Programme (UNEP) Finance Initiative launched the Principles for Responsible Investment (PRI) in April 2006 at the New York Stock Exchange (NYSE) to ingrain social responsibility in investment decision-making of asset owners and financial managers. In February 2008, the UN Conference on Trade and Development (UNCTAD) incepted the ‘Responsible Investment in Emerging Markets’ initiative at the Geneva PRI office. The United Nations Environment Programme Finance Initiative (UNEP FI), the Equator Principles, The Green Bond Principles and corporate reporting standards led initiatives such as Global Reporting Initiative (GRI) and Integrating Reporting (IR). In the wake of the 2015 inception of the UN Sustainable Development Goals (UN SDGs), the UN targeted at finding finance to embrace environmental, social and governance issues in light of fiduciary duty. The United States Stock Exchange Commission seeks to further support the PRI and consider innovative ways how to imbue a greening of the economy in financial markets. A group of central banks and supervisors launched the Networking for © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. M. Puaschunder, The Future of Resilient Finance, Sustainable Development Goals Series, https://doi.org/10.1007/978-3-031-30138-4_6

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Greening the Financial System (NGFS) in 2017 to contribute to the analysis and management of climate and environment-related risks in the financial sector and mobilize mainstream finance to support a transition to a sustainable economy. Sustainable development impact reporting highlights sustainable development criteria such as environmental and social standards. In Europe, the Next Generation EU and the European Green Deal are notable developments at the forefront of green finance. The European Finance Taxonomy offers a system to classify which parts of the economy can be considered as sustainable investments. Today insurance sectors, general banking and credit regulation but also mutual funds development as well as foreign direct investments and trade policies have become intertwined with the idea of environmental stability as a key to prosperity. Green banking is becoming popular in the pursuit of reducing greenhouse gas emissions and increasing the resilience of society to negative climate change impacts while considering sustainable development goals in inclusive growth and equal opportunities. Central banks and financial regulators play a pivotal role in mainstreaming green finance and making sure climate-related risks are properly measured, verified and reported. In response to a growing awareness of the economic impacts of global warming and cognizant of the regulatory and supervisory gap in green finance, a growing number of central banks and regulators around the world are addressing climate change and environmental risks faced by the banking and financial sector. Notable is the Prudential Regulation Authority (PRA) within the Bank of England which addresses the widespread economic impact of climate change on society. Global governance institutions play a crucial role in implementing resilient finance as well. Comprised of all nations of the world, global governance entities have the capacity to instigate the idea of a ‘Global Green New Deal,’ which could globalize a binding taxation-and-bonds solution for redistribution to alleviate environmental inequalities. Green bonds could thereby help finance renewable energy availability. Green FinTech includes environmental innovations in the domains of artificial intelligence, big data analysis, the internet of things and blockchain technology. The role of Green FinTech and the sustainability of cryptocurrencies in money and banking is currently debated. Ethical concerns arise from the use of cryptocurrencies for the private exploration and colonization of space, which rises legal concerns, environmental risks and human species impacts as well as moral dilemmas.

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Institutional Landscape

Today corporate conduct contributes to environmental causes in a globally responsible and sustainable way by means as never before experienced. Corporations that join the environmental wave are pursuing concomitant tangible (profit gain, efficiency, product innovations, market segmentation) and intangible (reputation, employee morale) benefits. The drive to engage finance for environmental goals has manifold proponents. The United Nations (UN) plays a pivotal role in promoting SRI. In 2004, the UN invited a group of leading financial institutions to form a financial responsibility initiative under the wing of the United Nations Global Compact (UNGC). In January 2004, the UN attributed the key role of the financial sector in meeting the UNGC’s objectives. Subsequently, a group of leading financial institutions were invited to form a joint financial sector initiative under the guidance of the UNGC Board. This forum was set up to discuss ways in which financial investment banks and fiduciaries can consider and implement social responsibility as a risk management tool. In associated research units, the initiative developed guidelines and recommendations on how to integrate environmental, social and corporate governance in asset management and securities brokerage services. To advance financial social responsibility, the UN launched ‘The Principles for Responsible Investment’ (PRI) at the NYSE in April 2006. The UNGC and the UN Environment Programme (UNEP) Finance Initiative launched the Principles for Responsible Investment (PRI) in April 2006 at the New York Stock Exchange (NYSE) to ingrain social responsibility in investment decision-making of asset owners and financial managers. The PRI are supported by the UNGC Conference Board, the chief executive officers of 20 global corporations, the International Finance Corporation of the World Bank Group, the Swiss Government, Columbia University and the UNEP Finance Initiative. Under the auspice of the UNGC and the UNEP Finance Initiative, the PRI invite institutional investors to consider SRI and mobilize chief executive officers of the world’s largest pension funds to advance SRI on an international level. In the Scandinavian and English-speaking context, pension funds are likely to engage with responsible investments, especially public pension funds (Sievänen et al., 2013). The principles are designed to place financial social responsibility into the core of investment decision-making of financial managers and asset

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owners of pension funds, foundation assets and institutional endowments. At the one-year anniversary of the PRI, more than 170 institutions representing approximately US $8 trillion in assets had committed to the PRI. Corporations that join the PRI report manifold benefits ranging from economic gains to more intangible assets, such as reputation and market gain as well as attracting ethical employees. The Principles for Responsible Investment (PRI) were launched as part of the UNGC to encourage institutional investors to embrace SRI. This initiative develops guidelines and recommendations on how to integrate environmental, social and corporate governance in financial markets and how financial investment banks and fiduciaries can implement social responsibility goals as a risk management tool. The PRI have established stakeholder saliency due to pragmatic and organizational legitimacy, normative and utilitarian power as well as management values (Majoch et al., 2017). Based on the idea to unite asset owners in their quest for responsible investment (RI), the United Nations Principles for Responsible Investment (PRI) have grown substantially up to 1500 fee-paying signatories (Hoepner et al., 2021). Today, the PRI’s signatories hold assets worth more than $80 trillion, making it one of the more prevalent not-for-profit organizations worldwide (Hoepner et al., 2021). Regulative, normative and cultural-cognitive factors influence an asset owner’s decision to subscribe to the PRI (Hoepner et al., 2021). Institutional environments with a higher number of pre-existing mandatory ESG regulation decrease the likelihood of signing the PRI (Hoepner et al., 2021). Hoepner et al. (2021) conclude that a high level of historical mandatory legislation may constrain organizational resources that could otherwise be dedicated to voluntary initiatives such as PRI. Actual asset owners are attributed as probably the most influential type of institutional investor, who have inspired many academic studies on the adoption and implementation of SRI (Hoepner et al., 2021). The cognitive–cultural aspect of the asset owner’s institutional setting has an influence on its participation in an initiative like the PRI (Hoepner et al., 2021). As another successful initiative of the United Nations, in February 2008 the UN Conference on Trade and Development (UNCTAD) launched the ‘Responsible Investment in Emerging Markets’ initiative at the Geneva PRI office in order to enhance the transparency of emerging financial markets. This PPP targets at fostering transparency and disclosure of emerging financial markets. The key constituents are the stock

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exchange and financial analyst communities as future SRI drivers to support the UNGC goals. In addition, NGOs are invited to advance financial market transparency and accountability. In the future, the world’s leading Stock Exchange Commissions will seek to further support the PRI and consider innovative ways to partner with the UNGC. The United Nations Environment Programme Finance Initiative (UNEP FI), the Equator Principles, The Green Bond Principles and the various corporate reporting-led initiatives such as Global Reporting Initiative (GRI) and Integrating Reporting (IR) are—for instance—UN responsible investment activities. In light of the rising climate change awareness and demand for an economically-efficient transition into renewable energy, the UN-led Earth League hosts the Climate Risk and the Finance Sector working group in partnership with United Nations Environment Programme Finance Initiative (UNEP FI), the World Resources Institute (WRI) and the Global Challenges Foundation. The UNEP FI is a global partnership between the UNEP and the financial sector. Over 200 institutions, including banks, insurers and fund managers, work together with UNEP to capture the mutual impacts of environmental and social considerations on financial performance. The United Nations Global Compact embraces constituents of the stock exchange and financial analyst communities as future SRI drivers. In addition, NGOs are invited to advance financial market transparency and accountability. SRI and in particular green investments have been at the forefront of financing causes at the heart of the Sustainable Development Goals (SDGs). The UN launched the Millennium Development Goals and is currently pursuing the Sustainable Development Goals (SDGs) since 2015. In the wake of the 2015 inception of the UN Sustainable Development Goals (UN SDGs), the UN targeted at finding finance to embrace environmental, social and governance issues in light of fiduciary duty. Several UN SDGs directly touch on environmental development and green finance. For instance, demands for Good Health and Well-being, Clean Water and Sanitation, Affordable and Clean Energy, Sustainable Cities and Communities, Responsible Consumption and Production, Climate Action and Life below and on Land are related to resilient green finance solutions. The consideration of environmental, social and governance (ESG) issues in investment decision-making, as well as green bonds, are current innovative approaches to meeting these goals. ESG issues are directly implemented in investment practices when addressing environmental conscientiousness as a fiduciary duty. The implementation of sustainable

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finance and impact investment proposes practical action for institutional investors, financial professionals and policy-makers to embrace sustainable development. The United States Stock Exchange Commission seeks to further support the PRI and to consider innovative ways to imbue a greening of the economy in financial markets. Sustainable development impact reporting can thereby highlight sustainable development criteria—such as environment and social standards. For instance, the United States Overseas Private Investment Corporation (OPIC) uses about 30 development indicators to evaluate job creation and human capacity-building, sustainability effects as well as impacts on environmental and community benefits and their reach (World Investment Report, 2015). In Europe, the Next Generation EU and the European Green Deal are notable developments at the forefront of green finance. The European Finance Taxonomy is a system to classify which parts of the economy can be considered as sustainable investments. This includes the evaluation and monitoring of economic activities with respect for environmental impacts for the labeling of green industries and products. The European Green Deal stipulates the European Union (EU) plan to become climate-neutral by 2050 (European Commission, 2019). The intended economic transformation of the EU will require enormous investments in the billions of Euro ranges, governmental guidance as well as industry efforts (Brühl, 2021). The EU estimates that approximately e350 billion of additional investment is required in the energy system alone each year up to 2030 in order to meet the 55% emission reduction target (Brühl, 2021; European Commission, 2021b). To finance the Green Deal, the EU Commission has announced that a total of e1 trillion will be invested in the green transformation of the European economy by 2021 (Brühl, 2021). In order to implement green finance initiatives, the EU Commission established the High-level Expert Group on Sustainable Finance and subsequently the Technical Expert Group (Brühl, 2021). The European Action Plan on Sustainable Finance has been refined through the Renewed Sustainable Finance Strategy (Brühl, 2021; European Commission, 2021a). In addition, specific sustainable development outcomes could be screened by finding if funds are in line with industrial development strategies and regional economic cooperation. Monitoring could comprise of an ombudsperson and facilitator to help ensure a vital sustainability

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climate. One way of implementing financial conscientiousness in corporate governance is by promoting political divestiture as a sustainable development incentive and conditionalities tool. Departing from narrow-minded, outdated views of the responsibilities of corporations only adherent to making a profit for shareholders and abiding by the law (Friedman, 1970), corporate executives nowadays are more prone to act responsibly in meeting the needs of a wide range of constituents. Apart from avoiding unethical societally-harmful behavior, such as bribery, fraud and employment discrimination, corporate executives currently proactively engage in corporate governance practice with a wider constituency outlook, including the needs of future generations. Most recent developments embrace the relation of financial stability in harmony with the environment in financial inclusion on energy efficiency. The role of Green FinTech and the sustainability of cryptocurrencies in money and banking is currently debated. Sprung out of SRI and socially conscientious market acts that are of benefit to the greater public, green finance marries the idea of leveraging financial assets for environmental causes. Not only insurance sectors but also general banking and credit regulation, mutual funds development as well as foreign direct investments and trade policies have become intertwined with the idea of environmental stability as a key to prosperity. Financial regulatory action but also new financial institutions and codes of conduct are heralded in the Great Green Transition. With the advent of space and cryptocurrencies playing a vital role in raising the funds to inhabit outer space, questions of sustainability, ethics of inclusion and fair invasion of new territories arise. For instance, digital finance was found to impede green investments in various testings for the Chinese market (Jiang et al., 2022). Future research is needed to unravel the driving factors and mechanisms of the impact of digital finance on green investment as well as to study the relationship in different contexts, industry-specific and on a global level (Jiang et al., 2022).

6.2

Green Banking and Green Finance

Green banking is defined as financing activities by banking and nonbanking financial institutions with an aim to reduce greenhouse gas emissions and increase the resilience of the society to negative climate change impacts while considering other sustainable development goals such as economic growth, job creation and gender equality (Park & Kim,

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2020). Green banking or green finance transitions corporate advantages and businesses to protect the financial system and manage environmental risks (Park & Kim, 2020). Green banking pays tribute that climate-related risks exist that impose harm to the financial sector in physical and financial risks but also acknowledges system instabilities. Private sector entities, therefore, have increasingly developed climate strategies and rolled out diverse green financial instruments to protect from variegated climaterelated risks. Green banking and sustainable finance also innovatively seize business opportunities in light of potential gains from a warming globe in order to redistribute assets to those areas that are losing the most and fastest from climate change (Puaschunder, 2020). In response to a growing awareness of the economic impacts of global warming and cognizant of the regulatory and supervisory gap in green finance, a growing number of central banks and regulators around the world are becoming aware of their role and potential mandate in addressing climate change and environment risks faced by the banking and financial sector (Park & Kim, 2020). A group of central banks and supervisors launched the Networking for Greening the Financial System (NGFS) in 2017 to contribute to the analysis and management of climate and environment-related risks in the financial sector, and to mobilize mainstream finance to support the transition toward a sustainable economy (Park & Kim, 2020). The NGFS supports central banks, supervisors, policy-makers and financial institutions to manage climate risks and ultimately make the financial system green and climate-resilient (Park & Kim, 2020). Since the 2008 World Financial Recession, the private sector and commercial banks have paid attention to integrating environmental and climate change risks into corporate strategies and risk management frameworks. This has resulted in a wave of green financial products to expand qualitatively and quantitatively. Banks have increasingly started assessing the risks associated with exposure to their loans by adopting risk management frameworks—such as the Equator Principles, which are essentially a credit risk management tool that can be used to identify, evaluate and manage environmental and social risks in project finance transactions (Park & Kim, 2020). Central banks and financial regulators play a pivotal role in mainstreaming green finance and making sure climate-related risks are properly measured, verified and reported (Park & Kim, 2020). Notable is the Prudential Regulation Authority (PRA) within the Bank of England

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which addresses the widespread economic impact of climate change on society. Green micro-prudential instruments include information disclosure of climate-related financial risks by banks, adoption and implementation of environmental and social risks management and differentiated reserve requirements (Park & Kim, 2020). Active market influences advocating for a greening of the economy include policies setting a minimum proportion of bank lending to climate and environment-related sectors, creating concessional green refinancing windows and extending concessional loans to banks that lend to climate-sensitive sectors (Park & Kim, 2020). All these attempts aim at shifting commercial banking toward more climate- and environment-friendly conduct while reducing risk exposure in the pursuit of climate goals. As these activities continue, the greening of the banking and finance sector will become more and more mainstream triggering an effect of more supply attracting more demand and vice versa, which will ultimately lead to qualitative and quantitative growth in the green market and finance products. All these developments will result in the aspired transition of the economy. While the greening of the economy offers risk mitigation and innovative potential as well as reputational capital and operational performance benefits in attracting quality human capital, from a critical point of view, it is important to note that to this day, the relationship between green and social banking activities and the financial and operational performance of banks is not completely understood and positive impacts are not clearly established empirically. Future research could therefore investigate whether green banks outperform non-green banks in terms of climate as well as operational and financial performance, and compare the effectiveness of green banking policy measures (Park & Kim, 2020). Global governance institutions play a crucial role in implementing resilient finance. Comprised of all nations of the world, global governance entities have the capacity to instigate the idea of a ‘Global Green New Deal,’ which could globalize ideas of the Green New Deal and the European Green Deal to enact a binding taxation-and-bonds solution for redistribution to alleviate environmental inequalities, especially in the domain of climate change. Empirically-driven redistribution schemes could thereby build the support of all international actors involved and imbue a notion of economically-driven rationality in fairness that could win countries to act and comply. Global governance institutions, such as the World Bank, IMF or the United Nations, could act as norm

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entrepreneurs and action catalysts of a Global Green New Deal that redistributes the unequally-distributed relative economic gains of a warming earth to places that face economically-declining economic prospects. The important role that global governance institutions can play in supporting and implementing a Global Green New Deal targets at redistribution to overcome global inequalities in regard to climate change. Global governance institutions can shape the conduct and array of international actors to contribute to a commonly-agreed global scheme. Economically-driven indices could aid in taking the political nature out of redistribution politics and historically-laden international relations. Drawing attention to the need for future research on this nexus will serve as a first step in finding economically-driven redistribution schemes. In the world compound historically, the advanced countries have gained welfare through environmental extraction, while the developing countries have not and appear nowadays as the most burdened with environmental disasters, for instance in regard to climate change. A most recent World Bank Report calls for a fair climate taxation-and-bonds mix worldwide (Semmler et al., 2021). While the World Bank Report presents a global overview of the current state of climate taxation and climate bond usage around the globe, it calls for more macroeconomic models that enact climate bonds and tax strategies concurrent use coupled with redistribution and burden-sharing (Semmler et al., 2021). In addition, The New York Times most recently discussed the disparate impact of climate policies and climate protection attention disparities (Flavelle, 2021a, 2021b). Literature emerges on how the world’s richest people are driving global warming (Roston et al., 2022). In the aftermath of the United Nations Climate Change Conferences of Parties meeting in 2021 COP26, it has been argued that the advanced countries have an obligation and responsibility to finance the adaptation to global warming of the low-income countries through direct transfers and credit guarantees (Sachs, 2021). In the aftermath of the COP26 annual climate meeting of the United Nations, Jeffrey Sachs put forward an idea of funds for climate change mitigation and adaptation that should be raised by climate tax-funded grants provided by some countries as transfer payments, while other countries should be recipients of green bonds granted to low-income countries (Sachs, 2021). The IPCC 2018 report estimated that the transition to a low-carbon economy ranges from US $1.6 trillion to US $3.8 trillion annually between 2016 and 2050 (IPCC, 2018). While Sachs (2021) argues that half of the funds raised

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should be grants (transfers) and half green bonds that help transition to renewable energy in low-income countries, global governance regimes could refine prioritizing which countries should be grantors and which recipients based on data-driven criteria. Subsequently, the United Nations Climate Change Conference COP27 in 2022 urged the call for a redistribution to finance those countries that face the most urgent climate change mitigation and adaptation needs. An innovative idea entails redistributing some of the expected gains from climate change to those countries that are losing the most and fastest from a warming globe. An international intermediary financial institution could manage and guarantee loans in a common taxation-bonds strategy spanning over the entire world. International banks—such as the World Bank and the International Monetary Fund—but also central banks are the main climate bond issuing authorities (Braga et al., 2020; Heine et al., 2019; Semmler et al., 2021). The World Bank issued the first green bond in 2007 (Braga et al., 2020). International organizations like the World Bank, International Monetary Fund or the United Nations have the global governance strength to support international green fund climate change mitigation and adaptation efforts and incentivize countries to transition to renewable energy. Global governance institutions are already serving as intermediaries for redistribution efforts. Similar models exist, for instance, in the European Union European Investment Bank acting as an intermediary for credit demand by low-income countries and a credit supply backed by taxes of advanced countries. For instance, the European Investment Fund under the European Guarantee Fund finances developing economies to help with the fallout of the COVID-19 pandemic. In addition, the European Investment Bank has funded large-scale infrastructure development projects with a sustainable edge—for instance, by issuing a European Guarantee Fund most recently for infrastructure investment and development in Poland and Lithuania (European Investment Fund, 2022a, 2022b). According to the European Investment Bank, the Pan-European Guarantee Fund (EGF) was created by the European Investment Bank Group (EIB and EIF) and European Union Member States as a community response to the COVID-19 pandemic. This bond “aims to increase access to credit for businesses in the wake of the economic effects of lockdowns and restrictions to contain the COVID-19 outbreak” (European Investment Fund, 2022a, 2022b). The fund strives to boost those

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communities of the EU economy that have been hit by the pandemic the worst (European Investment Fund, 2022a, 2022b). First ideas in green global governance exist in the Global Green New Deal (GGND), which features a concerted plan of a policy package to instigate global change (Boyle et al., 2021; O’Callaghan & Murdock, 2021). The GGND was first proposed by the United Nations Environment Program (UNEP) in 2009 (UNEP, 2009). The UNEP describes the GGND as a policy package to revive the world economy, reduce carbon dependency and further sustainable growth (UNEP, 2009). The UNEP GGND focuses on economic stimulus, domestic regulatory reform, and international cooperation. State-led economic stimulus fosters decarbonizing carbon-intensive sectors of the economy—such as energy, transport, buildings and agriculture (UNEP, 2009). Domestic policy reform includes eliminating environmentally-harmful subsidies and strengthening environmental legislation (UNEP, 2009). International cooperation advocates for changes to the policy architecture governing international trade, aid, global carbon markets and technology transfers (UNEP, 2009). Via a GGND international agreement, global governance institutions could generate global social norms that foster a domestic implementation of a green stimulus. Policy measures may thereby be pegged to COVID19 recovery efforts, such as in the United States Green New Deal and the European Green Deal plans (European Commission, 2019; The White House of the United States of America, 2021a, 2021b, 2021c; United Nations, 2020; United Nations General Assembly, 2020, Art. 47; United States Congress, 2019; Vivid Economics, 2021; World Trade Organization, 2020, 2021). A global governance approach—as pursued in the GGND—could shape the conduct of an array of international actors and identify emerging trends in the global governance of system dynamics on climate stabilization efforts. The implementation of the financing of climate change mitigation and adaptation efforts could become a concerted action of multiple entities: First, mitigation is likely to be tackled on an international level by global governance institutions. Adaptation is expected to be more prevalent on a country level. Financing climate mitigation and redistribution of climate change economic windfall gains to economically-losing territories in the wake of climate change could become the central focus of international entities, such as the United Nations, the World Bank and the IMF. Redistribution of climate gains to territories that have a decreasing

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GDP prospect in light of global warming could be accomplished via taxation and bonds if international entities support such a plan concertedly. For instance, the United Nations (UN) could target a binding climate agreement between countries during their Conferences of Parties (COP) meetings. All UN joining nations would then sign up for implementing a climate gains redistribution via taxes and bonds. Alternatively, or complementary, the World Bank and/or the International Monetary Fund (IMF) could work out a redistribution scheme via their existing contributions key and loan programs. While the United Nations features a democratic ‘one-country-one-vote’ voting system, the World Bank and IMF have voting schemes that also weigh in the national financial contributions of all participating entities. As a universal dispute resolution for non-compliance with the outlined plans, prospectively the World Trade Organization (WTO) or International Law Commission of the United Nations in New York could serve as panels for oversight, monitoring and evaluation control. Governments and multilateral organizations are also essential to support the issuance of green bonds as private funds show higher yields, volatility and beta prices (Braga et al., 2020). As for climate change adaptation funding, central banks could become intermediaries for issuing country-specific and industry-specific bonds on the national level. Country-wide bonds could feature an interest rate bandwidth around the universal bank lending rate for climate bonds determined by international entities. Within the bandwidth, central banks could offer green bonds with specific premium bond payments for industries based on the industry carbon emission levels. Industry-specific interest rates could turn the traditional price-cutting behavior that drives corporations to seek cheap and often non-renewable energy sources to opt-in for a competitive race-to-the-top for beneficial interest rates that gratify choices for renewable energy solutions. A beneficial industry shift could also be fortified by COVID-rescue and recovery packages that are in line with the Green New Deal program in the United States and the European Green Deal in Europe (European Commission, 2019; The White House of the United States of America, 2021a, 2021b, 2021c; United Nations, 2020; United Nations General Assembly, 2020, Art. 47; United States Congress, 2019; Vivid Economics, 2021; World Trade Organization, 2020, 2021). The Green New Deal and the European Green Deal, in combination with the European Sustainable Finance Taxonomy, are the most wide-scale efforts to marry the idea of economic growth in line with the natural resources pool and with respect for environmental limitations.

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Problematic may be the largess of funds needed that may exceed the capacity of funding agencies within smaller nations. The lending capacity remains a political problem internationally and nationally. On the international level, questions arise about the power dynamics of interest groups that may influence the agenda of the World Bank, the IMF and central bank grantors. Collective action problems may drive the political pressure on different constituency groups. Transfer funds will be challenging to achieve. Potential incentive mechanisms may be discussed, such as bonus systems. But also, socio-psychological motives may be elicited in nurturing an awareness that countries that are first-and-foremost victims of climate change deserve a guaranteed repayment for damage and losses. A politically-neutral international tax-and-bonds-scheme should primarily focus on redistribution fairness aside from historical or political agendas. Lastly, also the COVID-19 crisis serves as a vivid example of collective action problems around the world to contain a life-threatening virus, of which no one is safe, until everyone is safe.

6.3 6.3.1

The Future Green Bonds

Green financing has been leveraged into a mainstream financial market tool for a transition away from carbonization to energy efficiency (Liu et al., 2022). Green financing is a fitting and supportive financing tool for energy efficiency. Nowadays, foremost green bonds are used to finance renewable energy and energy efficiency projects in order to increase energy efficiency and meet accelerated growth in energy availability (Liu et al., 2022). FinTech and green finance assist in achieving clean energy provision that is also mandated in sustainable development goals (Liu et al., 2022). The differences in attributes, financing mechanism, funds flow system, transaction systems and variation in support by the financial institution are the main reasons that lessen the role of financial inclusion and FinTech for energy efficiency (Liu et al., 2022). Green bonds account for the most novel energy efficiency attainment method on a global scale (Liu et al., 2022). Green bonds have substantial revenue-raising opportunities to fund climate policies (Semmler, 2021). Bonds can serve as a hedging instrument against oil price fluctuations in portfolios, particularly low fat-tail

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correlations (Semmler, 2021). Green bonds are fixed-income securities usually certified by a third party to have the funds for climate stabilization. Green bonds are thus predestined for low capital cost green projects and instruments for funding green counter-cyclical investment (Semmler, 2021). Green bonds unlock the necessary funding for the investment in sustainability projects, such as clean energy, low-carbon transport and green buildings (Flaherty et al., 2017; Semmler, 2021). Green bonds are safe and crisis-robust long-term assets as they are often financed via quantitative easing and backed by the state, especially in large-scale projects and grand greening endeavors (Semmler, 2021). The investment grade for green bonds appears to be equal to or greater according to the Standards and Poor’s rating (Semmler, 2021). The standard duration for green bonds is greater than 10 years, which predetermines green bonds for long-term intergenerational burden-sharing strategies (Semmler, 2021). Green bonds enable intertemporal burdensharing of climate change mitigation and adaptation (Orlov et al., 2018; Sachs, 2014). Climate bond issuing agencies comprise public and private sector entities. Public sector green bond providers include international institutions, central banks, governments and municipalities (Semmler, 2021). The World Bank but also the International Monetary Fund (IMF) as well as central banks and municipalities have played a leading role in the development and utilization of green bonds over the last years (Semmler, 2021). The IMF is also holding a lead role in helping national governments to build their capacity to address climate challenges and share the risk of climate-related disasters in bonds, loans and trusts (Georgieva & Tshisekedi, 2021). Based on information derived from the Bloomberg Terminal, Semmler et al. (2021) outline that bonds are heterogeneous in terms of issuer, duration, country and currency, and sectors. Most green bonds are issued by banks, real estate, power generation, utilities, governments, supranational entities and the energy sector. Climate change mitigation and adaptation are currently financed by a climate taxation and green bonds strategy. Green bonds have become fundamental pillars for raising funds for a transition to renewable energy (Puaschunder, 2016). Solar power and wind turbines, eco-friendly infrastructure and more research and development in clean energy and green technology are all investments for averting climate change funded by bonds (Puaschunder, 2016).

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Public entities, such as the World Bank or the International Monetary Fund, or governmentally-backed bonds, such as municipal governments investing in renewable energy projects, are primary green bond issuers. Asset-backed securities are similar to traditional bonds, but their debt repayment is financed by a particular revenue stream, such as tolls or surcharges on energy use (Semmler, 2021). Covered bonds are a type of asset-backed security that is also guaranteed by the issuing agency (Semmler, 2021). The repayment mechanism of green bonds depends on which of these categories the bond falls into. The strategic bundling of bonds but also tax-and-bonds strategies are currently debated in science and policy contexts to aid climate change mitigation and adaptation efforts. The financing of climate justice is estimated to comprise 5–7% of the contemporary world GDP, accounting for 5–6 billion USD (Braga et al., 2020; Flaherty et al., 2017). Green bonds could fund all these endeavors and are currently pegged to governmental aid in the post-COVID-19 crisis recovery aid. Governments can also bring back the financial world in the service of improving and stabilizing the real economy through a stricter separation between investment and consumer banks, which already began in the course of the regulations following the 2008/09 World Financial Recession. Central banks, on behalf of the World Bank or the International Monetary Fund, could take the lead in offering differing bond regimes on a global scale. The European Taxonomy for sustainable activities creates a European Union standard to classify assets and investments according to their climate benefits, following the new technological trends and indicators of the Technical Expert Group on Sustainable Finance (2020). Organized by sector and technology, the European Sustainable Finance Taxonomy provides references to classify climate change mitigation and adaptation activities, including environmental objectives (European Union Technical Expert Group on Sustainable Finance, 2020). The European classification of industries’ contribution to climate change in the European Sustainable Finance Taxonomy could become the basis for setting positive market incentives to change market dynamics via differing bonds regimes. Broad-based climate stabilization through bonds and credits could thereby finance climate change mitigation efforts, while global warming adaptation funding would address the impact of climate change on its local effects, such as regional disasters. Climate bonds could thereby feature a combination of climate justice between countries and over time. A progressive financial system would indeed facilitate increased financing

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to the renewable energy sector, but would also encourage individuals to invest in larger, energy-efficient commodities as a result of their increased incomes (Liu et al., 2022). Future scientific investigations could learn from previous examples of green bonds for sustainable development focusing on climate. Multilateral organizations, such as the International Monetary Fund, the World Bank, the United Nations but also the European Union rescue and recovery funds, have already worked out specifications for similar bond solutions (Semmler et al., 2021). In the future, global governance institutions are believed to play an increasing role as ‘global society’ leaders to tackle large-scale complex problems—such as climate change but also COVID-19 alleviation—that create global social norms to sustainably implement global public policies by identifying change agents on the national level (Barnett & Sikkink, 2011). Future research should address the strategic bundling of financial market instruments to help a transition to a greener economy. In an advent of attention to climate risks, green insurance of corporate entities could become subject to scrutiny as for extending the concept onto green bonds. Green insurances usually improve corporate environmental risk management and environmental governance capabilities. Green insurance transfers can diversify environmental risks and introduce external supervision mechanisms (Chen et al., 2022). Green insurance could be made mandatory and regulatorily coupled to embrace foreign investments and remittances in order to foster overall market diversification and ensure a consistent path to sustainable energy solutions. Already now several insurances are deemed not to be market-efficient anymore (e.g., insuring private property along coastal lines) for market actors. Funding green insurances via climate bonds could aid in continuous market activity and bundling resources to de-risk the economy in light of environmentally-adverse conditions. In the future, favorable banking and regulatory policies can aid pushing the banking sector to shift from speculative lending to green investment lending in order to foster the transition to a more energy-efficient production technology (Raberto et al., 2019). As up-to-date capital goods have better energy efficiency in the model design, a higher pace of investment implies also a positive environmental effect (Raberto et al., 2019). Future research may address the design of appropriate banking regulation policies that follow an agent-based approach, which are aimed to

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push banks to lend to low-carbon activities to ease the green investment gap (Raberto et al., 2019). Empirical studies may investigate the effectiveness of a carbon tax in fostering capital goods investments by firms to raise their average energy efficiency. Future research may also analyze the relationship between green investment and environmental pollution from the perspective of institutional quality as well as market readiness and consumer willingness for whole-rounded high-quality development of a transitioning to a renewable and environmentally-secure market. Future research should also pay attention to emerging trends in global redistribution models to alleviate climate inequalities and enact climate justice worldwide and over time. Broader issues, specifications and institutional arrangements might need to be addressed to move the idea of climate-related redistribution patterns forward. Global governance institutions could further build on research-driven inequality parameters to derive concrete policy implementation solutions of global equity norms via global taxation-and-bonds schemes (Boyle et al., 2021; O’Callaghan & Murdock, 2021). Future writings could also investigate the underexplored role of global governance institutions in changing country-level dynamics according to international world power resolutions. The global governance research literature could be fortified by insights into the dynamics of modern relations of global societies as dense networks of states with shared values and agreed-upon principles (Barnett & Sikkink, 2011). How powerful global governance institutions could help the legitimacy and lead in a cascading of social norms internalized in a network of change agents on the local levels should be explored (Finnemore & Sikkink, 1998). As for concrete redistribution plans, different means of transfer should be investigated in future studies, ranging from taxation models, direct or indirect transfers, credit guarantees, bond issuance and conventional repayment schemes. Future studies on climate change impacts may address the different tipping points and disaster drivers of temperature rise, weather extremes and sea level rise to advance the idea of climate inequality alleviation strategy (Dietz et al., 2021). Future theoretical work may define and clarify climate argumentations and determine favorable influence factors to enact climate bonds, such as disaster effects and historical inequalities to refine the redistribution schemes. Future comparative studies could compare the costs and effectiveness of various tax and bond designs not only in a cost-effectiveness analysis but also in terms of their political feasibility and legal impetus. Forecasting

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studies should tackle potential obstacles and contingency planning if there are unintended outcomes of green bonds that raise problems for compensation compliance or if there is a pushback in future generations, or if the plan of redistribution over time does not work. Philosophical problems of bonds should be addressed in future generations not having caused the climate problem but being indebted for stabilizing the climate in the past. Counter argumentations of money being fungible and always there but a stable climate vanishing and natural resources’ finite character could be underlined. As for future research on implementing climate justice via climate bonds, political economy insights may inform about bargaining and the role of cartels in reaching favorable common goods allocation outcomes. Historical examples of previous world leaders’ negotiations (e.g., after world wars or revolutions) may lead to analyzing contemporary negotiation strategies and outcome risk estimate forecasting. Future Law and Economics extensions should particularly pay attention to the disparate impact of climate policies on marginalized and vulnerable societal groups. In a heterodox opening of the macroeconomic aggregate production and consumption functions, the disproportionately hard effect of policies on gender, race and other vulnerable populations must be addressed with special heterodox attention. The legal community could inform about the concrete application feasibility of tax-and-bonds strategies via commitment bonds (Armour et al., 2021; Ayres & Abramowicz, 2011; Bishop, 2019; Omarova, 2020). Corporate legal scholars may add information about the practicality of green bonds and how to avert negative downsides, such as greenwashing through clear and concrete contracts, economic incentives and direct and implicit social sanction mechanisms. 6.3.2

Green FinTech and Cryptocurrencies Outer Space Exploration Funding

FinTech refers to innovative financial services such as big data analysis, Artificial Intelligence (AI), Blockchain, DEFI (decentralized finance) and mobile internet bringing innovative solutions to financial services (Kabaklarlı, 2022). Green FinTech includes innovations in the domains of artificial intelligence, big data analysis, internet of things and blockchain technology with a sustainability edge (Kabaklarlı, 2022). Green FinTech couples technology innovations with an environmentally-friendly way

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to operate finance. Green FinTech thereby employs big data analysis, internet of things (IoT), machine learning, artificial intelligence, mobile payment technologies in order to strive for environmentally-friendly energy consumption. Green FinTech targets at constructive environmental impacts by reducing CO2 through sharing economy model (Mi & Coffman, 2019). In a holistic approach, Kabaklarlı (2022) argues that financial technologies that apply technological innovations in the finance and banking industry enable the stimulation of economic growth, resulting in a reduction of inequality, poverty and environmental destruction in society. FinTech development, therefore, has the potential to enhance efficiency and manage to reduce costs of financial activities (Kabaklarlı, 2022). The relation of Green FinTech tools and techniques that use of blockchain, mobile phones, open banking, big data analysis has been recognized in international development, for instance, when technological innovations present access to banking services and money transfers at lower cost (Kabaklarlı, 2022). Challenges for internet banking remain in the security and the international liability character of the internet. At the same time, Green FinTech has raised questions about the sustainability of cryptocurrencies (Kabaklarlı, 2022). The clear connection between Green FinTech and the Sustainable Development Goals is yet to be determined. As such the contested relation between digitalization and sustainability should be reflected upon, especially when it comes to the carbon footprint of data cloud storage and big data computations (Leal et al., 2023). Environmentally problematic appears that Bitcoins are generated through mining, which demands a significant amount of electrical energy (Kabaklarlı, 2022). Kabaklarlı (2022) estimates the shares of Bitcoin mining of cryptocurrencies to be substantial, which questions Green FinTech’s environmental friendliness. Kabaklarlı (2022) found a positive correlation between the BTC (Bitcoin) miners’ revenue and the Bitcoin electricity consumption, which has been rising after the COVID-cryptocurrency hype. Another concern is the sharp volatility noticed in cryptocurrencies between October 2014 and April 2017, which downgrades this market option as a resilient finance strategy (Kabaklarlı, 2022). Another ethical concern arises from the use of cryptocurrencies for the private exploration and colonization of space, which implies legal concerns, environmental risks and carbon footprint challenges alongside substantial moral dilemmas (Pierson, 2021). In the most recent decade,

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commercial space travel and the advent of space travel to Mars but also the setup of a permanent space station have become a reality. Space travel endeavors are high-risk innovations that are often funded by cryptocurrencies, e.g., such as Marscoin. Society has become close to living in outer space. Risk management experts, however, note the enormous costs and risks alongside a legal and policy vacuum on the impact of space travel in terms of human protection, socio-economic impacts and ethical considerations. The environmental impacts of space travel are estimated to be substantial (Pierson, 2021; SpaceX, 2021a, 2021b). Environmental pollution of commercial space travel appears to be pitted against the human wish to explore and conquer new resources. Cryptocurrencies are therefore used as a means to stretch the physical landscape but passively imply human health risks, environmental harm and potential biological contamination of space. Critical ethics concerns also arise out of the act of colonialization in the celestial setting (Pierson, 2021). From the legal aspect, commercial space travel falls under territory governed by the United Nations “Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies” (United Nations Office for Outer Space Affairs, 1967), which follows International Law standards and maritime law conduct that was carved out decades ago on the rights in international waters (Pierson, 2021). This implies that corporations are bound by the national flag they fly and leads to contradictory interests of corporations, countries and international law (Pierson, 2021). These conflicts are yet to be settled and imply volatility around cryptocurrencies’ use in space exploration and commercialized space travel. Economically, space travel remains extraordinarily expensive. It is estimated that a flight to Mars ranges in the hundreds of billions of U.S. dollars (Levchenko et al., 2018 in Pierson, 2021). From the environmental aspect, space travel not only impacts earthly resources but also touches upon the celestial ecosystem, which is less understood, especially in its relation to humankind and the earthly biosphere (Pierson, 2021). Besides the enormous carbon emissions in the production and functioning of spacecraft, there is also the space waste problem, especially with satellite debris circling in orbit forever. On the human aspects, space travel may come with safety, health, reproductive and socio-psychological impairments, partially due to cosmic

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radiation (Pierson, 2021). In all the risk prospects mentioned, the use of future-oriented cryptocurrencies to raise funds for space travel appears ethically questionable.

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CHAPTER 7

Finance Diplomacy: The Politics and International Relations of Finance

Abstract Today’s global challenges in regard to climate change demand for urgent action of the global community. Recent research has elucidated the economic impact of climate change on the world and found stark national differences in Gross Domestic Product (GDP) prospects under climate change around the world. Climate inequalities are proposed to be alleviated by redistribution mechanisms enacted by a taxation-and-bonds strategy. A model for economic prospects under climate change is introduced in order to determine a fair redistribution of relative short-term economic gains under global warming in order to offset for economic losses based on economic, ecological, historic and political factors. The model determining redistribution patterns throughout the world is based on the geo-impact of climate change, the financial crisis resilience capabilities as well as the global connectivity and science diplomacy leadership of a country. Empirically, nine indices provide a basis to determine which countries should be using a taxation strategy and what countries should be granted climate bond premiums in order to enact a fair relative economic gains redistribution between countries. A country’s starting ground on the climate gains and losses spectrum, a country’s climate flexibility in terms of temperature zones and a country’s CO2 emissions contributions in production and consumption levels as well as a country’s CO2 emissions levels changes and historically-grown bank lending rate as well as resilient finance strategies coupled with science diplomacy leadership and © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. M. Puaschunder, The Future of Resilient Finance, Sustainable Development Goals Series, https://doi.org/10.1007/978-3-031-30138-4_7

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economic connectivity on the international stage will determine whether a country will be on the taxation regime for funding mutual climate stabilization or whether a country will be on the receiving end of climate bonds solutions. The countries economically gaining from climate change and being climate flexible as well as countries with high CO2 emissions and not changing CO2 emissions levels as well as consuming goods and services from other countries but also having favorable bank lending rates and a history of resilience finance and crisis intervention expertise but also science diplomacy and trade leadership advantages could be taxed to transfer funds via climate bonds for regions of the world that are losing from global warming and are not climate flexible as well as countries with low CO2 emissions and lowering CO2 emissions levels that are producing goods and services that are consumed in other parts of the world as well as having unfavorable bank lending rates and missing resilience finance expertise as science diplomacy and trade followers. The proposed taxation-and-bonds strategy could aid a broad-based and longterm market incentivization of a transition to a clean energy economy. The discussion features the implications of the proposed strategy, implementation details and the economic impetus of redistribution mechanisms. The monitoring, evaluation and accountability control of the outlined plan are thematized in the estimation of the feasibility and limitations. Future research and outlooks on the redistribution via taxation-and-bonds strategy are provided.

7.1

Introduction

Today’s global challenges in regard to climate change demand for urgent action of the global community. Time windows close on humankind’s ability to revert global warming. Global warming impacts have reached unprecedented urgency for attention to finding common-ground driven solutions fast and efficiently. In the coming together of all nations to solve global issues of concern around global warming, global governance institutions have done excellent work and proved successful leadership in the past decades. Another form of more informal strategies to discuss global crises leaving aside political frameworks and customary law practices is to connect and build a bridge of mutual understanding of global community members via scientific facts.

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As early as the 1930s and at its height during the old Cold War, researchers came together and aligned in order to discuss matters-offacts and rational findings leaving aside any political agenda and historical denominations. This practice became known as science diplomacy. At the forefront of science diplomacy stood the International Institute for Applied Systems Analysis (IIASA) in Laxenburg, Austria, which—to this day—informs public leaders based on science-driven interdisciplinary findings and interculturally-derived insights. Science diplomacy had its height during the Cold War era when institutional foundations in global international organizations helped connect scientists via empirical and rational facts in order to solve global issues of concern aside from political realities and country differences. In light of renewed East–West tensions and the urgency of a global warming solution, today’s most pressing international challenges in climate change call for a renewed science diplomacy spirit to discuss solutions scientifically without political biases and historic customary practice. Science diplomacy builds on “scientific collaborations…to address common and shared problems” (The Vienna Statement on Science Diplomacy, 2022). Science diplomats advocate for a “free and open exchange of scientific ideas and information” (The Vienna Statement on Science Diplomacy, 2022). Building on the integrity of research and societal responsibility focus of science, science diplomacy fosters “freedom of cooperation” (The Vienna Statement on Science Diplomacy, 2022). Science can learn from diplomacy tactful communication and respectful appreciation of differences; while diplomacy can benefit from the rationality of scientific facts and the rigor in argumentation over precise quantifications of the natural environment. With certain world problems being too-big-to-fail requiring global collaboration and fast action, the challenges of our lifetimes appear to only be surmountable if tackled by a rational scientific collaborative approach. The time for science diplomacy has therefore come. Yet to this day, no quantification of the concept of science diplomacy exists. The concept of science diplomacy has never been quantitatively studied to highlight the importance and potential of specific countries around the globe to engage in academic discourse for science diplomacy. In particular, we lack information on what countries can lead the world to find a common ground on climate change aversion with science diplomacy advocacy. In the age of global warming, pandemics and East–West tensions, the time for coupling science diplomacy with financial responsibility has come.

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To this day, the concept of science diplomacy has never been quantified to highlight the importance and potential of specific countries around the globe to engage in science diplomacy. The following chapter acknowledges today’s global challenges in climate change and presents the first quantification of science diplomacy potential around the world. The first introduction of the concept of science diplomacy draws from the history of the International Institute for Applied Systems Analysis (IIASA) in order to then capture the most pressing contemporary issue of climate change. In the first macroeconomic model of science diplomacy, an index was created including 51 countries around the world ranked on their potential to be spearheading science diplomacy. The presented Science Diplomacy Index integrates (1) the academia quota per country as an indication of scientific excellence based on World Bank Educational Attainment data of at least Bachelor’s or equivalent education in the population of a country from 25 years of age as a cumulative percent in the population; (2) a modified World Ranking of academic institutions based on the Web of Universities data weighted by the relevance of its academic institutions; and (3) the Lowy Global Diplomacy Index measuring diplomatic relations in embassies, consulates or other diplomatic representations. The index is then applied to a macroeconomic model on disparate economic impacts of climate change around the world and countryspecific CO2 emission levels, in order to determine what countries have excellent starting grounds but also a heightened responsibility to engage in science diplomacy to reverse the negative impacts of global warming. The results offer invaluable yet quantified information on the importance of science diplomacy in the twenty-first century. Science diplomacy is quantified in order to then couple the first Science Diplomacy Index (SDI) with the concept of a Responsibility to Act (RTA) on climate change based on a macroeconomic model estimating the economic prospects under the condition of a changing temperature (Puaschunder, 2020b). The results of the Science Diplomacy Index applied to a macroeconomic model on disparate economic impacts of climate change around the world and country-specific CO2 emission levels determines what countries have excellent starting grounds but also a heightened responsibility to engage in science diplomacy to reverse the negative impacts of global warming (Puaschunder, 2020b). The discussion informs about future research avenues for deriving inferences about

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the relation of science diplomacy and macroeconomic correlates to shine light on the positive implications and multiplying variables of science diplomacy.

7.2

Climate Change Resiliency Financing 7.2.1

Climate Change

Climate change gained unprecedented urgency to address the warming of the globe in the most recent decades. As outlined by the world surface temperature anomalies since the start of world surface temperature recordings in 1891, the climate is changing and getting hotter throughout the world (Tokyo Climate Center, 2022) as outlined in Graph 7.1. Historically, the advanced countries have gained welfare and rising living standards by the use of fossil fuel energy and intensive CO2 emissions, while the developing countries have not and appear nowadays as the most burdened with climate disasters. The New York Times most recently discussed the disparate impact of climate policies and climate

Graph 7.1 World surface temperature anomalies 1891–2021

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protection attention disparities (Flavelle, 2021a, 2021b). Geographicallydetermined economic prospects in light of climate change reveal vast inequalities in the distribution of future climate-induced economic gain or loss prospects. Ethical imperatives lead to the claim for redistribution of some of the gains of global warming into territories that are losing out from climate change. The historical debt has risen calls for reparations and the responsibility of the developed world to compensate the countries that are losing the fastest and the most from global warming (Moneer, 2022). Political historical facts may also deter countries from action on climate change, as was shown during the Copenhagen Intergovernmental Panel on Climate Change Conferences of the Parties (COP). At this meeting in 2009, the developing booming economy countries argued for a right to economic growth as experienced by already highly-developed countries in the past via climate change causing productivity. A compromise was found in the developed world agreeing to transfer payments to offset for economic costs for the transition to a renewable energy economy in the developing world. In the aftermath of the 2021 United Nations Conference of the Parties (COP26) meeting on Climate Change, it has been argued that the advanced countries have an obligation and responsibility to finance the adaptation to global warming of the low-income countries through direct transfers and credit guarantees (Sachs, 2021). The 2022 COP27 fortified the call for climate redistribution of economic gains and losses in-between countries and over time. The recent COP27 meeting on Climate Change urged for addressing a triple inequality inherent in climate change in the distribution of global warming-related economic prospects (Moneer, 2022). Now the most pressing question arises, what measures should the world community take to determine the beneficiaries and victims of climate change? While ethical imperatives lead to the claim for redistributing some of the short-term economic gains of global warming into territories that are losing out from climate change the most and the fastest; political realities may hinder efforts to cooperate on an international level to redistribute resources in order to avert climate change. Free rider problems exist, whereby countries that do not take action may benefit from the other countries’ efforts. In an attempt to provide information on how to find a fair key for redistribution, economic growth perspectives in light of climate change

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can be taken into account. Future economic growth depends on national temperature conditions and climate change (Hansen, 2014). Economic growth depends on climate prospects and is measured in gains, losses and risks. Climate change risks are manifold and comprise of physical risks in weather extremes, wildfires, landslides, flooding, heatwaves, hurricanes, storms and typhoons, smog and many other forms of environmental damage. Climate-related finance costs are also imbued in transition risks in stranded assets as for causing volatility in financial systems. Novel policy efforts are now focused on redistribution via taxationand-bonds strategies (Semmler et al., 2021). While a World Bank Report presents a global overview of the current state of climate taxation and climate bond usage around the globe, it calls for macroeconomic models to inform on the political feasibility of climate gains redistribution strategies and global warming loss burden sharing (Semmler et al., 2021). Current climate change mitigation and adaptation financing efforts are calling for innovative green investment strategies around the globe. Ethics of inclusion in the environmental domain as a novel climate taxationand-bonds strategy to redistribute climate change gains can only raise widespread momentum for a transition to a zero-carbon global economy if carried by a global community. An emerging literature and awareness of the economic gains and losses of a warming globe being distributed unequally between countries is the basis of redistribution schemes. In the aftermath of the COP26 annual climate meeting of the United Nations, Jeffrey Sachs (2021) put forward an idea of funds for climate change mitigation and adaptation that should be raised by climate tax-funded grants provided by some countries as transfer payments, while other countries should be recipients of green bonds granted to low-income countries. A refinement in prioritizing which countries should be grantors and which recipients based on macroeconomically-informed criteria, such as expected climate change economic gains and losses as well as CO2 emissions as the cause of global warming, is provided in this chapter. In the political feasibility check of a global redistribution scheme, science diplomacy appears as a prerequisite to implement climate change aversion via taxation-and-bonds strategies. All these strategies will need a scientifically-informed concerted action of all nations of the world, which lets science diplomacy appear as an attractive vehicle to push for a common ground. While the country positions on expected climate change economic gains could serve as an indicator to determine the responsibility

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to act on global warming, science diplomacy could aid in targeting what countries could lead the world in the collective burden-sharing strategy and implementation of a common climate gains redistribution scheme. In order to make the case for ethics of inclusion in the environmental domain in light of climate-induced inequalities, nine different indices will be provided that allow for a quantified transfer strategy within the world community in order to distribute the gains and losses of global warming throughout the world.

7.3

Climate Resilience Finance

Green bonds have recently been promoted as an innovative climate stabilization strategy (Puaschunder, 2020b; Sachs, 2014; Semmler et al., 2021). Green bonds are in most cases governmental bonds. Issuance of a bond is taking a loan or getting credit that is to be repaid in the future. The issuer of bonds establishes the bond for bond buyers. Investors who purchase these bonds can expect to make a profit as the bond matures. The bond pricing and yields of bonds are dependent on the risk of the underlying cause and/or asset. An issuer of bonds that show high yields indicates that the fund carries high risks of being repaid. Borrowing money can only be issued by paying a risk premium, which entails the yield containing a risk premium. Risk can also mean negative externalities that others have to pay sometimes in the future, which is already internalized in the bond yield today. In green bonds, borrowers issue securities in order to secure financing for projects with positive environmental impact, such as climate stabilization and a transfer to renewable energy solutions. Green bonds are mainly issued by major banks, which identify qualifying assets or loans, which meet sustainability criteria. Tax benefits are often granted for investing in green bonds. In climate bonds, funds with high risk are often those with unsure outcomes of climate protection, new green energy innovations, disaster risk, etc. Financing climate change mitigation and adaptation will have different targets—while mitigation has global effects, adaptation is more focused on overcoming the negative local effects of global warming, such as disasters that tend to be more regional. Climate bonds can reduce the overall global climate risk but can also contribute positive aspects to the overall economy in, for example, environmental protection and de-risking the economy (Bolton et al., 2020; Braga et al., 2020b). Green bonds can

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also be used for transitioning to a clean energy economy or funding clean innovations. For example, green bonds can kick-start ideas that represent green energy and/or avoid disasters, and thus carry a high yield and get rewarded in the long run. The effectiveness of the financial market for this transition to a lowcarbon economy depends on attracting investors and removing financial market roadblocks (Braga et al., 2021). While many recent studies find yield differentials between green bonds and conventional funds, Braga et al. (2021) highlight that green bond returns might be mixed as compared to conventional bonds. Braga et al. (2021) emphasize that green bonds protect investors from oil price and business cycle fluctuations as well as stabilize portfolio returns and volatility (Braga et al., 2021). In the long run, green bonds benefit the economy and generate positive social returns even if these assets currently may only have lower yields (Braga et al., 2021). Green bonds can thus be justified not only from the point of view of climate protection and climate disasters avoidance but also by endogenous growth theory (Aghion & Howitt, 1992, 1998; Arrow, 1962; Braga et al., 2021; Kaldor, 1961; Lucas, 1988; Romer, 1986, 1990; Uzawa, 1965a, 1965b; Vitek, 2017).

7.4

Climate Economic Prospects

The standard translation of climate change gains and losses in burdensharing contribution schemes is usually defined in Nordhaus’ Regional Integrated model of Climate and the Economy model (RICE model). This regional, dynamic and general-equilibrium model of the economy integrates economic activity with emissions levels as the main driver of human-made climate change (Orlov et al., 2018). As a creative approach to raise funds for transitioning to a green economy based on redistribution schemes, one may take a closer look at the macroeconomic impacts and economic growth prospects under climate change. Impacts of climate change vary around the world and are likely to impose considerable economic prospect changes, which will increase over time as global temperatures increase (Lomborg, 2021). Global warming will likely cause economic gains and losses, which are distributed unequally throughout the world and over time (Lomborg, 2021; Puaschunder, 2020b). Economic research has elucidated the economic impact of climate change on the world and found stark national differences (Burke

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et al., 2015; Puaschunder, 2020b). Puaschunder (2020b) measured the Gross Domestic Product (GDP) prospect differences under climate change around the world and found exacerbating climate inequalities. Puaschunder (2020b) introduced a climate change winners and losers index based on the economic prospects under climate change around the world and over time. The index attributed economic gain and loss prospects based on the medium temperature per country in relation to the optimum temperature for economic productivity per GDP agriculture, industry and service sector and the GDP sector composition per country in order to determine how far countries are deviating from their optimum productivity levels on a time scale (Puaschunder, 2020b). Burke et al. (2015) estimate how climate change will affect GDP per capita. In addition, the International Monetary Fund conducted a cross-country analysis of the long-term macroeconomic effects of climate change and found country inequalities in global warming effects (Kahn et al., 2019).

7.5

Resilient Redistribution

In order to alleviate inequalities in climate change impacts between countries, ethical imperatives but also economic calculus as put forward in Kaldor-Hicks’ compensation criteria guide redistribution schemes (Kant, 1783/1993; Rawls, 1971). Following ethical considerations of Immanuel Kant’s (1783, 1993) categorical imperative and John Rawls’ (1971) veil of ignorance, the climatorial imperative was formulated to advocate for the need for fairness in the distribution of the global earth benefits among nations (Puaschunder, 2020b). Based on Kant’s imperative to only engage in actions one wants to experience themselves being done to oneself, no climate harm should be done to any country independent of a country’s position on the relative economic climate winners and losers spectrum. Passive neglect of action on climate mitigation is an active injustice to others (Puaschunder, 2020b). Moral and ethical guidelines may be enhanced with the Kaldor-Hicks Compensation Criteria (Kaldor, 1961; Law & Smullen, 2008). The Kaldor-Hicks test for improvement potential within a society is aimed at moving an economy closer toward Pareto efficiency (Law & Smullen, 2008). Kaldor-Hicks’s criteria assume that any change usually makes some people better off and others worse off at the same time and tests if

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this imbalance can be alleviated by winners compensating losers for the change in conditions. Applying the Kaldor criterion in the context of taxation and bonds would serve as an example by which the economy moves closer to a Pareto optimality if the maximum number of gainers are prepared to pay the losers and to agree that the change is greater than the minimum amount losers are prepared to accept. In the KaldorHicks’s criteria, both sides must also agree that the benefits exceed the costs of such action. In the environmental domain problematic appears the fungibility of compensation (money will always be there) but the irreversible lock-ins and tipping points of environmental degradation (climate may be irreversibly locked-in and degrade living conditions in a nonlinear trajectory). The Kaldor-Hicks compensation can be applied to environmental constraints in regard to climate change. As economic gains and losses from a warming earth are distributed unequally around the globe, ethical imperatives lead to the pledge to redistribute gains to losing territories in the quest for climate justice and inclusive growth. Climate justice comprises fairness between countries but also over generations in a unique and unprecedented tax-and-bonds climate change gains and losses distribution strategy. Climate change winning countries are advised to use taxation to raise revenues to offset the losses incurred by climate change. Climate change losers could be incentivized to receive bonds that have to be paid back by future generations. Regarding taxation within the winning countries, foremost the gaining GDP sectors should be taxed. Those who caused climate change could be regulated to bear a higher cost through carbon tax in combination with retroactive billing through inheritance tax to map benefits from past wealth accumulation that potentially contributed to global warming. Climate justice within a country should also pay tribute to the fact that low- and high-income households share the same burden proportional to their dispensable income, for instance, enabled through progressive carbon taxation and a carbon consumption tax. In order for the Kaldor compensation to work effectively, climate change economic winners and losers must also agree that the benefits of a commonly-agreed-upon compensation scheme exceed the costs of such action. International cooperation and/or significant participation is an important way to internalize global externalities and avert climate change

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but also to agree upon a commonly-pursued rescue and resilience plan (Nordhaus, 1994; Semmler, 2021). Problems arise from free-rider problems that could be curbed with penalties for non-compliance to common agreements to a mutual climate stabilization plan enacted via taxation revenue transfers.

7.6

Science Diplomacy

Science diplomacy uses scientific collaborations among nations to address common problems and build constructive international partnerships for their solutions (The Vienna Statement on Science Diplomacy, 2022). As a rather informal and unpaid diplomatic service, scientists are thereby engaging in technical, research-based academic discourse and scientific exchange with the goal of collaborating based on facts to understand and alleviate global concerns. Originating since the 1930s in concept but practiced vividly during the Cold War, science diplomacy benefited from the political and financial independence of scientists, who often can exchange information freer from governmental oversight and media scrutiny control than conventional diplomats. Science diplomats are mainly researchers trained to focus on facts and scientific goals rather than promoting national country interests or advocating for stakeholder demands. Science diplomacy appears to be practiced by scientists to advise and inform as well as support policy objectives with international impetus and/or global governance focus. Science diplomacy also benefits from attracting a range of scientists who are willing to collaborate and practice heterodox—in terms of unconventional methodology—scientific ethics. Science diplomats’ research cooperation thereby forms a network of scientific exchange around the world; governmental leaders may turn to maintaining communication channels in times when political and conventional diplomacy are deadlocked (Gluckman et al., 2022). Science diplomacy is therefore a research collaboration-based informal network of allies that transcends nationalism and political frictions (Gluckman et al., 2022). Science diplomacy is considered as a new diplomacy form different from traditional diplomatic ties and a subform of international relations or soft diplomacy (Barston, 2014; Bjola & Kornprobst, 2018; Constantinou & Sharp, 2016; Nye, 1990; Sharp, 2016; Szkarłat, 2020).

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At the core of science diplomacy rests scientific cooperation and compromise for higher goals of global stability, sustainable development and common security. Science diplomacy allows for the pooling of diversified viewpoints and a larger range of funding than conventional national scientific endeavors. The international sharing of organizational capacities and historicallygrown expertise is bundled with a clear focus on empirically-driven results aside from national-politically-tainted red tape. As a rather unconventional approach of tackling global challenges and mainly focused on often hard-to-understand or inaccessible scientific jargon, science diplomacy collaboration can also benefit from less media scrutiny and market interference. Historically, science diplomacy was practiced successfully at the International Institute for Applied Systems Analysis (IIASA) in Laxenburg, Austria, from the end of the 1960s on throughout the Cold War (Gluckman et al., 2022). On the back-then-neutral country ground of Austria, scientists from East and West could discuss and exchange research-based knowledge and en passant build bridges and lasting ties between two blocs that were officially at cold diplomatic tact and rested within politically-distanced camps (Gluckman et al., 2022). Scientists focused on common issues of concern and advancing global progress toward a better future for all and thereby incepted concepts like sustainable development, nuclear disarmament and space exploration cooperation (Gluckman et al., 2022). Historically, topics of scientific cross-border interests became subject to informal meetings to discuss the emergence of potential global challenges and world community needs. Oftentimes, scientists were the only elite group who was allowed to travel freely under restrictive regimes, granting them a global network in the governance and development of science. Historic examples of scientific collaboration despite political adversities include explorations and scientific measurement of distance and time as well as grand accomplishments in technology and energy creation. Potential advancements during Cold War that were driven by science diplomacy were the successful closing of the Ozone Layer, cooperative development of nuclear energy, and concerted efforts on space exploration and technology transfers. Global governance institutions, like the World Bank, International Monetary Fund and United Nations, are building on science diplomacy to this day. Not only in the elevated number of academic-hired Bretton

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Woods institutions officials, but also in formal ties and open collaborations with universities and scientific organizations, such as the National Academy of Sciences. Around the world, science diplomacy appears to come to action and global progress to fruition. Successful examples are the Conferences of the Parties (COP) Intergovernmental Panels on Climate Change (IPCC) reports, which are usually led by scientific investigators and rolled out with the help of global governance institutions, foremost the United Nations. The Sustainable Development Goals of the United Nations but also the Unequal World Conferences of the United Nations have become hallmarks of science diplomacy delivering tangible research output and credible results aside from political agendas. Most recent notable advancements were the push toward science diplomacy as a soft power during the U.S. President Barack Obama administration. Notable institutional support is—to this day—provided by National Academies of Sciences around the world. The American Association for the Advancement of Science (AAAS) in Washington D.C. houses a Center for Science Diplomacy to bring together “scientists, policy analysts, and policy-makers” to “share information and explore collaborative opportunities” (Center for Science Diplomacy of the American Association for the Advancement of Science). The European Union also advocates for science diplomacy in EU-funded projects and international programs, such as the European Master in Law and Economics. Leaders in science, politics but also the industry have acknowledged the power and influence of science diplomacy beyond traditional governmental efforts and conventional international development. Global challenges that are too-large-to-fail and can only be surmounted by concerted intellectual effort asides from political agendas call for science diplomacy solutions. Global challenges related to climate change lay at the intersection of science and international relations.

7.7

Science Diplomacy Index (SDI)

In the first macroeconomic model of science diplomacy, an index was created including 51 countries around the world ranked on their potential to be spearheading science diplomacy. The presented Science Diplomacy Index (SDI) integrates (1) the academia quota per country as an indication of scientific excellence based on World Bank Educational Attainment data of at least Bachelor’s or equivalent education in the population of

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a country from 25 years of age as cumulative percent in the population derived from the United Nations Educational, Scientific and Cultural Organization (UNESCO) Institute for Statistics data as of June 2022 (World Bank, 2022); (2) a modified World Ranking of academic institutions based on the Web of Universities data weighted by the relevance of its academic institutions of the July 2021 edition (Web of Universities, 2022); and (3) the Lowy Global Diplomacy Index 2019 Country Ranking measuring diplomatic relations in embassies, consulates or other diplomatic representations around the world (Global Diplomacy Index, 2022). The Science Diplomacy Index results for 51 world countries are shown in Graph 7.2. The red country has the best science diplomacy conditions, followed by yellow and light green colored countries. The dark green countries have low science diplomacy preconditions. For white countries no data exists. The supporting data of the Science Diplomacy Index is exhibited in Table 7.1. The Science Diplomacy Index for 51 countries of the world indicates that the United States offers the best conditions to lead the world in

Graph 7.2 Science Diplomacy index worldmap

0.002345 Nepal 0.002615 Netherlands 0.012258 New Zealand 0.062239 Norway 0.000557 Philippines 0.000903 Poland

0.002291 Ireland 0.000313 Israel 0.001598 Italy 0.042081 Japan 0.040758 Latvia 0.003227 Lithuania 0.002593 Malaysia 0.000038 Mexico 0.060416 Mongolia

0.000000 France 0.048176 Germany 0.000002 Greece

0.019878 Hungary 0.002752 Iceland

0.001145 India

Bhutan Brazil Brunei Darussalam Canada Chile

China

Austria Bangladesh Belgium

0.004031 Portugal 0.026015 Russian Federation 0.000511 Saudi Arabia

0.024474 Myanmar

Australia

0.002086 Indonesia

Science Diplomacy Index numerical ranking

0.012041 Czech Republic 0.001633 Denmark 0.001803 Estonia 0.004423 Finland

Table 7.1

0.026350 0.020001 0.002562

0.000848 0.000400 0.000867

0.000921

0.003982 United States of America Vietnam

0.001503

0.603586

0.004512 Thailand 0.003280 0.187294 United Kingdom 0.049136

0.002108 South Korea 0.005180 Spain 0.016922 Sweden

0.000010 Slovakia 0.010268 Slovenia 0.001583 South Africa

0.000161 Singapore

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science diplomacy. As visible in Graph 7.3, Russia as well as Japan and India, the United Kingdom, Brazil, France and Germany have good conditions to establish cooperation through science diplomacy. South Korea, Mexico, Indonesia, Spain, Canada, Poland but also Italy, Australia and the Netherlands play a role in science diplomacy leadership on a global scale. Additional countries of interest to help with science diplomacy are the Philippines, Portugal, Belgium, Malaysia, Saudi Arabia, Thailand, Greece, Chile, Israel, Hungary, Sweden, Ireland, Denmark, Norway and the Czech Republic. In addition, capable of science diplomacy are Bangladesh, Austria, Finland, New Zealand, Vietnam and China. Further science diplomacy support can be granted by Singapore, Lithuania, South Africa, Slovakia, Latvia, Mongolia, Slovenia, Estonia, Myanmar, Iceland, Nepal, Brunei and Bhutan.

Graph 7.3 Science Diplomacy index bar chart

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Overall, the results indicate that the U.S. and Russia are key players in science diplomacy. Africa offers science diplomacy leadership potential foremost in South Africa. In Asia Japan and India but also South Korea, Indonesia as well as the Philippines, Malaysia and Thailand, Bangladesh, Vietnam, China, Singapore, Mongolia, Myanmar, Nepal, Brunei and Bhutan play a role in science diplomacy. Australia and New Zealand take a stage in science diplomacy as well. Within Eurasia, Saudi Arabia and Israel are key players in science diplomacy. In Europe, the United Kingdom, France and Germany lead followed by Spain, Poland, Italy, the Netherlands, Portugal, Belgium, Greece, Hungary, Sweden, Ireland, Denmark, Norway and Czech Republic, Austria, Finland, Lithuania, Slovakia, Latvia, Slovenia, Estonia and Iceland. In North America, the U.S. leads in science diplomacy but also Canada has the potential for academic diplomacy. In South America Brazil, Mexico and Chile have good starting grounds on science diplomacy.

7.8

Research Question and Hypotheses

This chapter addresses the question of economic redistribution of world countries under climate change in order to enact climate justice between countries and over time. A model for economic prospects under climate change will be introduced in order to determine a fair redistribution of short-term economic gains under global warming in order to offset for economic losses based on economic, ecological, historic and political factors. The chapter will also enlighten on what countries have favorable crisis resilience and resilient finance measures in place as well as science diplomacy and economic leadership conditions in order to argue for their heightened responsibility to act on climate change to lead the world’s climate justice scheme. In order to act on climate change mitigation and adaptation within the shortened timeframe given, a global solution must be found at extraordinary speed. Country leadership of powerful science diplomacy nations appears as necessary conditions to push for cooperation and feasible solutions that are carried by the world community. The underlying hypotheses of the following macroeconomic modeling state that scientifically-skilled and academically-equipped nations with rising economic prospects based on changing temperatures under global warming have favorable redistribution conditions. Countries that cause the problem in harmful CO2 emissions and countries that have favorable

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economic starting grounds to lead a global redistribution scheme have a heightened responsibility to act on climate change with science diplomacy focused on enacting climate justice. In the following nine indices will be introduced that target at determining the countries that have good economic and political starting grounds on science diplomacy given their expected climate changeinduced economic conditions, historic ecological debt to redistribute as well as financial power and academic skills in scientific institutions as well as knowledge-driven expertise networks to enact a fair redistribution scheme to enact climate justice. After presenting a scientific quantification of science diplomacy leadership potential, the Science Diplomacy Index will be applied to climate change aversion strategies. Thereby the question arises of what countries have an economically better starting ground to protect the earth from global warming and a higher obligation to act on fair climate solutions. In accordance with ethical imperatives derived from Immanuel Kant’s (1783, 1993) categorical imperative and Hans Jonas (1979) extension on environmental justice, John Rawls’ (1971) veil of ignorance, Kaldor’s (1961) compensation criteria and Puaschunder’s (2020b) climatorial imperative, those countries should have a higher responsibility to act to protect the earth from global warming that have relatively better economic outlook conditions in light of climate change as well as those countries that cause the problem of a heating up earth in CO2 emissions and those countries that are not willing to change their emissions. Those countries with established science diplomacy and economic networks around the world as well as those having favorable capital lending access are predestined to lead the world on a common climate justice redistribution solution enabled via green climate bonds and country-wide taxation.

7.9

Climate Justice

Economic models on the economic impact of climate change on the world have found vast differences in climate change impacts around the globe (Burke et al., 2015). Burke et al. (2015) estimate how climate change will affect GDP per capita. In addition, the International Monetary Fund conducted a cross-country analysis of the long-term macroeconomic effects of climate change and found country inequalities in global warming impacts (Kahn et al., 2019). The Nordhaus Regional Integrated

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model of Climate and the Economy model (RICE model) also pays attention to the regional, dynamic and general-equilibrium of the economy given human-made climate change in greenhouse gas emissions (Orlov et al., 2018). Another approach is to consider contemporary Gross Domestic Product (GDP) measurements to serve as the basis for estimations about the productivity of the agriculture, industry and service sectors around the world during climate change, which is directly linked to employment and capital streams (Puaschunder, 2020b). Based on the cardinal temperatures for the agriculture, industry and service sectors’ productivity, the average temperature per country around the world as well as climate projections of the year 2100 under the business-as-usual path, Puaschunder (2020b) revealed economic gains and losses being distributed highly unequally throughout the entire world, leading to relative short-term economic climate winners and losers around the world. Overall and simply seen from a narrow-minded GDP perspective, the world will macroeconomically benefit more from climate change until 2100 than lose (Puaschunder, 2020b). Winning and losing from a warming earth is significantly positively correlated with the Paris COP21 emissions country percentage of Greenhouse Gas (GHG) for ratification (Puaschunder, 2020b). The higher the climate change-causing effect of some countries the more likely the country is also to have more time ahead to peak productivity based on a favorable climate. This connection between being a climate change winning territory and causing climate change leads to the assumption that the countries that have the longest time horizon regarding a warming earth may also lack motivation to mitigate global climate change based on the short-term benefits and economic gain prospects (Puaschunder, 2020b). While the method to measure the gains from climate change can certainly be refined in future studies, shedding light on climate change winners and losers opened the gates for policy work to settle for a right, just and fair distribution of relative benefits and gains from our common warming mother earth. The introduction of the gains from climate change is a novel approach that should solely be seen in connection to the imperative to distribute the gains in a fair manner among all world inhabitants. Outlining the benefits of a warming globe may also serve as means to hopefully draw attention to climate change to agnostic market actors or those who shy away from action given the overall negative connotation of burden sharing and loss aversion.

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The implementation of climate stability accounts for the most challenging contemporary global governance predicament that seems to pit world countries against each other but also today’s generation against future world inhabitants. In a trade-off of economic growth versus sustainability, only a broad-based international coalition could establish climate stability. The most recent attention to global warming gains and losses being distributed unequally around the globe urges to search for a well-balanced climate mitigation and adaptation public policy mix guided by micro- and macroeconomic analysis results (IPCC, 2021). A new way of funding climate change mitigation policies but also the transition to renewable energy is proposed through a broad-based climate stability bonds-and-taxation mix that not only involves future generations but also establishes an equitable solution between current world countries and market actors, who are incentivized to reduce CO2 emissions (Chichilnisky, 2014; Kato et al., 2014; World Bank, 2015a, 2015b). Technological innovations are usually a result of a mix of private and public activities. The public sector can set frameworks and incentives to support inventions through R&D and de-risk of innovation through public support, subsidies and setting strategic incentives (Flaherty et al., 2017). Public actions—such as tax and subsidies but also bonds—enable the transition to a low-carbon economy (Maurer & Semmler, 2015). A tax-and-bonds mix can contribute to a faster transformation of the energy system toward a less carbon-based energy provisions (Heine et al., 2019). Carbon taxation can be manifold and includes a Pigouvian tax that addresses negative externalities (Acemoglu et al., 2019; Nordhaus, 2008; Semmler, 2021). Taxation leads to a repricing of goods, services and substitution effects that can nudge consumers into a transition of energy sources and consumer habits that are in sync with environmental protection. Green taxation provides domestic revenues which governments can use for instigating green innovation and for compensation for climaterelated losses (Acemoglu et al., 2019; Semmler, 2021). In previous climate financing models through taxation, the distributional imbalances were considered as problematic in green taxation since the current generation often carried a higher burden. One standard taxation approach was used for all countries and societal members. The resulting intertemporal, inter-societal and intergenerational predicaments led to political constraints and implementation hesitancy of the many involved stakeholders around the globe (Chappe, 2021; Semmler, 2021).

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Inequality appeared in the disproportionate burden of taxation within a society but also over time. Having found that there are relative short-term gains from a warming earth allows for redistribution schemes to transfer benefits into areas of the world that will be primarily losing from climate change the most and the fastest. Thereby a taxation-and-bonds transfer strategy could allow lifting the negative impacts of climate change hindering economic growth by compensation funded out of the gains of global warming (Barro, 1990; Puaschunder, 2016a, 2020c). In the implementation, a climate change bonds but also taxation strategies are recommended. A commonly-agreed-upon bonds-and-tax transfer strategy would require governments and global entities to promote taxpayer collaboration but could enhance tax morale in the environmental domain (Puaschunder, 2017, 2020b). One of the most prominent forms to create revenues for public longterm investment causes are taxes. Tax compliance has been studied in the context of competitive games (Engwerda, 2014). On environmental concerns, taxation can grant redistribution potential between countries in the macroeconomic predicaments around economic growth and climate change (Greiner, 2014). Taxation is codified in all major societies and a hallmark of democracy. Aimed at redistributing assets to provide public goods and ensure societal harmony, taxation improves societal welfare and fairness notions within society. Tax compliance is a universal phenomenon based on cooperation in the wish for improving the social compound. Taxpayers voluntarily decide to what extent to pay or avoid taxes that limit their personal freedom. In a social dilemma, individual interests are in conflict with collective goals. From a myopic economic perspective, the optimal strategy of rational individuals would be to not cooperate and thus evade tax. Short-term the single civilian tax contribution does not make a significant difference in the overall maintenance of public goods—if only a few taxpayers evade taxes, public goods will not disappear or be reduced considerably. But if a considerable number of taxpayers do not contribute to tax over time, common goods are not guaranteed and ultimately everyone will suffer from suboptimal societal conditions (Dawes, 1980; Stroebe & Frey, 1982). Fairness is believed to decrease egoistic utility maximization leveraging trust and reciprocity as interesting social norms-building factors (Kirchler, 2007; Puaschunder, 2015c). Social perceptions of fairness as

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underlying social tax-paying norms are therefore potential tax ethics nudges (Puaschunder, 2015d, 2020a). But psychological facets of fairness for the formation of social norms have been left out of tax-and-bonds strategy compliance nudges. Likewise, in the hope of building a more equitable society, when facing unequally-distributed gains and losses from a warming earth, tax compliance for redistribution may be elicited. In the macroeconomic growth literature regarding government actions, a zero-emissions tax is not necessarily considered welfareimproving (Greiner et al., 2014) but appears as one of the most powerful means to curb harmful emissions and set positive market incentives for a transition to renewable energy (Hansen & Sato, 2016; IPCC, 2007; Mankiw, 2007; Nordhaus, 2008, 2013; Semmler et al., 2021; Uzawa, 2009). A substantial increase in green investments is still required to reach the Paris Agreement’s emission targets (Braga et al., 2020a). A widespread energy transition will require innovation but also governmental efforts to imbue incentives into market economies to change energy resource usage patterns (Semmler et al., 2020). Technological change appears as a driver of the transition to clean technologies but has proven to be unpredictable and uncertain (Acemoglu et al., 2014, 2019). The implementation of climate-friendly technological change around the world faces several constraints, such as international consent, national willingness and ground-level implementation constraints (Chappe, 2021; Popp, 2014). A carbon tax allows for an instant and relatively stable broader application to generate tax revenue. Carbon taxation also lowers harmful emissions and can steer market dynamics toward a fair climate change burden and benefits distribution. Tax funds can thereby be used to fund large-scale investments for the future, such as enacted in green bonds and development economics (Braga et al., 2020a; Semmler et al., 2021). Carbon tax policies and the issuance of climate bonds have therefore risen steadily within the previous decade (Flaherty et al., 2017; Semmler et al., 2021). Taxation models can aid to share the burden of climate change within society in a fair way. Regarding concrete climate taxation strategies, a carbon tax on top of the existing tax system could be used to reduce the burden of climate change and encourage economic growth through subsidies for transitioning into renewable energy (Chancel & Piketty, 2015; Greiner et al., 2014; Wirl & Yegorov, 2014). Within a country, high- and low-income households should face the same burden of climate

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stabilization adjusted for their disposable income. Finding the optimum balance between consumption tax adjusted for disposable income through a progressive tax scheme promises to aid in unraveling drivers of tax compliance in the sustainability domain. Besides progressive taxation schemes to imbue a sense of fairness in climate change burden sharing, corporate taxation is also a flexible means to reap past wealth accumulation, which potentially caused environmental damage. Those who caused climate change should bear a higher cost through carbon tax in combination with retroactive billing through a corporate ‘inheritance’ tax. Industry-specific taxation attempts could also curb harmful emissions in sectors of the economy that emit high levels of CO2 . The burden of climate change mitigation and adaptation could also be allocated in a fair way within society through contemporary inheritance tax in order to reap the benefits of past wealth accumulation. But also developed and underdeveloped countries as well as various overlapping generations are affected differently and this inequality could be met with a combined tax-and-bonds strategy to even out the differences. If climate taxation is perceived as a fair and just allocation of the climate burden, this could convince taxpayers to pay one’s share. A novel ‘serviceand-client’ atmosphere could promote taxpayers as cooperative citizens who are willing to comply if they feel their share as fair contribution to the environment. Taxpayers, who understand that there is an inequality in the way climate change effects the earth and that there are some countries that have rising economic prospects in a warming climate which can be redistributed, may be more prone to contribute to the financing of climate justice if they are incentivized by behavioral changes. Educating taxpayers about the gains and losses of global warming could thus foster cooperative citizens who are willing to comply voluntarily with common goals. International comparisons of tax behavior also reveal tax norms being related to different stages of institutional development of the government, which is an essential consideration in sharing the climate change burden in a fair manner between countries. In the environmental domain, Jeffrey Sachs (2014) proposed an intergenerational burden-sharing idea with bonds. Sachs (2014) presented a 3-model climate change burden sharing through fiscal policy with bond issuing in order to reflect the implementation regarding contemporary finance and growth models with respect to maximizing utility of the model. In an overlapping generations type model, research has elucidated climate change abatement and mitigation policies to lead to a

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fairer solution across generations (Orlov et al., 2018). As a novel way to amend individual saving preferences in favor of future generations, Sachs (2014) advises to mitigate climate change by debt to be repaid by tax revenues on labor income in the future. Introducing financing climate change mitigation through bonds to be paid back by future generations through taxation is a means to raise funds for offsetting the losses of global warming. In a second-period model, one generation works in period 1 and retires in period 2. Part of the disposable wage income is saved for consumption in the second period. CO2 emission mitigation imposes immediate costs on current generations and reduces wages. Greenhouse gas concentrations in period 2 are determined by the emissions in period 1. Wages of the young in period 2 are reduced by climate change dependent on greenhouse gas levels. Disposable labor income of the young equals market wage net of taxes. Leaving the current generation with unchanged disposable income allocates the burdens of climate change mitigation across generations without the need to trade off one generation’s well-being for another’s. While today’s young generation is left unharmed, the second-period young generation is made better off ecologically. The current generation mitigates climate change by a transition to renewable energy and building up infrastructure against climate risk financed through climate bonds to be paid by future generations. Since current generations raise funds via debt for future generations, the currently-created externalities from economic activities—the effects of CO2 emissions—are removed. This entails that the current generation remains financially as well off as without mitigation while improving the environmental well-being of future generations. As Sachs (2014) shows, this intergenerational tax-and-transfer policy turns climate change mitigation policies into a Pareto-improving strategy. Shifting the costs for climate abatement to the recipients of the benefits of climate stability appears as novel, feasible and easily-implementable solution to nudge many overlapping generations toward future-oriented loss aversion in the sustainability domain (Puaschunder, 2018). This kind of bonds solution should be pursued in countries in which climate change shrinks the economic prospect, in order to offset the costs of climate change in a more intergenerationally-harmonious way. The novel idea brought forward in this chapter now is that climate bonds could be funded by taxing those countries and industries that have a rising GDP prospect. Current costs for climate stabilization could also

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be covered by tax payments made by those countries that currently gain from a warming temperature. Governments in losing countries should receive tax transfers in the present from the winning countries. In the territories losing from global warming in the near future, climate bonds could be financed by taxation revenues of countries that have a relatively rising GDP prospect under global warming in the short run as well as by debt for future generations in the relatively GDP losing territories. While future generations enjoy a favorable climate and averted environmental lock-ins; the current populace does not face economic drawbacks to growth (Puaschunder, 2015a, 2019). Countries that have a declining GDP prospect could also issue climate bonds funded by debt that is paid by those countries that do not change their CO2 emissions standards in the next period. Since here borrowing equals loans or issuing of bonds to be paid back by future generations, the government must pay back the debt plus interest payments that are funded by direct transfers and by raising taxes on those societies that have not changed their CO2 emitting behavior in later periods. All generations are better off with mitigation through climate bonds as compared to the business-as-usual (BAU) non-mitigation scenario (Sachs, 2014). Taxing climate change winning countries that enjoy climate flexibility and countries that cause climate change in CO2 emissions in production and consumption and those that are not willing to change their CO2 emissions and have historically-favorable bank lending rates are justified for economic, ethical and philosophical reasons. Resilient finance in the climate-related growth is portrayed as a Pareto optimal solution from the economic perspective. Ethics of inclusion lead to the rationale that inclusive growth is sustainable and most likely to breed harmony in society in the long run (Puaschunder, 2016c). As for potential obstacles following a logic based on Kaldor’s compensation criteria, a mutual agreement has to be found in the realization that everyone is better off in the long run if climate change is averted. Based on Kant’s (1783, 1993) categorical imperative, a taxation-and-bonds strategy appears favorable even as a climate change winner if considering to not wanting to incur harm actively that one does not want to be incurred onto oneself passively. Rawls’ (1971) veil of ignorance justifies climate transfers funded via taxation of climate winners when considering the ethical dilemma to fund or not fund without knowing whether one is a grantor or recipient of funds. Ecologically, funding climate bonds on debt

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for future generations can be grounded in the preferences of future generations to avoid higher costs and long-term damages of climate change and environmental irreversible lock-ins. Overall, this tax-and-transfer mitigation policy thus appears as a Paretoimproving fair solution across the world, over time periods and generations. It also incentivizes countries long-term to change their CO2 emission levels and turns competitive market behavior into a race to the top for a transition to renewables. This innovative tax-and-bonds strategy imbues asset prices with loss aversion to create positive market incentives for curbing harmful emissions and thereby steers a transition to renewable energy.

7.10 Climate Resiliency Financing Implementation Since 2007 there has been a steady rise in carbon taxation and green bonds issuance (Flaherty et al., 2017; Heine et al., 2019; Semmler et al., 2021). Throughout the world, some countries engage primarily in carbon pricing, some in green bonds and foremost the U.S., Europe, China, Australia, South Africa and the Southern parts of Latin America feature a mixture strategy comprised of carbon pricing and green bonds (Semmler et al., 2021). Portfolio and hedge fund managers strive for reducing risks to the overall portfolio with green bonds, in the short term and the long run (Braga et al., 2020b). Capital markets can expedite green investments by de-risking innovative green finance (Braga et al., 2020b). Financial benefits of green bonds include a de-risking of investor portfolios and a diversification strategy against market volatility (Semmler, 2021). Braga, Semmler and Grass (2021) find that empirical beta pricing and yield estimates reveal some public involvement in the green bonds market, especially for long-maturity bonds. Investment options based on renewable energy can reduce the risks and political dependencies on commodities associated with non-renewables (Gevorkyan & Semmler, 2016). Renewable energy, therefore, appears as a crisis-stable market option, also as for being chosen based on values and not for profit motives (Puaschunder, 2013, 2015b). Climate bonds also incentivize a transition to renewable energy solutions (Semmler, 2021). Subsidies and carbon taxation can complement the role of the de-risked interest rates and expedite the energy transition (Braga et al., 2021).

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Green bonds have substantial revenue-raising opportunities to fund climate policies (Semmler, 2021). Bonds can serve as a hedging instrument against oil price fluctuations in portfolios, in particular low fat-tail correlations (Semmler, 2021). Green bonds are fixed-income securities that are usually certified by a third party to have the funds for climate stabilization. Green bonds are thus predestined for low capital costs green projects and good instruments for funding green counter-cyclical investment (Semmler, 2021). Green bonds unlock the necessary funding for the investment in sustainability projects, such as—for example—clean energy, low-carbon transports and green buildings (Flaherty et al., 2017; Semmler, 2021). Green bonds are safe and crisis-robust long-term assets (Semmler, 2021). Governmental bonds are often financed via quantitative easing and backed by the state (Semmler, 2021). Green bonds thereby enable intertemporal burden sharing of climate change mitigation and adaptation (Orlov et al., 2018; Sachs, 2014). The investment grade for green bonds appears to be equal to or greater and the duration greater than 10 years according to Standards and Poor’s ratings, which predetermines green bonds for long-term intergenerational burden-sharing strategies (Semmler, 2021). Climate bond issuing agencies comprise of public and private sector entities. Public sector green bond providers include international institutions, central banks and governments as well as municipalities (Semmler, 2021). The World Bank but also the International Monetary Fund as well as central banks and municipalities have played a leading role in the development and utilization of green bonds over the last several years (Semmler, 2021). Based on information derived from the Bloomberg Terminal, Semmler et al., (2021) outline that bonds are heterogeneous in terms of issuer, duration, country and currency as well as sectors. Most green bonds are issued by banks, real estate power generation, utilities, governments, supranational entities and the energy sector.

7.11 Climate Justice Resiliency Financing Taxation-and-Bonds Strategy Currently, the financing of climate justice is estimated to comprise of 5– 7% of the contemporary world GDP, accounting for 5–6 billion USD (Braga et al., 2020b; Flaherty et al., 2017). Climate change mitigation and adaptation are proposed to be financed by a climate taxation and

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green bonds strategy. Green bonds have become fundamental pillars to raise funds for a transition to renewable energy. Solar power and wind turbines, an eco-friendly infrastructure and more research and development in clean energy and green technology, are all investments for averting climate change, which have been funded by bonds. Public entities, such as the World Bank or the International Monetary Fund, or governmentally-backed bonds, such as municipal government investment in renewable energy projects, are primary green bond issuers. Asset-backed securities are similar to traditional bonds, but their debt repayment is financed by a particular revenue stream, such as tolls or surcharges on energy use (Semmler, 2021). Covered bonds are a type of asset-backed security that are also guaranteed by the issuing agency (Semmler, 2021). The repayment mechanism of green bonds depends on which of these categories the bond falls into. The strategic bundling of bonds but also tax-and-bonds strategies are currently debated in science and policy contexts. Green bonds could fund all these endeavors by being pegged to governmental aid in the post-COVID-19 crisis recovery. Governments can also bring back the financial world in the service of improving and stabilizing the real economy in resilience financing, which already began in the course of the regulations following the 2008/09 recession and evolved in the aftermath of the economic fallout of the COVID-19 pandemic. Central banks on behalf of the World Bank or the International Monetary Fund could take the lead to offer differing bond regimes. The European Taxonomy for sustainable activities creates a European Union standard to classify assets and investments according to their climate benefits, following the new technological trends and indicators of the Technical Expert Group on Sustainable Finance (2020). Organized by sector and technology, the European Sustainable Finance Taxonomy provides references to classify climate change mitigation and adaptation activities, including environmental objectives (European Union Technical Expert Group on Sustainable Finance, 2020). Broad-based climate stabilization financing through bonds and credits could thereby finance mitigation efforts, while adaptation funding would address the impact of climate change on its local effects, such as regional disasters. The European classification of industries’ contribution to climate change could become the basis of setting positive market incentives to change via differing bonds regimes.

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In-between countries global governance could determine climate change transfer grantors and beneficiaries of climate bonds in a climate tax-and-bonds strategy. The transfers could be based on the climate change winners and losers’ index but also the climate flexibility of a country and the willingness and ability of a country to change its CO2 emissions and the CO2 emissions production and consumption levels as well as the bank lending rates. The administration of the climate taxationand-bonds resilience finance strategy could be based on those countries that have a historically beneficial position to raise funds and convince in existing science diplomacy networks due to a well-established economic trade exchange. A country’s ability to lead on crisis resilience and resilient financialization strategies via access to favorable bank lending rates as well as expertise in science diplomacy could determine the responsibility to protect from climate change. All these factors could serve as parameters for whether a country should be using more of a climate taxation strategy to grant the common climate bonds endeavors or be a recipient of a favorable climate bonds regime with high bond premiums and maturity rates. Being a climate change winner or loser could be integrated into an index based on the CO2 emissions per country in relation to other countries. On a yearly basis, countries already determine their greenhouse gas emissions levels, hence their causing of the climate change problem. The factors of being a climate change winner or loser and having climate flexibility as a country but also the current CO2 emissions and the CO2 emissions production and consumption levels and the bank lending rates for credits should determine a key to estimate the transfer need and country responsibility to contribute to a common plan. If a country has a resilient finance structure and has intervened during financial crises previously but also if a country is well-connected and a leader in science diplomacy, this could win other countries to follow the proposed climate financialization resilient finance strategy enacted via climate bonds and taxation. Climate bonds could thereby feature a combination of climate justice between countries and over time. Based on this index, the redistribution scheme could be established via a diversified bonds premium payment regime, in which the climate change winners and climate flexible countries should be financing climate bonds by climate taxation. In countries that already face declining economic prospects due to climate change and that are naturally climate-constraint, the interest rate regime for climate bonds should be more favorable compared to climate change

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winners. High CO2 emitting countries that are contributing more to the problem should be issuing climate bonds that pay for climate stability, and hence, face a climate tax regime that pays for the establishment and maintenance of the climate bond. Lower CO2 emitting countries should be beneficiaries of issuing bonds with a higher interest rate premium for common green bonds. This will spark capital mobility in territories that gain economically from climate change to curb harmful emissions and move toward renewable energy. Climate fund transfers should also pay attention to CO2 emission production and consumption differences. Accounting for international trade disparity could address how CO2 emissions compare by country when adjusting for the trade of CO2 -producing goods. Taking historically-established access to financialization capital but also the previous crisis intervention and resilience finance build-up could be other determinants for successful leadership in the climate bonds and sustainability taxation scheme. If a country has science diplomacy expertise and if a country is well-connected in trade and human capital movement terms, then these countries should become proponents of the global taxation-and-bonds strategy. All these redistribution measures could enact climate justice in-between countries in a given year. The diversified climate bonds should also depend on the CO2 emissions changes of countries over time. In order to ensure that countries are incentivized to keep their CO2 emissions at a low level and compete over a transition to renewable energy, countries should have the prospect of shifting from being a climate bond grantor (those countries that pay for the fund with climate taxation) to become climate bond beneficiaries (those countries that receive climate bonds for favorable market conditions subsidized by payments of the climate bonds grantors). The prospect to gain from global warming for lowering CO2 emissions could enact climate justice action over time, if the index that determines where a country falls onto the climate bonds grantor or climate bonds-beneficiary spectrum also includes CO2 emission changes from year to year. In addition, the bank lending rates of a country could determine whether a country should be granting the climate bonds via taxation or be a beneficiary of favorable climate bonds. Countries with low bank lending rates, in which industries have ample access to market capital, should work toward a transition to renewable energy and thus operate with taxation of industries that have high CO2 emission levels. Countries that face high bank lending rates should be climate bond beneficiaries that are funded by

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climate bonds via the transfer payments of low bank lending rates countries. In high bank lending rate countries, the climate taxation-and-bonds solution could also be funded via debt that will be paid back by future generations, who receive a favorable climate in lieu. This will enable to implement climate justice over time in-between generations. The following model integrates these ideas of climate justice between countries and over time in presenting nine indices to implement a climate taxation-and-bonds strategy: (1) Climate winners and losers CO 2 emission Index: Climate justice between countries could be based on the idea that climate change winning countries that contribute to human-made global warming in CO2 emissions should pay for the establishment and maintenance of climate bonds via carbon taxation, while climate change losing territories with low CO2 emissions should be climate bond issuers with a higher interest rate premium. (2) Climate winners and losers’ climate flexibility and CO 2 emission Index: Climate change winning countries that also feature relative climate flexibility in terms of temperature ranges on their territory and that contribute to human-made global warming in CO2 emissions should pay for the establishment and maintenance of climate bonds via carbon taxation; while climate change losing territories with low CO2 emissions and a narrow range of temperatures on their soil and thus low climate flexibility should be recipients of climate bonds with relatively high interest rate premium and thus be relative beneficiaries in the common climate taxation-and-bonds transfer scheme. (3) Climate winners and losers CO 2 emission change Index: Climate justice over time could be fortified by climate change winning countries that contribute to human-made global warming in CO2 emissions and have a rising trend of CO2 emissions compared to other countries should pay for the establishment and maintenance of climate bonds via carbon taxation; while climate change losing territories with low CO2 emissions that have declining CO2 emissions compared to other countries should be recipients of climate bonds with higher interest rates and thus be climate bond premium beneficiaries. This would create market incentives for countries to compete over CO2 emissions reductions and naturally lead towards a transition to renewable energy. As Puaschunder (2020b) found a

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correlation between being a climate change winner and CO2 emissions; the combination of having been a climate winner and having caused the climate problem is likely. This index could incentivize positive changes over time and is only one proposed index measure that may be combined or exchanged by any of the other proposed indices. (4) Climate winners and losers CO 2 emission Financial Crisis Intervention Index: Climate justice between countries could be based on the idea that climate change winning countries that contribute to human-made global warming in CO2 emissions and have a history of financial crisis interventions should pay for the establishment and maintenance of climate bonds via carbon taxation; while climate change losing territories with low CO2 emissions that also have no crisis intervention expertise should be climate bond recipient beneficiaries being granted a relatively higher bond interest rate premium funded by taxation of CO2 emitting industries in climate winning countries with well-established financial crisis intervention means. (5) Climate winners and losers CO 2 emission Resilience Finance Index: Climate justice between countries could be based on the idea that climate change winning countries that contribute to human-made global warming in CO2 emissions and have expertise in resilience finance strategies should pay for the establishment and maintenance of climate bonds via carbon taxation; while climate change losing territories with low CO2 emissions that lack resilience finance infrastructures should be climate bond recipient beneficiaries being granted a relatively higher bond interest rate premium funded by taxation of CO2 emitting industries in climate winning countries with well-established resilience finance means. (6) Climate winners and losers CO 2 emission bond lending rate Index: Climate justice between countries could be based on the idea that climate change winning countries that contribute to human-made global warming in CO2 emissions and have a low bank lending rate should pay for the establishment and maintenance of climate bonds via carbon taxation; while climate change losing territories with low CO2 emissions that also have a high bank lending rate should be climate bond recipient beneficiaries being granted a relatively higher bond interest rate premium funded by taxation

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of CO2 emitting industries in climate winning countries with low bank lending rates. (7) Climate winners and losers consumption-based, trade-adjusted CO 2 emission Index: Climate justice between countries could be based on the idea that climate change winning countries that contribute to human-made global warming in CO2 emissions goods and services consumption should pay for the establishment and maintenance of climate bonds via carbon taxation; while climate change losing territories with low CO2 emissions goods and services consumption should be climate bond issuers with a higher interest rate premium. (8) Science Diplomacy Climate Responsibility Index: The implementation of climate justice between countries could be based on the idea that climate change winning countries that contribute to human-made global warming in CO2 emissions goods and services consumption and have an established science diplomacy expertise with networks around the world should have a heightened responsibility to protect from climate change and pay for the establishment and lead in implementing the maintenance of climate bonds via carbon taxation; while climate change losing territories with low CO2 emissions goods and services consumption that are not so well versed in science diplomacy should follow the plan to accept climate bond issuers with a higher interest rate premium. (9) Global Connectivity Climate Responsibility Index: The implementation of climate justice between countries could be based on the idea that climate change winning countries that contribute to human-made global warming in CO2 emissions goods and services consumption and have an established global connectivity through trade, finance and human capital transfer with networks around the world should have a heightened responsibility to protect from climate change and pay for the establishment and lead in implementing the maintenance of climate bonds via carbon taxation; while climate change losing territories with low CO2 emissions goods and services consumption that are not so well versed in global networking should follow the plan to accept climate bond issuers with a higher interest rate premium.

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Economic Model

Climate stabilization financialization is proposed to integrate relative economic climate gain and loss prospect theories and empirical validations of the unequal climate change impact on countries in order to guide on contemporary climate justice endeavors enacted via taxation-and-bonds strategies. As a foundation for the redistribution of climate gains and losses, the disparate impact of global warming on countries is considered. A model will be laid out for determining redistribution patterns of relative short-term economic gains from climate change throughout the world based on the geo-impact of climate change, the financial crisis resilience capabilities as well as the global connectivity and leadership of a country. As for the geo-impact, if a country has a relatively short-term rising GDP prospect in a warming climate, then this country should be redistributing some of the expected wealth increase to places that have a declining GDP prospect. Further, if a country has a natural climate flexibility in terms of a range of different temperatures that vary within its territory, then the country is assumed to have more economic degrees of freedom and future trade assets in a changing climate and thus should also redistribute some of the expected wealth increase to places that have a declining GDP prospect and low climate flexibility. In order to set positive market incentives to not cause climate change, the model will also integrate human-made contributions to climate change as well as the ability and willingness of a country to change its CO2 emissions in relation to others. Those countries that contribute to CO2 emissions in production and consumption and are not changing their CO2 emissions levels to less pollution, are therefore suggested to be required to redistribute some of the expected economic GDP gains to places that have a declining GDP prospect, are not causing CO2 emissions in production and consumption as well as have been curbing harmful CO2 emissions in relation to other countries and over time. When it comes to financial crisis resilience capabilities, the model will consider a created Financial Crisis Intervention Index based on the previous resilience of a country during economic upheaval. Those countries that intervened during economic crises around the world and over time are predestined to be leaders in a global climate redistribution scheme for established expertise in administering financial transfers to alleviate economic risks and crisis fallouts.

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The model will also introduce a newly created Financial Resilience Index, which measures the capability of countries to proactively create financial tools to overcome crises. The historical knowledge to combat crises with resilience finance will determine a country’s responsibility to act on finding sustainable finance means to redistribute assets for climate change mitigation and adaptation around the world and over time. The prevailing bank lending rate regimes will play a role in the model insofar as those countries with low bank lending rates are assumed to have better conditions to access funding and will therefore be advised to redistribute rescue and recovery aid for climate change mitigation and adaptation to countries with high bank lending rates to even out historically-grown hierarchies and economic power dynamics in the access to capital for economic transitions. As for global connectivity and leadership, the consumption-based, trade-adjusted CO2 emissions will be taken into consideration. Those countries that consume goods and services with high CO2 emissions in their production should be redistributing some of the relative expected short-term gains from a warming globe into territories that are losing out from climate change the fastest and the most and are consuming fewer goods that cause high CO2 emissions in their production. A Science Diplomacy Index was created based on the academia quota per country, the world ranking of academic institutions as well as the diplomatic relations in embassies, consulates and other representations as determined by the Lowy Global Diplomacy Index. The better equipped a country is based on science diplomacy, the more the country is predestined to lead the world in a science-driven solution to redistribute funds for climate change mitigation and adaptation around the world. The Global Economic Connectivity was measured based on trade freedom, remittances, Foreign Direct Investments (FDI) and migration of a country in order to outline which countries have a vital network of trade and human capital transfers established in order to lead the world in the redistribution of funds around the globe in the endeavored climate taxation-and-bonds strategy. looseness-1All mentioned influence factors in the determination of which countries have a responsibility to act on climate change and best starting positions to implement a planned climate change taxation-andbonds strategy to redistribute funds to offset for climate change losses and transition to a renewable resilient finance economy are outlined in Table 7.2.

Geo-impact of climate change (1) Relative economic climate change winner and loser countries and CO2 emission Index (integrating normalized values of F1 and F3 )

Index Description

Climate change economic loser countries with low CO2 emissions → climate bonds strategy with high discount rates regime and longer-term maturity to spread the burden of climate stabilization financing between generations and a relatively high bond yield-at-issue with relatively high interest rates from subsidies funded by high index value countries

Low values

Influence variables on climate taxation-and-bonds strategy

Climate taxation bonds strategy

Table 7.2

(continued)

Relative climate change economic short-term winner countries with high CO2 emissions → taxation strategy coupled with low discount rates regime and short-term maturity to act now to protect future generations from climate change impacts. The higher the index, the more the country should be obliged to fund the climate bond via taxation. The lower the relatively high values of the index, the more likely the country should have access to bonds with growing yield-at-issue instead of taxation

High values

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(continued)

Low values Climate change economic loser countries with low climate flexibility and low CO2 emissions → climate bonds strategy with high discount rates regime and longer-term maturity to spread the burden of climate stabilization financing between generations and a relatively high bond yield-at-issue with relatively high interest rates from subsidies funded by high index value countries

Climate change economic loser countries with low CO2 emissions and lowering CO2 emissions → climate bonds strategy with high discount rates regime and longer-term maturity to spread the burden of climate stabilization financing between generations and a relatively high bond yield-at-issue with relatively high interest rates from subsidies funded of high index value countries

Index Description

(2) Relative economic climate change winner and loser countries’ climate flexibility and CO2 emission Index (integrating normalized values of F1 , F2 and F3 )

(3) Relative economic climate change winner and loser countries and CO2 emission change Index (integrating of F1 , F3 and F4 by multiplication)

Climate taxation bonds strategy

Table 7.2

Relative climate change economic short-term winner countries with high climate flexibility and high CO2 emissions → taxation strategy coupled with low discount rates regime and short-term maturity to act now to protect future generations from climate change impacts. The higher the index, the more the country should be obliged to fund the climate bond via taxation. The lower the relatively high values of the index, the more likely the country should have access to bonds with growing yield-at-issue instead of taxation Relative climate change economic short-term winner countries with high CO2 emissions and increasing CO2 emissions → taxation strategy coupled with low discount rates regime and short-term maturity to act now to protect future generations from climate change impacts. The lower the relatively high values of the index, the more likely the country should have access to bonds with growing yield-at-issue instead of taxation. The yield-to-maturity should depend on the country’s CO2 emission changing behavior insofar as a reduction over time improves the maturity over time

High values

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Financial crisis resilience (4) Relative economic climate change winner and loser countries and CO2 emission and Financial Crisis Intervention Index (integrating normalized values of F1 , F3 and F7 by multiplication)

Index Description

Climate taxation bonds strategy

Climate change economic loser countries with low CO2 emissions and low crisis intervention capability → climate bonds strategy with high discount rates regime and longer-term maturity to spread the burden of climate stabilization financing between generations and a relatively high bond yield-at-issue with relatively high interest rates from subsidies funded of high index value countries

Low values

(continued)

Relative climate change economic short-term winner countries with high CO2 emissions and high crisis intervention capability → taxation strategy coupled with low discount rates regime and short-term maturity to act now to protect future generations from climate change impacts. The lower the relatively high values of the index, the more likely the country should have access to bonds with growing yield-at-issue instead of taxation

High values

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(continued)

Low values Climate change economic loser countries with low CO2 emissions and low resilience finance → climate bonds strategy with high discount rates regime and longer-term maturity to spread the burden of climate stabilization financing between generations and a relatively high bond yield-at-issue with relatively high interest rates from subsidies funded of high index value countries

Climate change economic loser countries with low CO2 emissions and high bond lending rate → climate bonds strategy with high discount rates regime and longer-term maturity to spread the burden of climate stabilization financing between generations and a relatively high bond yield-at-issue with relatively high interest rates from subsidies funded of high index value countries

Index Description

(5) Relative economic climate change winner and loser countries and CO2 emission and Resilience Finance Index (integrating normalized values of F1 , F3 and F8 by multiplication)

(6) Relative economic climate change winner and loser countries and CO2 emission and bank lending rate Index (integrating normalized values of F1 , F3 and F5 by multiplication)

Climate taxation bonds strategy

Table 7.2

Relative climate change economic short-term winner countries with high CO2 emissions and high resilience finance capability → taxation strategy coupled with low discount rates regime and short-term maturity to act now to protect future generations from climate change impacts. The lower the relatively high values of the index, the more likely the country should have access to bonds with growing yield-at-issue instead of taxation Relative climate change economic short-term winner countries with high CO2 emissions and low bank lending rate → taxation strategy coupled with low discount rates regime and short-term maturity to act now to protect future generations from climate change impacts. The lower the relatively high values of the index, the more likely the country should have access to bonds with growing yield-at-issue instead of taxation

High values

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Global connectivity & leadership (7) Relative economic climate change winner and loser countries and CO2 emission and consumption-based, trade-adjusted CO2 emission Index (integrating normalized values of F1 and F6 by multiplication)

Index Description

Climate taxation bonds strategy

Climate change economic loser countries with low consumption-based, trade-adjusted CO2 emissions and high bond lending rate → climate bonds strategy with high discount rates regime and longer-term maturity to spread the burden of climate stabilization financing between generations and a relatively high bond yield-at-issue with relatively high interest rates from subsidies funded of high index value countries

Low values

(continued)

Relative climate change economic short-term winner countries with high consumption-based, trade-adjusted CO2 emissions → taxation strategy coupled with low discount rates regime and short-term maturity to act now to protect future generations from climate change impacts. The lower the relatively high values of the index, the more likely the country should have access to bonds with growing yield-at-issue instead of taxation

High values

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(continued)

Low values Climate change economic loser countries with low CO2 emissions and low science diplomacy → climate bonds strategy with high discount rates regime and longer-term maturity to spread the burden of climate stabilization financing between generations and a relatively high bond yield-at-issue with relatively high interest rates from subsidies funded of high index value countries

Climate change economic loser countries with low CO2 emissions and low science diplomacy → climate bonds strategy with high discount rates regime and longer-term maturity to spread the burden of climate stabilization financing between generations and a relatively high bond yield-at-issue with relatively high interest rates from subsidies funded of high index value countries

Index Description

(8) Relative economic climate change winner and loser countries and CO2 emission and Science Diplomacy Index (integrating normalized values of F1 , F3 and F9 by multiplication)

(9) Relative economic climate change winner and loser countries and CO2 emission and Global Economic Connectivity (integrating normalized values of F1 , F3 and F10 by multiplication)

Climate taxation bonds strategy

Table 7.2

Relative climate change economic short-term winner countries with high CO2 emissions and high science diplomacy → taxation strategy coupled with low discount rates regime and short-term maturity to act now to protect future generations from climate change impacts. The lower the relatively high values of the index, the more likely the country should have access to bonds with growing yield-at-issue instead of taxation Relative climate change economic short-term winner countries with high CO2 emissions and high science diplomacy → taxation strategy coupled with low discount rates regime and short-term maturity to act now to protect future generations from climate change impacts. The lower the relatively high values of the index, the more likely the country should have access to bonds with growing yield-at-issue instead of taxation

High values

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Operationalization

This chapter proposes a taxation-and-bonds strategy that outlines a scheme of countries being either climate taxation bonds funders or climate bonds recipients based on economic prospects in light of climate change, CO2 emissions and consumption-based, trade-adjusted CO2 emissions and carbon pollution changes as well as historic bank lending rates and resilient financing strategies coupled with science diplomacy. A country’s starting ground on the climate gains and losses spectrum, a country’s climate flexibility in terms of temperature zones and a country’s CO2 emissions contributions in production and consumption levels as well as a country’s CO2 emissions levels changes and historically-grown the bank lending rate as well as resilient finance strategies coupled with science diplomacy leadership on the international stage will determine whether a country will be on the taxation regime for funding mutual climate stabilization or whether a country will be on the receiving end of climate bonds solutions. Pegging the country-specific influence of global warming and efforts to mitigate climate change to either becoming a climate bonds grantor or climate funds recipient allows for establishing a competitive race-tothe-top for the mutual climate fund allocations. Considering historicallygrown resilient finance banking and science diplomacy leadership grants opportunities to determine countries’ responsibility and capability of administering a daring endeavor to act on climate change on the international level. Integrating the CO2 emissions levels changes over time imbues incentives to change harmful behavior. Empirically, nine indices are proposed in the following as a basis to determine which countries should be using a taxation strategy and what countries should be granted climate bond premiums. The first cluster of indices pays attention to the geo-economic impact of climate change around the world. Index 1 ranks countries based on the country’s initial position on a climate change gains and losses index and the country’s CO2 emissions. Index 2 ranks countries based on the country’s initial position on a climate change gains and losses index and climate flexibility in temperature ranges and its CO2 emissions. Index 3 ranks countries based on the country’s initial position on a climate change gains and losses index and the country’s CO2 emissions as well as the country’s CO2 emissions changes.

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The second cluster of indices addresses the financial crisis resilience historically established by countries. Index 4 ranks countries based on a Financial Crisis Intervention Index, which measures countries based on their previous willingness to address financial upheaval with macroeconomic interventions and the country’s CO2 emissions. Index 5 includes a novel Resilience Finance Index as well as the country’s CO2 emissions to determine climate stabilization financialization patterns around the world. Index 6 determines a country’s initial position on a climate change gains and losses index and the country’s CO2 emissions as well as the estimated bank lending rate to gain funding for bonds in that country. When it comes to Global Connectivity and Leadership around the world, Index 7 ranks countries based on the country’s initial position on a climate change gains and losses index and the country’s consumptionbased trade-adjusted CO2 emissions. Index 8 holds countries’ initial position on a climate change gains and losses index as well as the countries’ CO2 emissions and the country’s science diplomacy capabilities based on a newly-created Science Diplomacy Index. Index 9 determines country-specific climate financialization redistribution patterns based on countries’ initial position on a climate change gains and losses index and the country’s CO2 emissions and science diplomacy capabilities based on a newly-created Global Connectivity Index. The countries economically gaining from climate change and being climate flexible as well as countries with high CO2 emissions and not changing CO2 emissions levels as well as consuming goods and services from other countries but also having favorable bank lending rates and a history of resilience finance and crisis intervention expertise but also science diplomacy and trade leadership advantages could be taxed to transfer funds via climate bonds for regions of the world that are losing from global warming and are not climate flexible as well as countries with low CO2 emissions and lowering CO2 emissions levels that are producing goods and services that are consumed in other parts of the world as well as having unfavorable bank lending rates, hence higher industry financing costs, and missing resilience finance, science diplomacy and are trade followers. The proposed taxation-and-bonds strategy could aid in broad-based and long-term market incentivization of a transition to a clean energy economy. In the following nine indices based on the ten described drivers F1– F10 are first translated into a scale for every country of the world included in the data. The ten drivers are then integrated into the nine different

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indices by multiplying the respective country values indicating the country’s position in relation to other countries on the different indexed dimensions of F1–F10. The drivers determine the relative weight on a scale from most taxation for climate stabilization to most climate bond financing. The presentation of different indices serves as a first introduction to the topics under scrutiny. Different indices that highlight different aspects may aid policy-makers to find the most favorable combination of evaluation criteria and strengthen their awareness of the disparate impact of climate change. In their entirety, the indices highlight what countries should pay for the installment of a global bond in taxation and what countries should be beneficiaries in climate bonds funded by climate winners and with repayment schemes for future generations. The more a country is considered as a climate change winner (high factor F1) with climate flexibility (high factor F2), causing climate change in CO2 emissions (high factor F3) and not reducing CO2 emission levels (high factor F4) as well as having favorable bank lending conditions (high factor F5) and consuming CO2 emissions in respective goods and services (high factor F6), the more the country is proposed to be obliged to fund a climate bonds solution via taxation and adopt a low discount rates regime to act now to protect future generations from climate change impacts. The more a country has expertise in financial crisis intervention (high factor F7) and the more a country is prone to future-oriented resilience finance (high factor F8), as well as the more likely the country engages in science diplomacy (high factor F9) and is globally connected in trade and human capital flows (high factor F10), the more the country should be obliged to face a responsibility to protect and the better conditions the country can offer to lead on and administer a climate resilience finance solution that features climate taxation and green bonds redistribution schemes around the world. In the countries that are considered as climate change losers (low factor F1) with low climate flexibility (low factor F2) that have low CO2 emission levels (low factor F3) and are reducing CO2 emissions (low factor F4) but also feature unfavorable bank lending conditions (low factor F5) and are not consuming CO2 emissions in respective goods and services (high factor F6), the climate bonds should be financing the economy with high bond yield rates and debt to be repaid by future generations. The more a country lacks financial crisis intervention expertise (high factor F7) and the less likely a country is able to administer future-oriented resilience

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finance (high factor F8), as well as the less likely the country engages in science diplomacy (high factor F9) and is less globally connected in trade and human capital flows (high factor F10), the more the country should follow a climate resilience finance solution that features climate bonds that redistribute funds around the world. The rationale is that countries that have a relative short-term current economic advantage from climate change, should be granting climate bonds in the now and redistributing some of the economic gains to losing territories. Only the countries that have lowered economic prospects due to climate change should be able to shift some of the burdens of climate change financing to future generations in bonds. In the actual implementation of a global climate resilience finance taxation-and-bonds scheme, those countries that have a historically-determined advantageous position to lead on a global financial redistribution should become leaders that face a relatively higher degree of responsibility to act on global warming, while countries less experienced in resilience finance and financial intervention are advised to follow a plan under conditions of heightened time constraints. The following nine indices are meant to provide a basic numerical scheme for how to redistribute the relative short-term economic gains of climate change to those countries that lose out on climate change the first and the most. The higher each index, the more countries are advised to be aiding in the financing of climate stability by raising funds through taxation that will then be used as transfer payments to offset the costs of climate bonds subsidies. The actual index numbers translate into a numerical key that determines the relative position of each country to other countries on a scale from taxation to raise funds for climate stabilization to receiving subsidized climate bonds transfer payments. The more a country is considered to win from global warming economically in the short run and the more a country is causing climate change in CO2 emissions production and consumption as well as the more a country is not willing to change CO2 emissions in relation to others and the lower the bank lending rate of the country, the more this country will likely have high index rates, which can serve as a key to determine taxation of the relative short-term economic climate winners. The better a country is equipped in financial crisis intervention and future-oriented resilience finance, as well as the more likely the country engages in science diplomacy and is globally connected in trade and human capital flows, the more the country should be obliged to face a

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responsibility to protect and the better conditions the country can offer to lead on and administer a climate resilience finance solution that features climate taxation-and-bonds redistribution schemes around the world. The more a country faces declining economic prospects in light of global warming and the fewer a country is emitting CO2 in relation to other countries and not consuming CO2 and the more a country is curbing its harmful CO2 emissions over time and the higher the bank lending rate this country faces in order to borrow funds on the international level, the more the country should be given helicopter funding for participating in climate bonds that remunerate a transition to a renewable energy solution and can be co-financed via debt to be repaid by future generations. Within the countries funding climate stabilization via bonds, those countries that are the worst off from climate change and have the lowest CO2 emissions and CO2 emission consumption levels in relation to others and are changing their CO2 emissions for the better as well as have the highest bank lending rates, should have the best subsidized conditions for climate bonds, thus investors should have the highest premium payments and climate bonds should be used to transfer some of the repayment obligations to future generations. The less a country is versed in financial crisis intervention and future-oriented resilience finance, as well as the more likely the country follows science diplomacy and is globally less connected in terms of trade, finance and human capital flows, the more the country should benefit from following the outlined climate taxation-and-bonds redistribution schemes around the world. The separation in ten different components for determining the degree of taxation or climate bond financing between countries is chosen in order to show different options on how to graph out a climate justice and climate loser compensation model. The different indices accentuate different aspects to be considered when thinking about redistribution— such as future climate wealth of nations, causing the problem in production and consumption as well as willingness to change harmful behavior or even historically-determined bank lending regimes that are based on risk estimates. In the implementation of the outlined plan under time constraints, leadership and followership roles may be chosen by the historically-grown access to capital, financial crisis intervention expertise and the available resilience finance tools. The connectivity to the world in trade and human capital transfers should also be considered in assigning who should lead and who should follow the stringent plan under tight temporal conditions.

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While standard climate bond strategies are assuming one discount rate to fit all participating agents, this driven taxation-and-bonds strategy will propose a novel idea to be guided by the climate change disparate impact on all countries around the world. Diversified financing of common green bonds is a new method aimed at sharing the burden but also the benefits of climate change within society in an economically-efficient, legallyequitable and practically-feasible way. The following plan also features a unique incentive scheme for carbon reduction by remunerating CO2 emissions changes over time.

7.14

Indices

Nine indices will be introduced to measure world countries’ comparative position on a spectrum of being a global climate bonds’ recipient via high bond yields or a global climate bonds’ grantor via taxation. The proposed taxation and climate bonds redistribution payment is based on the following influence factors: (1) the country’s initial position on the climate change gains and losses index spectrum (F1); (2) a country’s climate flexibility in climate zones as a future trade benefit and comparative advantage (F2); (3) the country’s human-made contribution to climate change as measured by CO2 emissions (F3); (4) the country’s change of CO2 emissions in relation to other country’s CO2 emissions changes (F4); (5) the estimated bank lending rate of bonds in comparison with other world countries (F5); (6) the country’s human-made contribution to climate change as measured by consumption-based, trade-adjusted CO2 emissions (F6); (7) the country’s financial crisis intervention propensity (F7); (8) the country’s resilience finance capabilities (F8); (9) the country’s science diplomacy ranking (F9); and (10) the country’s global connectivity ranking (F10). In the following, nine indices will be presented that integrate these outlined ten components equally. Normalized index scales that measure parameters (F1) to (F10) will be bundled and factored into nine different indices. The factoring of normalized indicators is meant to create equity over several measurement factors, e.g., being a relative economic shortterm climate change winner or loser and having a certain estimated lending rate of bonds. Table 7.3 holds a summary of nine different indices, whose value can rank the different countries of the world on a spectrum from climate financing taxation to subsidized climate bonds. Table 7.3 outlines the

Factor 1 (F1 ) called W L T T CCC for 185 countries of the world, standing for being a climate change winner or loser as measured by a newly created normalized P RW L T T Index based on the original W L T T index as retrieved from Puaschunder (2020b) including GDP growth prospects in light of climate change, GDP sector composition per country and mean temperature per country as well as optimal temperature for production by GDP sector

(1) Climate winners and losers CO2 emission Index W L T T CCC (integrating normalized values of F1 and F3 by multiplication) for 185 countries of the world

(continued)

Factor 3 (F3 ) human-made self-reported country’s Climate Change Causing (CCC) CO2 emissions data for 185 countries of the world as retrieved from Our World in Data 1 and presented by the Global Carbon Project

Input factor

FINANCE DIPLOMACY: THE POLITICS …

1 https://github.com/owid/co2-data.

Input factor

Index description

Input factor

Influence variables on climate taxation-and-bonds strategy operationalization

Climate taxation bonds strategy operationalization

Table 7.3

7

259

(continued)

Factor 1 (F1 ) called W L T T CCC for 185 countries of the world, standing for being a climate change winner or loser as measured by a newly created normalized P RW L T T Index based on the original W L T T index as retrieved from Puaschunder (2020b) including GDP growth prospects in light of climate change, GDP sector composition per country and mean temperature per country as well as optimal temperature for production by GDP sector

(2) Climate winners and losers’ climate flexibility and CO2 emission Index C FCCC (integrating normalized values of F1 , F2 and F3 by multiplication) for 84 countries of the world

Factor 2 (F2 ) climate flexibility index (W x) pays attention to the GDP prospects of countries around the globe in a changing temperature based on climate flexibility as measured by the individual country’s latitude and altitude naturally determining extreme temperatures as retrieved from the List of Countries by Extreme Temperatures 2

Input factor

2 https://en.wikipedia.org/wiki/list_of_countries_by_extreme_temperatures. 3 https://github.com/owid/co2-data.

Input factor

Index description

Climate taxation bonds strategy operationalization

Table 7.3

Factor 3 (F3 ) human-made self-reported country’s Climate Change Causing (CCC) CO2 emissions data for 185 countries of the world as retrieved from Our World in Data 3 and presented by the Global Carbon Project

Input factor

260 J. M. PUASCHUNDER

Factor 1 (F1 ) called W L T T CCC for 185 countries of the world, standing for being a climate change winner or loser as measured by a newly created normalized P RW L T T Index based on the original W L T T index as retrieved from Puaschunder (2020b) including GDP growth prospects in light of climate change, GDP sector composition per country and mean temperature per country as well as optimal temperature for production by GDP sector

(3) Climate winners and losers CO2 emission change Index W L T T CCC G (integrating of F1 , F3 and F4 by multiplication) for 185 countries of the world

Factor 3 (F3 ) human-made self-reported country’s Climate Change Causing (CCC) CO2 emissions data for 185 countries of the world as retrieved from Our World in Data 4 and presented by the Global Carbon Project

Input factor

(continued)

Factor 4 (F4 ) is the percentage of CO2 emissions CCC as indicated for the year 2019 data retrieved from Our World in Data 5 and presented by the Global Carbon Project

Input factor

FINANCE DIPLOMACY: THE POLITICS …

5 https://github.com/owid/co2-data.

4 https://github.com/owid/co2-data.

Input factor

Index description

Climate taxation bonds strategy operationalization

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261

(continued)

Factor 1 (F1 ) called W L T T CCC for 185 countries of the world, standing for being a climate change winner or loser as measured by a newly created normalized P RW L T T Index based on the original W L T T index as retrieved from Puaschunder (2020b) including GDP growth prospects in light of climate change, GDP sector composition per country and mean temperature per country as well as optimal temperature for production by GDP sector

(4) Climate winners and losers CO2 emission Financial Crisis Intervention Index CC FC I (integrating normalized values of F1 , F3 and F7 by multiplication) for 112 countries of the world

Factor 3 (F3 ) human-made self-reported country’s Climate Change Causing (CCC) CO2 emissions data for 101 countries of the world as retrieved from Our World in Data 6 and presented by the Global Carbon Project

Input factor

Factor 7 (F7 ) called Financial Crisis Intervention Index FC I , , included historical cross-sectional country data on crisis intervention measures of guarantees (including account guarantee, blanket guarantee, other liability guarantee, asset guarantee), lending (including ad hoc liquidity assistance, broad-based liquidity assistance, market liquidity assistance), capital injection (including ad hoc capital injection, broad-based capital injection), resolutions (including restructuring or resolution, stakeholder bail-in), rules (including suspension or bank holiday, debt or payment moratorium, credit rules, other rules), asset management (including ad hoc asset management, broad-based asset management) and other financial crisis intervention tools (including major communication, stress test, other) retrieved from the Metrick-Schmelzing Banking-Crisis Intervention Database for the years 1960–20197

Input factor

6 https://github.com/owid/co2-data. 7 https://som.yale.edu/centers/program-on-financial-stability/metrick-schmelzing-paper-and-database.

Input factor

Index description

Climate taxation bonds strategy operationalization

Table 7.3

262 J. M. PUASCHUNDER

Factor 1 (F1 ) called W L T T CCC for 185 countries of the world, standing for being a climate change winner or loser as measured by a newly created normalized P RW L T T Index based on the original W L T T index as retrieved from Puaschunder (2020b) including GDP growth prospects in light of climate change, GDP sector composition per country and mean temperature per country as well as optimal temperature for production by GDP sector

(5) Climate winners and losers CO2 emission Resilience Finance Index CC R F I (integrating normalized values of F1 , F3 and F8 by multiplication) for 130 countries of the world

Factor 3 (F3 ) human-made self-reported country’s Climate Change Causing (CCC) CO2 emissions data for 101 countries of the world as retrieved from Our World in Data 8 and presented by the Global Carbon Project

Input factor

(continued)

Factor 8 (F8 ) called future-oriented Resilience Finance R F, , included historical cross-sectional country data on future-oriented resilience finance measures of guarantees (including account guarantee, blanket guarantee, other liability guarantee, asset guarantee), lending (including ad hoc liquidity assistance, broad-based liquidity assistance, market liquidity assistance), capital injection (including ad hoc capital injection, broad-based capital injection), retrieved from the Metrick-Schmelzing Banking-Crisis Intervention Database for the years 1960–20199

Input factor

8 https://github.com/owid/co2-data. 9 https://som.yale.edu/centers/program-on-financial-stability/metrick-schmelzing-paper-and-database.

Input factor

Index description

Climate taxation bonds strategy operationalization

7 FINANCE DIPLOMACY: THE POLITICS …

263

(continued)

Factor 1 (F1 ) called W L T T CCC for 185 countries of the world, standing for being a climate change winner or loser as measured by a newly created normalized P RW L T T Index based on the original W L T T index as retrieved from Puaschunder (2020b) including GDP growth prospects in light of climate change, GDP sector composition per country and mean temperature per country as well as optimal temperature for production by GDP sector

(6) Climate winners and losers CO2 emission bank lending rate Index W L T T CCC L (integrating normalized values of F1 , F3 and F5 by multiplication) for 101 countries of the world

10 https://github.com/owid/co2-data. 11 https://data.worldbank.org/indicator/fr.inr.lend.

Input factor

Index description

Climate taxation bonds strategy operationalization

Table 7.3

Factor 3 (F3 ) human-made self-reported country’s Climate Change Causing (CCC) CO2 emissions data for 101 countries of the world as retrieved from Our World in Data 10 and presented by the Global Carbon Project

Input factor

Factor 5 (F5 ) called N L, the inverse normalized Lending rate L n in percent retrieved from the World Bank recorded International Monetary Fund Lending interest rate in percent for the year 201911

Input factor

264 J. M. PUASCHUNDER

Factor 1 (F1 ) called W L T T CCC for 185 countries of the world, standing for being a climate change winner or loser as measured by a newly created normalized P RW L T T Index based on the original W L T T index as retrieved from Puaschunder (2020b) including GDP growth prospects in light of climate change, GDP sector composition per country and mean temperature per country as well as optimal temperature for production by GDP sector

(7) Climate winners and losers consumption-based, trade-adjusted CO2 emission Index W L T T C BT AE (integrating normalized values of F1 and F6 by multiplication) for 116 countries of the world

Factor 6 (F6 ) country consumption-based, trade-adjusted CO2 emissions data for 116 countries of the world as retrieved from Our World in Data 12

Input factor

Input factor

(continued)

FINANCE DIPLOMACY: THE POLITICS …

12 https://ourworldindata.org/co2-emissions#consumption-based-trade-adjusted-emissions.

Input factor

Index description

Climate taxation bonds strategy operationalization

7

265

(continued)

Factor 1 (F1 ) called W L T T CCC for 185 countries of the world, standing for being a climate change winner or loser as measured by a newly created normalized P RW L T T Index based on the original W L T T index as retrieved from Puaschunder (2020b) including GDP growth prospects in light of climate change, GDP sector composition per country and mean temperature per country as well as optimal temperature for production by GDP sector

(8) Climate winners and losers CO2 Science Diplomacy Index CC S D I (integrating normalized values of F1 , F3 and F9 by multiplication) for 48 countries of the world

Factor 3 (F3 ) human-made self-reported country’s Climate Change Causing (CCC) CO2 emissions data for 101 countries of the world as retrieved from Our World in Data 13 and presented by the Global Carbon Project

Input factor

15 https://www.webometrics.info/en/distribution_by_country. 16 https://globaldiplomacyindex.lowyinstitute.org/country_rank.html.

13 https://github.com/owid/co2-data. 14 https://data.worldbank.org/indicator/se.ter.cuat.ba.zs.

Input factor

Index description

Climate taxation bonds strategy operationalization

Table 7.3

Factor 9 (F9 ) called Science Diplomacy Index S D I , , integrating the Academia quota per country as retrieved from the World Bank, Educational Attainment, at least Bachelor’s or equivalent, population 25 + , total (%) cumulative,14 World Ranking of academic institutions based on the Ranking Web of Universities weighted by relevance,15 and the diplomatic relations in embassies, consulates and other representations in total based on the Lowy Global Diplomacy Index for the year 202116

Input factor

266 J. M. PUASCHUNDER

Factor 1 (F1 ) called W L T T CCC for 185 countries of the world, standing for being a climate change winner or loser as measured by a newly created normalized P RW L T T Index based on the original W L T T index as retrieved from Puaschunder (2020b) including GDP growth prospects in light of climate change, GDP sector composition per country and mean temperature per country as well as optimal temperature for production by GDP sector

(9) Climate winners and losers CO2 emission Global Connectivity Index CC GC (integrating normalized values of F1 , F3 and F10 by multiplication) for 158 countries of the world

Factor 3 (F3 ) human-made self-reported country’s Climate Change Causing (CCC) CO2 emissions data for 101 countries of the world as retrieved from Our World in Data 17 and presented by the Global Carbon Project

Input factor

Factor 10 (F10 ) called Global Connectivity Index GC I , integrates Trade Freedom in The Global Economy Ranking Trade Freedom Index of 2022,18 Remittances in Personal Remittances paid (current US$) as derived from the World Bank19 normalized by Gross Domestic Product as derived from Population U,20 Personal Remittances received (% of GDP),21 Foreign Direct Investments as derived from the World Bank, Foreign direct investment, net inflows (% of GDP),22 World Bank, Foreign direct investment, net outflows (% of GDP),23 as well as migration derived from Our world in data, Migration % of the population for the year 202024

Input factor

23 https://data.worldbank.org/indicator/BM.KLT.DINV.WD.GD.ZS?end=2020&start=1970. 24 https://ourworldindata.org/explorers/migration.

FINANCE DIPLOMACY: THE POLITICS …

21 https://data.worldbank.org/indicator/bx.trf.pwkr.dt.gd.zs?name_desc=false. 22 https://data.worldbank.org/indicator/bx.klt.dinv.wd.gd.zs.

20where%20data%20are%20available. 19 https://data.worldbank.org/indicator/bm.trf.pwkr.cd.dt. 20 https://www.populationu.com/gen/countries-by-gdp.

17 https://github.com/owid/co2-data. 18 https://www.theglobaleconomy.com/rankings/herit_trade_freedom/#:~:text=Trade%20freedom%20index%20(0%2D100,countries%

Input factor

Index description

Climate taxation bonds strategy operationalization

7

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components of the indices and the underlying data that led to the factor variables for the composition of the indices. These ten drivers determine the relative weight on a scale from most taxation for climate stabilization to most climate bond financing. In the following indices, the ten drivers are first translated into a scale featuring an actual numerical position on the scale for every country of the world included in the data. The ten drivers are then integrated in the nine different indices by multiplying the respective country position on the scale.

7.15 7.15.1

Results

Climate Winners and Losers CO2 Emission Index

Climate justice between countries could be based on the idea that countries economically relatively winning in the short run and countries that contribute to human-made global warming in CO2 emissions should pay for the establishment and maintenance of climate bonds via carbon taxation, while territories that lose from climate change the fastest and the most with low CO2 emissions should be climate bond issuers with a higher interest rate premium. The W L T T CCC index, therefore, integrated whether a country is a climate change winner or loser and the relative CO2 emissions per country in relation to other countries. The results for the W L T T CCC index for 185 countries are exhibited in Table 7.4, which holds a graphical display of the W L T T CCC index numbers per country. Table 7.4 shows the W L T T CCC index numbers per country. The higher the index, the more likely the country is a climate change winner with high CO2 emissions. These countries are advised to follow a taxation strategy to fund the bonds solution. The lower the index gets, the more the country should shift to a bond strategy funded by the climate winners with high CO2 emissions. Overall, this taxation-and-bonds strategy is targeted at redistributing climate change gains to climate change loser countries with low CO2 emission levels. Graph 7.4 displays a worldmap that colors those countries in red that are advised to fund climate bonds with a taxation strategy. Countries colored in green are climate change losers and have fewer CO2 emissions per country. The greener the country is colored, the higher bond premiums are advised to be paid out in this country as for being a higher

Iraq

0.003718 0.026087 0.008329

0.007847

0.024925 Croatia 0.0000808 Cuba

0.222636 Cyprus

0.012799 Czechia 0.366717 Denmark

0.151753 Djibouti 0.051674 Dominica 0.001072 Dominican Republic 0.0000343 Ecuador

Angola Antigua and Barbuda Argentina

Armenia Australia

Austria Azerbaijan Bahamas

Bangladesh Barbados Belarus

Benin

Belgium Belize

Bahrain

Algeria

Latvia Lebanon

0.000175 0.032399 0.015152

0.001987 Ethiopia

0.020286 Panama 0.004125 Tanzania 0.032802 Papua New 0.001944 Thailand Guinea 0.002971 Paraguay 0.00562 Togo

0.107524 Switzerland 0.006084 Syria 0.245633 Tajikistan

0.092788 Sweden

(continued)

0.000631

0.009772 0.033732

0.08905 0.030527 0.023849

FINANCE DIPLOMACY: THE POLITICS …

Lesotho

Kuwait Kyrgyzstan Laos

0.182543 0.002651 0.000276

0.035638 Egypt 0.000315 El Salvador 0.136663 Equatorial Guinea 0.167397 Eritrea 0.000215 Estonia

5.87E-07 North Korea 0.016925 Norway 0.030983 Oman 0.021902 Pakistan

0.10667

Kiribati

0.323365 0.001355

0.805039

0.03253

Nepal

0.000317 0.520328

0.000179

0.070084 0.02665

0.002242 0.00067 0.000757

0.42536

0.155744 Mozambique 0.005403 Solomon Islands 0.063168 Myanmar 0.036108 Somalia 0.064241 Namibia 0.003999 South Africa

0.056321 Montenegro 0.003854 Slovakia 0.870884 Morocco 0.082545 Slovenia

0.031224 South Korea 0.201664 Jamaica 0.002344 Netherlands 0.267106 Spain 0.066603 Japan 1.545733 New 0.056428 Sri Lanka Zealand 0.00000766 Jordan 0.027586 Nicaragua 0.002204 Sudan 0.000138 Kazakhstan 0.677486 Niger 0.000496 Suriname 0.012515 Kenya 0.009003 Nigeria 0.018247 Eswatini Italy

Ireland Israel

Indonesia Iran

Afghanistan Albania

0.000497 0.001313

W L T T CCC index per country for 185 countries

0.015191 Congo 0.008496 Democratic Republic of Congo 0.094902 Costa Rica

Table 7.4

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0.000806 Lithuania 0.0000647 Luxembourg 0.024941 North Macedonia 1.278587 Madagascar 0.002252 Malawi 0.080275

0.0000536 Maldives 0.013208

0.004831 Gabon 0.144885 Gambia 0.000023 Georgia

0.062169 Germany 0.000122 Ghana

0.000605 Greece

0.002196 Grenada

0.003091 Guatemala

Bulgaria Burkina Faso Burundi

Cambodia

Cameroon

0.001094 Peru 0.032103 Philippines

Mali

Malaysia

4.713191 Uganda 0.001309 Ukraine

9.887821

0.682884

0.000945

0.004162 0.423223

0.058857 Turkey 0.582528 0 Turkmenistan 0.105137 0.133123 Tuvalu 0.000000182

0.053071 Tonga 0.0000782 0.029021 Trinidad 0.001454 and Tobago 0.63593 Tunisia 0.031484

0.000116 United Arab Emirates 0.0000556 Saint Lucia 0.0001 United Kingdom 0.000148 Saint 0.0000171 United Vincent & States Grenadines

0.054159 Saint Kitts and Nevis

0.003478 Russia 0.001347 Rwanda

0.030647 Portugal 0.018795 Qatar 0.013316 Romania

Liechtenstein 0.000336 Poland

0.486052

0.043477 France

Bosnia and Herzegovina Botswana Brazil Brunei

Liberia Libya

0.001198 0.10719

0.003453 Fiji 0.018399 Finland

(continued)

Bhutan Bolivia

Table 7.4

270 J. M. PUASCHUNDER

Comoros

0.000126 India

Haiti Honduras Hungary Iceland 1.563574

0.001671 0.006656 0.079078 0.008683

0.000499

0.000195 Guyana

Central African Republic Chad Chile China Colombia

0.000502 0.147383 20.8524 0.030845

0.000248 0.000124

1.656119 Guinea 0.000461 GuineaBissau

Canada Cape Verde

Mongolia

Mauritius Mexico Micronesia Moldova

Mauritania

Malta Marshall Islands

Senegal Serbia Seychelles Sierra Leone 0.179933 Singapore

0.003702 0.396982 0.00006 0.010708

0.0016 Samoa 0.0000291 Sao Tome and Principe 0.0000469 Saudi Arabia

0.004049 Zimbabwe

0.000232 Venezuela 0.086827 Vietnam 0.0000376 Yemen 0.000378 Zambia

0.071972 Vanuatu

0.0000207 Uruguay 0.0000756 Uzbekistan

0.009811

0.026191 0.088764 0.004277 0.005908

0.000111

0.00703 0.149526

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Graph 7.4 Worldmap of W L T T CCC index per country for 185 countries

climate loser and having fewer CO2 emissions, hence contributing less to the climate problem. Countries that range in the middle of the index are displayed in yellow in the display spectrum from countries ranked on taxation strategy in red to the highest bonds premium recipient country colored in green. Graph 7.5 ranks 185 countries based on their relative W L T T CCC index status. 7.15.2

Climate Winners and Losers’ Climate Flexibility and CO2 Emission Index

Countries that relatively win economically from climate change in the short run and that benefit from climate flexibility in terms of temperature ranges on their territory but also contribute to human-made global warming in CO2 emissions should pay for the establishment and maintenance of climate bonds via carbon taxation; while climate change losing territories with low CO2 emissions and a narrow range of temperatures and thus low climate flexibility should be recipients of climate bonds with relatively high interest rate premium and thus be relative beneficiaries in

7

FINANCE DIPLOMACY: THE POLITICS …

Graph 7.5 Country ranking of W L T T CCC index for 185 countries

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the common climate taxation-and-bonds transfer scheme. The C FCCC index, therefore, integrated whether a country is a climate change winner or loser and if the country has relatively high or low climate flexibility as well as the relative CO2 emissions per country in relation to other countries. The results for the C FCCC index for 84 countries are exhibited in Table 7.5. Table 7.5 holds a graphical display of the C FCCC index numbers per country. The higher the index, the more likely the country is a climate change winner with high climate flexibility and high CO2 emissions. These countries are advised to follow a taxation strategy. The lower the index gets, the more the country should be a recipient of bonds with a high premium in order to redistribute climate change gains of climate change causing nations to climate change loser countries with low CO2 emission levels. Graph 7.6 outlines the indices of all countries in a worldmap that colors those countries with high index values that are more likely climate change winners with high climate flexibility and high CO2 emissions in red. Climate change loser countries with low climate flexibility and low CO2 emissions are colored in green. Countries in the middle that tend to have moderate economic changes due to climate change, medium climate flexibility and middle levels of CO2 emissions are colored in yellow. Countries that are advised to have a high climate taxation strategy are colored in red, high bonds premium recipients in green and countries that are in the middle of the index range in yellow. Graph 7.6 displays a worldmap that colors those countries with advised high taxation strategy in red, high bonds premium recipients in green and countries that are in the middle of the index range in yellow. In Graph 7.6 countries are greener if being climate change losers and having less climate flexibility as well as having fewer CO2 emissions per country. The redder a country is, the more likely the country is a climate change winner and benefits from more climate flexibility as well as is more likely to feature more CO2 emissions. Medium levels of climate change economic changes with medium climate flexibility and moderate levels of CO2 emissions are colored in yellow. Red countries are advised to have a climate taxation strategy, yellow countries a mixed climate taxation-and-bonds strategy and green countries a climate bonds recipient standing among all countries of the world.

Czechia Denmark Dominica Egypt Estonia Finland France Germany Greece Guatemala Hungary Iceland India Iran Ireland Israel Italy Japan Jordan Kyrgyzstan Latvia

0.00046738 0.00258036

0.00000134

0.00509898 0.00029571 0.00828623 0.00356766 0.00118494 0.00086335 0.00299433 0.00329611 0.00112243

0.00532930 0.00155675 0.00001778 0.00007356 0.08324848

0.00344483

0.58184291 0.00061468 0.00019532

Afghanistan Algeria

Antigua and Barbuda Argentina Armenia Australia Austria Azerbaijan Bangladesh Belarus Belgium Bosnia and Herzegovina Brazil Bulgaria Burkina Faso Cambodia Canada

Chile

China Croatia Cuba

0.00052087 0.00099474 0.00043257

0.03857131

0.05283758 0.02453939 0.00093612 0.00128319 0.01207178

0.00419361 0.00069080 0.00309140 0.01232259 0.03075435 0.00172938 0.00028315 0.00175967 0.00019303

0.00000170

0.00443819 0.00122935

Table 7.5 C FCCC index per country for 84 countries

Russia Samoa Saudi Arabia

Romania

Pakistan Panama Philippines Poland Portugal

Maldives Malta Moldova Mongolia Myanmar Nepal Netherlands New Zealand Norway

Lithuania North Macedonia Malaysia

0.24583090 0.00000088 0.00517248

0.00313439

0.00765046 0.00009364 0.00109222 0.01388410 0.00104930

0.00000312 0.00001954 0.00023586 0.00659033 0.00059137 0.00059971 0.00500799 0.00111788 0.00304209

0.00130737

0.00065787 0.00029662

Thailand Turkey Turkmenistan Ukraine United Arab Emirates United Kingdom United States Uruguay Vietnam

Slovenia South Africa South Korea Spain Sudan Eswatini Sweden Switzerland Syria

Slovakia

Serbia Singapore

0.32655247 0.00011041 0.00240708

0.01262311

0.00182797 0.01680032 0.00254521 0.00977103 0.00051636

0.00054085 0.01029034 0.01827173 0.00730210 0.00015515 0.00001387 0.00317080 0.00199685 0.00061604

0.00154345

0.00214448 0.00009417

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Graph 7.6 Worldmap of C FCCC index per country for 84 countries

Graph 7.7 ranks 84 countries based on their relative C FCCC x index status from the highest climate taxation country to the highest bonds premium recipient country. 7.15.3

Climate Winners and Losers CO2 Emission Change Index

Climate justice over time could be fortified by climate change winning countries that contribute to human-made global warming in CO2 emissions and have a rising trend of CO2 emissions compared to other countries paying for the establishment and maintenance of climate bonds via carbon taxation; while climate change losing territories with low CO2 emissions that have declining CO2 emissions compared to other countries should be recipients of climate bonds with higher interest rate and thus be climate bond premium beneficiaries. This would create market incentives for countries to compete over CO2 emissions reductions and naturally lead toward a transition to renewable energy. The W L T T CCC G index, therefore, integrated whether a country is a climate change winner or loser as well as the relative CO2 emissions per country in relation to other countries and the relative CO2 emissions changes per country compared

7

FINANCE DIPLOMACY: THE POLITICS …

Graph 7.7 Country ranking of C FCCC index for 84 countries

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to the rest of the world. This index incentivizes positive changes in terms of CO2 emissions reductions over time. The results for the W L T T CCC G index for 185 countries are exhibited in Table 7.6. Table 7.6 also holds a graphical display of the W L T T CCC G index numbers per country. The higher the W L T T CCC G index, the more likely the country is a climate change winner with high CO2 emissions that increase over time. These countries are advised to follow a taxation strategy. The lower the index gets, the more the country should shift to a bonds strategy in order to redistribute climate change gains to climate change loser countries with low and reducing CO2 emission levels. Graph 7.8 displays a worldmap that colors those countries with recommended high taxation strategies in red, high bonds interest premium recipients in green and countries that are in the middle of the index range in yellow. In Graph 7.8 the greener a country is colored, the more likely the country is a climate change loser as well as has fewer CO2 emissions and decreasing CO2 emissions in relation to other countries. The redder a country is, the more likely the country is a climate change winner as well as is more likely to feature more CO2 emissions and rising CO2 emission levels. Medium levels of climate change economic changes and moderate levels of CO2 emissions that are not changing are colored in yellow. Red countries are advised to have a climate taxation strategy, yellow countries a mixed climate taxation-and-bonds strategy and green countries a climate bonds recipient standing among all countries of the world. Graph 7.9 ranks 66 countries based on their relative W L T T CCC G index status. Graph 7.10 is a graphical display of countries ranked from the highest climate taxation country to the lowest based on the W L T T CCC G index accounting for climate change loser as well as having fewer CO2 emissions per country and decreasing CO2 emissions. Graph 7.10 ranks 120 countries based on their relative W L T T CCC G index status from the lowest bond payment to the highest bond funding country. 7.15.4

Climate Winners and Losers CO2 Emission Financial Crisis Intervention Index

The climate winners and losers CO2 emission Financial Crisis Intervention Index CC FC I included the past performance of countries during financial crisis. Based on historical data of past crisis responses around

−0.05908099Czechia −0.43529334Denmark

0.40381453Djibouti 0.3214127 Dominica −0.00268536Dominican Republic 0.00029985Ecuador

Armenia Australia

Austria Azerbaijan Bahamas

0.00610541Ethiopia 0.0092748 Fiji

0.00657618Lesotho 0.00752241Liberia

0.00045527Latvia −0.69926107Lebanon

−0.34975252Kuwait 0.00832563Kyrgyzstan −0.00126954Laos

−0.09937774Kiribati

0.10402693Panama 0.07577249Papua New Guinea −0.0247807 Paraguay 0.0040542 Peru

0.00000384North Korea 0.0538215 Norway 0.40026944Oman 0.03749707Pakistan

−1.34413625Nepal

0.0117411 Togo 0.0316305 Tonga

0.0138708 Tanzania 0.0086129 Thailand

−0.337842 Switzerland 0.0056099 Syria 0.1407476 Tajikistan

0.1456765 Sweden

0.117122

(continued)

0.0018755 0.0005116

0.0105728 −0.0481358

0.1896766 0.1277534 0.4808025

0.255474

0.0060958 0.001423 −0.0010804

−2.0352593 0.0110197

−3.001186

0.0009255 0.7284596

0.0011722

−0.5385218 −0.1455893

FINANCE DIPLOMACY: THE POLITICS …

Benin Bhutan

Bangladesh 0.68361563Egypt Barbados −0.00053617El Salvador Belarus 0.13516 Equatorial Guinea Belgium −0.08336386Eritrea Belize 0.00072264Estonia

Bahrain

−0.00182044Italy

−0.73291621Cyprus

0.061413 Slovakia 0.8285826 Slovenia

0.7455444 Mozambique 0.0207744 Solomon Islands −0.27440159Myanmar 0.01881248Somalia 0.20235988Namibia 0.0013196 South Africa

0.39976907Montenegro 2.78160227Morocco

South Korea −0.65702206Jamaica 0.00013362Netherlands −0.891065 Spain −0.49512808Japan −3.95089444New 0.2349664 Sri Lanka Zealand 0.00001846Jordan 0.12703491Nicaragua 0.0070262 Sudan −0.00036175Kazakhstan −1.23980019Niger 0.0009819 Suriname 0.10254525Kenya 0.00938094Nigeria 0.0529351 Eswatini

0.02407814Ireland −0.00306498Israel

0.01164552Iraq

−0.00086638Indonesia 0.0030215 Iran

0.02260724Croatia −0.00021153Cuba

0.03890542Congo 0.02767867Democratic Republic of Congo 0.42724745Costa Rica

W L T T CCC G index per country for 185 countries

Angola Antigua and Barbuda Argentina

Algeria

Afghanistan Albania

Table 7.6

7

279

−0.000302

−0.51584682Malaysia

−2.78227969Guinea 0.00099247Malta

0.07499368Mali

0.00106021Guatemala

Cameroon

Canada

0.00017984Maldives

0.00777425Grenada

Cambodia

Greece

0.001253

0.0680047

−5.82E-06

United Arab Emirates United Kingdom United States

Uganda Ukraine

0.0142

−25.550128

−1.843104

0.0010736

0.0113235 −1.5460322

Turkey −1.9549637 Turkmenistan 1.0255016 Tuvalu 1.19E-06

0.00036367Saint −0.000262 Lucia 0.00054638Saint −4.47E-05 Vincent & Grenadines 0.00231777Samoa 0.0001352 Uruguay

0.02063459Saint Kitts and Nevis

−3.619731 0.003736

Bulgaria Burkina Faso Burundi

−0.22057527Germany 0.00047351Ghana

−0.00164744Lithuania −0.04171095Portugal 0.00025822Luxembourg 0.04249589Qatar 0.10734601North 0.2022787 Romania Macedonia −9.03960956Madagascar −0.01436315Russia 0.00746433Malawi −0.00035826Rwanda

−0.03536965Gabon −0.02897697Gambia −0.00011327Georgia

−0.329775 0 −0.322956

−1.16895527Liechtenstein 0.00047978Poland

0.89271331France

0.1115284 Trinidad and Tobago −2.839428 Tunisia

Bosnia and Herzegovina Botswana Brazil Brunei

0.08677372Philippines

−0.98111394Libya

0.01887746Finland

(continued)

Bolivia

Table 7.6

280 J. M. PUASCHUNDER

Comoros

0.00036845India

0.00110848Haiti −0.26823654Honduras 45.68760881Hungary 0.33358908Iceland 1.51666708Mongolia

−0.00427339Mauritius 0.02909193Mexico −0.08405967Micronesia −0.08338756Moldova

0.0010177 Mauritania

0.000465

Central African Republic Chad Chile China Colombia

Guyana

0.00049736Marshall Islands

0.00184576GuineaBissau

Cape Verde

−0.01622233Senegal −1.10757839Serbia 0.00039265Seychelles 0.01457339Sierra Leone 0.2805157 Singapore

0.00019028Sao Tome and Principe 0.00018755Saudi Arabia Venezuela Vietnam Yemen Zambia

Vanuatu

0.0069437 Zimbabwe

0.0003172 1.6240079 0.0001099 0.0015116

0.067294

0.0001806 Uzbekistan

−0.0835974

−0.2608878 1.5061401 0.0133224 −0.0178719

0.0007253

−0.4846129

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Graph 7.8 Worldmap of W L T T CCC G index per country

the world in terms of historical accounts of crisis intervention measures of guarantees (including account guarantee, blanket guarantee, other liability guarantee, asset guarantee), lending (including ad hoc liquidity assistance, broad-based liquidity assistance, market liquidity assistance), capital injection (including ad hoc capital injection, broad-based capital injection), resolutions (including restructuring or resolution, stakeholder bail-in), rules (including suspension or bank holiday, debt or payment moratorium, credit rules, other rules), asset management (including ad hoc asset management, broad-based asset management) and other financial crisis intervention tools (including major communication, stress test, other), countries were ranked on crisis intervention propensity. The rationale is that countries that have better established means to combat crises financially are better equipped to lead the world in the proposed climate financialization taxation-and-bonds strategy. Countries that have rising GDP prospects in light of climate change and countries that contribute to human-made global warming in CO2 emissions and have the historical knowledge to combat crises with financial means, are argued to face a higher responsibility to act on climate change and lead the world in the proposed climate taxation-and-bonds

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Graph 7.9 Country ranking of W L T T CCC G index for CO2 reducing countries

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Graph 7.10 countries

Country ranking of W L T T CCC G index for CO2 increasing

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solution. In these countries, the financial sector should pay for the establishment and maintenance of climate bonds via carbon taxation; while climate change losing territories with low CO2 emissions that also have no experience in financial crisis intervention based on past historic records should be climate bond recipient beneficiaries being granted a relatively higher bond interest rate premium funded by taxation of CO2 emitting industries in climate winning countries with financial crisis intervention expertise. The CC FC I index, therefore, integrated whether a country is a climate change winner or loser as well as the relative CO2 emissions per country in relation to other countries and the historic crisis intervention propensity of the country. The results for the CC FC I index for 112 countries are exhibited in Table 7.7, which also holds a graphical display of the CC FC I index numbers per country. Table 7.7 also holds a graphical display of the CC FC I index numbers per country. The higher the index, the more likely the country is a climate change winner with high CO2 emissions and crisis intervention capabilities. These countries are advised to follow a taxation strategy to fund climate bonds. The lower the index gets, the more the country should shift to a bonds strategy and be a climate bonds premium recipient country. This climate taxation-and-bonds strategy is meant to redistribute climate change gains from countries with high CO2 emission levels and high crisis intervention propensity to climate change loser countries with low CO2 emission levels and advised crisis followership. Graph 7.11 exhibits a worldmap that colors those countries with recommended high taxation strategy in red, high bonds premium recipients in green and countries that are in the middle of the index range in yellow. Graph 7.11 displays a worldmap that colors those countries in red that are advised to fund climate bonds with a taxation strategy. Red countries tend to be more likely climate winners with high CO2 emissions and crisis intervention propensity. Graph 7.11 displays countries greener if being climate change losers as well as having fewer CO2 emissions per country and crisis intervention followership. The greener the country is colored, the higher the bond premiums are advised to be paid out in this country as for being a higher climate loser and having fewer CO2 emissions with less crisis intervention capabilities, hence contributing less to the climate problem and being advised to be climate bond followers. Countries that range in the middle of the index are displayed in yellow in the display spectrum from countries ranked on taxation strategy in

Bolivia

Algeria Angola

0.001769 Egypt

0.007021 Ireland

0.007300 Colombia 0.014236 Guatemala 0.000959 Costa 0.000358 Guinea Rica Argentina 0.059940 Croatia 0.005017 GuineaBissau Australia 0.112836 Cyprus 0.001811 Honduras Austria 0.046693 Czechia 0.023269 Hungary Azerbaijan 0.002981 Denmark 0.039706 Iceland Bangladesh 0.001371 Dominican 0.001203 India Republic Belgium 0.051507 Democratic 0.000126 Indonesia Republic of Congo Benin 0.000115 Ecuador 0.007507 Iran

0.000412 Saudi Arabia

0.076343 Russia

0.050243 Mexico

0.014577 Moldova

0.089528

0.000142 Romania

0.011914 Mauritius

1.540851 United Arab Emirates 0.004152 United Kingdom

0.288912

0.000073

0.012974 0.005449 0.078417 0.000160

0.000640 Luxembourg 0.002169 Peru 0.008165 Thailand 0.019769 Madagascar 0.000268 Philippines0.006139 Tunisia 0.001670 Malaysia 0.018747 Poland 0.073377 Turkey 0.300687 Malta 0.000062 Portugal 0.011319 Uganda 0.020480 Ukraine

0.000564

0.001179 Paraguay

0.000002 Lithuania

0.014171 Sweden 0.032821 0.000159 Switzerland 0.020550 0.000865 Tanzania

0.003901 Pakistan 0.001262 Panama

0.001778 Latvia 0.000029 Lebanon

Table 7.7 CC FC I index per country for 112 world countries

286 J. M. PUASCHUNDER

0.212680 Morocco

0.006231 Italy 0.000874 Jamaica 0.018552 Japan 0.140207 Jordan 0.000959 Kazakhstan 0.614705 Kenya 0.000217 Kuwait 0.018525 Kyrgyzstan

0.050152 Estonia

0.008369 Ethiopia 0.000007 Finland

0.000238 France

0.286636 Georgia

0.000010 Germany 0.019840 Ghana

5.213100 Greece

Bulgaria Burkina Faso Cameroon

Canada

Chad Chile

China

0.041523 Senegal

0.000022 United States

0.001061 Netherlands 0.046230 South Africa 0.117257 New 0.006511 South Zealand Korea 0.000866 Nicaragua 0.000085 Spain 0.003580 Nigeria 0.003509 Sri Lanka 0.001787 Norway 0.028949 Eswatini

0.000341

0.000164

0.003022 0.003414

0.002028

9.887821

0.000029

0.136808 Zimbabwe 0.000377 0.000130

0.108371 Zambia

0.080051 Yemen

0.001587 Sierra 0.000022 Uruguay Leone 0.000451 Mozambique 0.000104 Singapore 0.000156 Venezuela 0.505336 Nepal 0.001801 Slovenia 0.003075 Vietnam

0.009883 Mongolia

0.001672 Equatorial 0.000011 Israel Guinea

Bosnia and Herzegovina Brazil

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Graph 7.11 Worldmap of CC FC I index per country

red to the highest bonds premium recipient country colored in green. Graph 7.12 ranks 112 countries based on their relative CC FC I index status from the highest climate taxation country to the highest bonds premium recipient country. 7.15.5

Climate Winners and Losers CO2 Emission Resilience Finance Index

The climate winners and losers CO2 emission Resilience Finance Index CC R F I included the resilience finance expertise of countries. Based on historical data of resilience finance propensities around the world that captured historical accounts of resilience finance measures of guarantees (including account guarantee, blanket guarantee, other liability guarantee, asset guarantee), lending (including ad hoc liquidity assistance, broadbased liquidity assistance, market liquidity assistance) and capital injection (including ad hoc capital injection, broad-based capital injection), countries were ranked on their resilience finance leadership potential. The rationale is that countries that have better-established resilience finance are

7

Graph 7.12 Country ranking of CC FC I index for 112 countries

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better equipped to lead the world in the proposed climate financialization taxation-and-bonds strategy. Countries that have rising GDP prospects in light of climate change and countries that contribute to human-made global warming in CO2 emissions and have historical knowledge in resilience finance applications, are argued to face a higher responsibility to act on climate change and lead the world in the proposed climate taxation-and-bonds solution. In these countries, the financial sector should pay for the establishment and maintenance of climate bonds via carbon taxation; while climate change losing territories with low CO2 emissions that also have no experience in resilience finance intervention based on past historic records should be climate bond recipient beneficiaries being granted a relatively higher bond interest rate premium funded by taxation of CO2 emitting industries in climate winning countries with resilience finance expertise. The CC R F I index, therefore, integrated whether a country is a climate change winner or loser as well as the relative CO2 emissions per country in relation to other countries and the historic resilient finance propensity of the country. The results for the CC R F I index for 130 countries are exhibited in Table 7.8, which also holds a graphical display of the CC R F I index numbers per country. Table 7.8 also holds a graphical display of the CC R F I index numbers per country. The higher the index, the more likely the country is a climate change winner with high CO2 emissions and resilience finance capabilities. These countries are advised to follow a taxation strategy to fund climate bonds. The lower the index gets, the more the country should shift to a bonds strategy and be a climate bonds premium recipient country. This climate taxation-and-bonds strategy is meant to redistribute relative short-term climate change gains from countries with high CO2 emission levels and high resilient finance propensity to climate change loser countries with low CO2 emission levels that feature advised crisis followership. Graph 7.13 exhibits a worldmap that colors those countries with recommended high taxation strategy in red, high bonds premium recipients in green and countries that are in the middle of the index range in yellow. Graph 7.13 displays a worldmap that colors those countries in red that are advised to fund climate bonds with a taxation strategy. Red countries tend to be more likely climate winners with high CO2 emissions and resilience finance propensity. Graph 7.13 displays countries greener if being climate change losers as well as having fewer CO2 emissions per

0.011389 Egypt 0.083699 El Salvador 0.000083 Equatorial Guinea 0.002300 Eritrea 0.003623 Ethiopia

Bolivia Bosnia and Herzegovina Brazil 0.084516 Finland Bulgaria 0.012952 France Burkina 0.000005 Georgia Faso

Belarus Belgium Benin

Bangladesh

0.283573 Netherlands

0.000586 New Zealand 0.708461 Nicaragua 0.004598 Niger 0.084686 Nigeria 0.001125 Norway 0.004936 Pakistan 0.001291 Panama 0.005072 Paraguay 0.005467 Peru

0.010843 Jamaica 0.030424 Japan 0.000221 Jordan 0.000023 Kazakhstan 0.000015 Kenya 0.001894 Kuwait 0.040196 Kyrgyzstan 0.222774 Latvia 0.002078 Lebanon

Mauritius Mexico Moldova Mongolia

0.053335

0.000063

0.188630 0.000282

0.234803

0.000675 0.005840 0.004442 0.043361

0.000344 Turkey 0.001873 Uganda 0.013268 Ukraine

0.053762 Togo 0.030704 Tunisia

(continued)

0.121360 0.000694 0.123440

0.000053 0.003935

0.000367 Switzerland 0.014842 0.000041 Tanzania 0.001221 0.001521 Thailand 0.011244

0.014107 Sweden

0.055647 Eswatini

0.000309 0.099245 0.001785 0.014994

Singapore Slovakia Slovenia South Africa 0.108860 Morocco 0.003439 South Korea 0.031584 Mozambique 0.000675 Spain 0.010707 Nepal 0.003903 Sri Lanka

0.023064 0.000724 0.130298 0.016427

0.000055 Italy

0.000001 Ireland 0.003650 Israel

0.213918 Djibouti 0.063230 Dominican Republic 0.006459 Democratic Republic Congo 0.005940 Ecuador

Australia Austria

Azerbaijan

0.047177 Iran

Hungary Iceland India Indonesia

0.001067 Denmark

0.000465 0.008696 0.001308 0.033611

Armenia

Costa Rica Croatia Cyprus Czechia

0.000708 0.023725 0.002077 0.018553

Albania Algeria Angola Argentina

Table 7.8 CC R F I index per country for 130 world countries

7 FINANCE DIPLOMACY: THE POLITICS …

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0.000042 Mali 0.000139 Malta 0.001941 Mauritania

9.557350 Guyana 0.017993 Haiti 0.000041 Honduras

China Colombia Congo

0.001110 Romania

0.008997 Yemen 0.000010 Zambia 0.000047 Zimbabwe

2.160213 Venezuela 0.000006 Vietnam

0.001651 North Macedonia 0.000063 Guinea 0.000041 Madagascar 0.055269 Guinea-Bissau 0.000016 Malaysia 0.000580 Russia 0.018053 Sao Tome & Principe 0.000012 Saudi Arabia 0.000267 Senegal 0.000004 Sierra Leone

0.000039 Guatemala

Cape Verde

Chad Chile

0.026758 Luxembourg 0.003133 Portugal

0.207015 Greece

Canada

0.002554 Poland

0.000094 Lithuania

0.000258 Ghana

Cameroon

0.003628 United Arab Emirates 0.158983 United Kingdom 0.014714 United States 0.022187 Uruguay

0.000091 Philippines

1.225312 Liberia

0.000050 Germany

(continued)

Burundi

Table 7.8

0.000356 0.000739 0.000818

0.006548 0.007397

0.000879

9.887821

0.398349

0.000236

292 J. M. PUASCHUNDER

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Graph 7.13 Worldmap of CC R F I index per country

country and resilience finance followership. The greener the country is colored, the higher bonds premium are advised to be paid out in this country as for being a higher climate loser and having fewer CO2 emissions with less resilience finance capabilities, hence contributing less to the climate problem and being advised to be climate bond followers. Countries that range in the middle of the index are displayed in yellow in the display spectrum from countries ranked on taxation strategy in red to the highest bonds premium recipient country colored in green. Graph 7.14 ranks 130 countries based on their relative CC R F I index status from the highest climate taxation country to the highest bonds premium recipient country. 7.15.6

Climate Winners and Losers CO2 Emission Bank Lending Rate Index

Climate justice between countries could be based on the idea that climate change winning countries that contribute to human-made global warming in CO2 emissions and have a low bank lending rate based on historic

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Graph 7.14 Country ranking of CC R F I index for 130 countries

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financial sector performance should pay for the establishment and maintenance of climate bonds via carbon taxation; while climate change losing territories with low CO2 emissions that also have a high bank lending rate based on past financial records should be climate bond recipient beneficiaries being granted a relatively higher bond interest rate premium funded by taxation of CO2 emitting industries in climate winning countries with low bank lending rates. The W L T T CCC L index, therefore, integrated whether a country is a climate change winner or loser as well as the relative CO2 emissions per country in relation to other countries and the bank lending rate of the country. The results for the W L T T CCC L index for 101 countries are exhibited in Table 7.9, which also holds a graphical display of the W L T T CCC L index numbers per country. Table 7.9 also holds a graphical display of the W L T T CCC L index numbers per country. The higher the index, the more likely the country is a climate change winner with high CO2 emissions and low bank lending for bonds. These countries are advised to follow a taxation strategy to fund climate bonds. The lower the index gets, the more the country should shift to a bonds strategy and be a climate bonds premium recipient country. This climate taxation-and-bonds strategy is meant to redistribute relative short-term economic climate change gains from countries with high CO2 emission levels and low bank lending rates to climate change loser countries with low CO2 emission levels and high bank lending rates. Graph 7.15 exhibits a worldmap that colors those countries with recommended high taxation strategy in red, high bonds premium recipients in green and countries that are in the middle of the index range in yellow. Graph 7.15 displays a worldmap that colors those countries in red that are advised to fund climate bonds with a taxation strategy. Red countries tend to be more likely climate winners with high CO2 emissions and low bank lending rates. Graph 7.15 displays countries greener if being climate change losers as well as having fewer CO2 emissions per country and high bank lending rates. The greener the country is colored, the higher bonds premium are advised to be paid out in this country as for being a higher climate loser and having fewer CO2 emissions, hence contributing less to the climate problem as well as high bank lending rates. Countries that range in the middle of the index are displayed in yellow in the display spectrum from countries ranked on taxation strategy in red to the highest bonds premium recipient country colored in green. Graph 7.16 ranks 101 countries based on their relative W L T T CCC L

0.080975 China 0.006722 Colombia

Algeria Angola

Bahamas, The Bangladesh

Azerbaijan

Australia

0.025476 Fiji

0.001039 Egypt

0.346790 Czech Republic 0.017962 Dominica

Antigua and 0.000064 Comoros Barbuda Argentina 0.000000 Democratic Republic of Congo Armenia 0.007414 Costa Rica

0.007712 Cabo Verde

0.001100 Lesotho

0.001837 Papua New Guinea

0.021484 Panama

0.009344 Pakistan

0.010921 Kyrgyz Republic 0.073747 Lebanon

0.005030 Norway

0.002884 Kenya 0.016217 Oman

0.021601 Nigeria

0.000198 Jordan

0.196925 Kuwait

0.001211 Nicaragua

0.062928 Myanmar 0.422378 Namibia

0.038364 Mozambique

0.000084 Jamaica

20.142248 Israel 0.018179 Italy

0.000341 Indonesia

W L T T CCC L index per country for 101 world countries

Albania

Table 7.9

0.001536 Eswatini

0.139784 South Sudan 0.003674 Suriname

0.106246 South Africa 0.005673 Sri Lanka

0.008097 Solomon Islands

0.001715 Sao Tome & Principe 0.015072 Seychelles 0.002826 Sierra Leone 0.001209 Singapore

0.000522

0.000306

0.000966

0.000851

0.363299

0.000116

0.003811

0.000020 0.000088

0.000022

296 J. M. PUASCHUNDER

0.002218 Mexico 0.078960 Moldova

0.014015 Honduras

0.000021 Hungary

0.059816 Iceland

0.000284 India

Brunei Darussalam Bulgaria

Burundi

0.325018 St. Kitts and Nevis 0.008991 St. Lucia

0.000511 Trinidad & Tobago 0.000093 Ukraine

Tajikistan Tanzania Thailand Tonga

0.029131 0.000111

0.004212

9.263864

0.107154

0.001063

0.005115 0.003675 0.032825 0.000066

0.025680 0.000000 0.117002 3.621926

0.000195 0.000234 0.051673 0.000034 Philippines Qatar Romania Russian Federation 0.003005 Rwanda

0.025532 Switzerland 0.088231

0.012292 Peru

0.000086 United States 0.007786 Mongolia 0.065133 St. Vincent & 0.000014 Uruguay Grenadines 1.130159 Montenegro 0.003519 Samoa 0.000016 Uzbekistan Vanuatu

0.000824 Mauritius

Brazil

Belize Bhutan Bolivia Bosnia and Herzegovina Botswana 0.004359 Haiti

0.000008 North Macedonia 0.015891 Madagascar 0.000046 Malawi 0.006964 Malaysia 0.000336 Maldives

0.102980 Gambia, The 0.000160 Georgia 0.001743 Grenada 0.015193 Guatemala 0.042841 Guyana

Belarus

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Graph 7.15 Worldmap of W L T T CCC L index per country

index status from the highest climate taxation country to the highest bonds premium recipient country. 7.15.7

Climate Winners and Losers Consumption-Based, Trade-Adjusted CO2 Emission Index

Climate justice between countries could be based on the idea that countries that have relatively short-term economic climate change gain prospects that contribute to human-made global warming in consuming CO2 emissions should pay for the establishment and maintenance of climate bonds via carbon taxation, while climate change losing territories with low CO2 emissions consumption should be climate bond issuers with a higher interest rate premium. The W L T T C BT AE index, therefore, integrated whether a country is a climate change winner or loser and the relative consumption-based, trade-adjusted CO2 emissions per country in relation to other countries. The results for the W L T T C BT AE index for 116 countries are exhibited in Table 7.10, which holds a graphical display of the W L T T C BT AE index numbers per country.

7

Graph 7.16

FINANCE DIPLOMACY: THE POLITICS …

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Country ranking of W L T T CCC L index for 101 countries

Table 7.10 shows the W L T T C BT AE index numbers per country. The higher the index, the more likely the country is a climate change winner with high CO2 emissions consumption. These countries are advised to follow a taxation strategy to fund the bonds solution. The lower

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Table 7.10

W L T T C BT AE index per country for 116 countries

Albania 0.084187Ecuador Argentina 0.044395Egypt Armenia 0.072388El Salvador Australia 0.027882Estonia Austria 0.136043Ethiopia Azerbaijan 0.053164Finland Bahrain 0.000000France Bangladesh0.038622Georgia

0.049583Latvia 0.203530Russia 0.112344 0.033550Lithuania 0.174536Rwanda 0.042039 0.042456Luxembourg 0.262082Saudi 0.019367 Arabia 0.118140Madagascar 0.104158Senegal 0.011877 0.062123Malawi 0.124976Singapore 0.072279 0.220249Malaysia 0.018773Slovakia 0.132670 0.100831Malta 0.221215Slovenia 0.116379 0.085327Mauritius 0.055971South 0.013819 Africa Belarus 0.083115Germany 0.088766Mexico 0.039002South 0.061082 Korea Belgium 0.160923Ghana 0.027079Mongolia 0.080431Spain 0.057235 Benin 0.035209Greece 0.026034Morocco 0.041975Sri Lanka 0.029386 Bolivia 0.032573Guatemala 0.044892Mozambique 0.122772Sweden 0.258932 Botswana 0.157627Guinea 0.016630Namibia 0.137780Switzerland 0.475893 Brazil 0.027226Honduras 0.043777Nepal 0.129583Tanzania 0.089674 Brunei 0.004136Hungary 0.104701Netherlands 0.058026Thailand 0.019155 Bulgaria 0.045700India 0.025069New 0.066944Togo 0.116701 Zealand Burkina 0.019796Indonesia 0.017847Nicaragua 0.035206Trinidad 0.006022 Faso and Tobago Cambodia 0.030092Iran 0.039554Nigeria 0.018148Tunisia 0.033214 Cameroon 0.051203Ireland 0.076726Norway 0.135197Turkey 0.055972 Canada 0.167785Israel 0.061049Oman 0.016143Uganda 0.063197 Chile 0.076865Italy 0.082341Pakistan 0.039465Ukraine 0.061845 China 0.055921Jamaica 0.027094Panama 0.081105United 0.011081 Arab Emirates Colombia 0.031376Japan 0.074798Paraguay 0.061355United 0.128235 Kingdom Costa 0.056822Jordan 0.067238Peru 0.049620United 0.077511 Rica States Croatia 0.082222Kazakhstan0.037330Philippines 0.026214Uruguay 0.109407 Cyprus 0.044297Kenya 0.063336Poland 0.051091Venezuela 0.031592 Czechia 0.072685Kuwait 0.015522Portugal 0.055118Vietnam 0.019741 Denmark 0.161792Kyrgyzstan 0.246514Qatar 0.000000Zambia 0.068011 Dominican 0.028785Laos 0.023748Romania 0.068421Zimbabwe 0.047526 Republic

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the index gets, the more the country should shift to a bond strategy funded by the climate winners with high CO2 emissions consumption. Overall, this taxation-and-bonds strategy is targeted at redistributing climate change gains to climate change loser countries with low CO2 emission consumption levels. Graph 7.17 displays a worldmap that colors those countries in red that are advised to fund climate bonds with a taxation strategy. Countries colored in green are climate change losers and have fewer CO2 emissions consumption per country. The greener the country is colored, the higher the bonds premium are advised to be paid out in this country as for being a higher climate loser and having fewer CO2 emission consumption, hence contributing less to the climate problem. Countries that range in the middle of the index are displayed in yellow in the display spectrum from countries ranked on taxation strategy in red to the highest bonds premium recipient country colored in green. Graph 7.18 ranks 116 countries based on their relative W L T T C BT AE index status from the highest climate taxation country to the highest bonds premium recipient country.

Graph 7.17 Worldmap of W L T T C BT AE index per country for 116 countries

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Graph 7.18 Country ranking of W L T T C BT AE index for 116 countries

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Science Diplomacy Climate Responsibility Index

The Science Diplomacy Climate Responsibility Index is applied to the macroeconomic model on disparate economic impacts of climate change around the world (Puaschunder, 2020b) and country-specific CO2 emission levels for the year 2019 derived from Our World in Data, in order to determine what countries have excellent starting grounds on science diplomacy leadership but also a heightened responsibility to engage in science diplomacy to reverse the negative impacts of global warming via redistribution of prospective short-term economic gains. The supporting data of the Science Diplomacy Climate Responsibility Index CC S D I is exhibited in Table 7.11. The Science Diplomacy Climate Responsibility Index CC S D I results for 48 world countries are shown in Graph 7.19. Graph 7.19 holds a worldmap that colors those countries with recommended high taxation strategy in red, high bonds premium recipients in green and countries that are in the middle of the index range in yellow. Graph 7.19 displays a worldmap that colors those countries in red that are advised to fund climate bonds with a taxation strategy. Red countries tend to be more likely climate winners with high CO2 emissions and global connectivity. Graph 7.19 features countries greener if being climate change losers as well as having fewer CO2 emissions per country and global followership. The greener the country is colored, the higher the bonds premium are advised to be paid out in this country as for being a higher climate loser and having fewer CO2 emissions with science diplomacy leadership, hence contributing less to the climate problem and being advised to be climate bond followers. Countries that range in the middle of the index are displayed in yellow in the display spectrum from countries ranked on taxation strategy in red to the highest bonds premium recipient country colored in green. The Science Diplomacy Climate Responsibility Index for 48 countries of the world indicates that the United States offers the best conditions to lead the world in science diplomacy. As visible in Graph 7.20, Russia as well as Japan and India, Germany, the United Kingdom, Canada, China, South Korea and France have good conditions to establish cooperation through science diplomacy and a heightened responsibility to act on climate change. Poland, Mexico, Brazil, Spain, Italy and Australia should also play a role in science diplomacy leadership for climate justice. Additional countries of interest to help with science diplomacy

Finland

France Germany Greece Hungary

Iceland

India Indonesia

Ireland

0.000248

0.000064 0.000740 0.006980 0.032920

0.000406

0.023881 0.000421

0.000153

Bangladesh Belgium Brazil Canada

Chile

China Czech Republic Denmark 0.000148

0.094465 0.001380

0.000000

0.020454 0.052112 0.000259 0.000205

0.000171

Netherlands

Mongolia Nepal

Mexico

Japan Latvia Lithuania Malaysia

Italy

0.002743

0.000092 0.000000

0.010328

0.096205 0.000011 0.000028 0.000218

0.005214

0.000168

Austria

Israel

Estonia

0.004416

Australia

0.000010

W L T T C BT AE index per country for 48 countries

Table 7.11

Slovenia

Singapore Slovakia

Saudi Arabia

Philippines Poland Portugal Russia

Norway

New Zealand

0.000011

0.000004 0.000059

0.000287

0.000150 0.010761 0.000266 0.882752

0.000227

0.000089

South Africa South Korea Spain Sweden Thailand United Kingdom United States Vietnam

0.000133

5.968150

0.006468 0.000273 0.000111 0.033554

0.021213

0.000451

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Graph 7.19 Worldmap of CC S D I index per country for 48 countries

on global warming are the Netherlands, Indonesia, Belgium, South Africa, Czech Republic, Chile, Saudi Arabia, Sweden, Portugal, Greece, Austria, Norway, Malaysia, Hungary, Finland, Israel, Denmark, the Philippines, Ireland, Vietnam, Thailand, Mongolia, New Zealand, Bangladesh, Slovakia, Lithuania, Latvia, Slovenia, Estonia, Singapore, Iceland and Nepal. Overall, the results indicate that the U.S. and Russia are key players in science diplomacy with the highest responsibility to act to avert climate change. Africa offers science diplomacy climate stabilization leadership potential foremost in South Africa. In Asia Japan, India and China but also South Korea, Indonesia as well as Malaysia, the Philippines, Vietnam and Thailand, Mongolia, Bangladesh, Singapore and Nepal play a role in science diplomacy with responsibility for climate control. Australia and New Zealand should take a responsible role in science diplomacy for global warming alleviation. Within Eurasia, Saudi Arabia and Israel are key players in science diplomacy with respect to climate mitigation and adaptation. In Europe, Germany, the United Kingdom and France lead on science diplomacy for climate awareness followed by Poland, Spain, Italy, the Netherlands, Belgium, Czech Republic, Sweden, Portugal, Greece, Austria, Norway, Hungary, Finland, Denmark, Ireland, Slovakia, Lithuania, Latvia, Slovenia, Estonia and Iceland. In North America,

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Graph 7.20 Country ranking of CC S D I index for 48 countries

the U.S. leads on science diplomacy but also Canada has potential for academic diplomacy and a responsibility to protect from the downsides of global warming. In South America Mexico, Brazil and Chile have good starting grounds for science diplomacy for a common climate solution. 7.15.9

Climate Winners and Losers CO2 Emission Global Connectivity Index

The climate winners and losers CO2 emission Global Connectivity Index CC GC included the global connectivity of countries in terms of their trade, finance and human migration flows. Based on data of Global Economic Trade Freedom and remittances normalized by Gross Domestic Product, Foreign Direct Investment flows as well as migration in percent of the population of countries around the world, countries were ranked based on their economic, financial as well as human capital flows. The rationale is that countries that are better connected with others in terms of economics, finance and human flows are better

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equipped to lead the world in the proposed climate financialization taxation-and-bonds strategy. Countries that have rising GDP prospects in light of climate change and countries that contribute to human-made global warming in CO2 emissions and have solid economics as well as a finance and human network around the world, are argued to face a higher responsibility to act on climate change and lead the world in the proposed climate taxationand-bonds solution. In these countries, the financial sector should pay for the establishment and maintenance of climate bonds via carbon taxation; while climate change losing territories with low CO2 emissions that also have less global connectivity based on economic, finance and human migration flows should be climate bond recipient beneficiaries being granted a relatively higher bond interest rate premium funded by taxation of CO2 emitting industries in climate winning countries with global connectivity. The CC GC index, therefore, integrated whether a country is a climate change winner or loser as well as the relative CO2 emissions per country in relation to other countries and the global connectivity in terms of trade, finance and human migration of the country. The results for the CC GC index for 158 countries are exhibited in Table 7.12, which also holds a graphical display of the CC GC index numbers per country. Table 7.12 also holds a graphical display of the CC GC index numbers per country. The higher the index, the more likely the country is a climate change winner with high CO2 emissions and global connectivity in terms of trade, finance and human migration. These countries are advised to follow a taxation strategy to fund climate bonds. The lower the index gets, the more the country should shift to a bonds strategy and be a climate bonds premium recipient country. This climate taxationand-bonds strategy is meant to redistribute climate change gains from countries with high CO2 emission levels and high global connectivity to climate change loser countries with low CO2 emission levels and advised followership due to a lack of global connectivity. Graph 7.21 holds a worldmap that colors those countries with recommended high taxation strategy in red, high bonds premium recipients in green and countries that are in the middle of the index range in yellow. Graph 7.21 displays a worldmap that colors those countries in red that are advised to fund climate bonds with a taxation strategy. Red countries tend to be more likely climate winners with high CO2 emissions and global connectivity. Graph 7.21 displays countries greener if being

0.000004 Democratic 0.000000 Kenya Republic of Congo 0.000000 Ecuador 0.000001 Kiribati

Azerbaijan

0.000013 Latvia 0.000000 Lebanon 0.000000 Lesotho 0.000001 Liberia 0.000008 Lithuania 0.000000 Luxembourg 0.000000 Madagascar 0.000014 Malawi 0.000087 Malaysia

0.000000 Fiji 0.000001 Finland 0.000022 France

0.000000 Gabon

0.000000 Gambia 0.000000 Georgia 0.000007 Germany

Bhutan Bolivia Bosnia and Herzegovina Botswana

Brazil Brunei Bulgaria

Belize Benin

0.000000 Egypt 0.000007 El Salvador 0.000041 Equatorial Guinea 0.000000 Estonia 0.000000 Ethiopia

Barbados Belarus Belgium

0.000003 Kuwait 0.000001 Kyrgyzstan 0.000000 Laos

0.000000 Jordan 0.000004 Kazakhstan

0.000006 Dominica 0.000022 Dominican Republic

Australia Austria

Bangladesh

0.000002 Jamaica 0.000000 Japan

0.000000 Denmark 0.000002 Djibouti

Argentina Armenia

0.000000 Qatar 0.000000 Congo 0.000003 Romania

0.003127 Portugal

0.000004 Panama 0.000206 Papua New Guinea 0.000000 Peru 0.000000 Philippines 0.000012 Poland

0.000000 North Macedonia 0.000032 Norway 0.000052 Oman 0.000001 Pakistan

0.000000 Nigeria

0.000002 Netherlands 0.000002 New Zealand 0.000010 Nicaragua 0.000084 Niger

Table 7.12 CC GC index per country for 158 world countries 0.000007 0.000004

0.000001 Trinidad and Tobago 0.000000 Tunisia 0.000000 Turkey 0.000007 Uganda

0.000000 Thailand 0.000002 Togo 0.000037 Tonga

0.000000 Tajikistan 0.000000 Tanzania

0.000005 Eswatini 0.000006 Sweden 0.000002 Switzerland

0.000001 Suriname

0.000001 0.000001 0.000000

0.000000

0.000001 0.000000 0.000000

0.000005 0.000000

0.000000 0.000008 0.000354

0.000000

0.000001 Sri Lanka 0.000000 0.000000 Saint Vincent 0.000000 and the Grenadines 0.000000 Sudan 0.000000

0.000243 South Korea 0.000001 Spain

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0.000001 Malta 0.000000 0.000003 0.000000 0.000001 0.000328 0.000002 0.000010 0.000000

0.000000 Guatemala

0.000036 Guinea 0.000000 Guyana 0.000000 Haiti

0.000002 0.000004 0.000001 0.000000 0.000000

Cameroon

Canada Cape Verde Chad

Chile China Colombia Comoros Costa Rica

Honduras Hungary Iceland India Indonesia

0.000003 Mali

0.000000 Greece

0.000000 Rwanda

0.000000 Russia

0.000014 Sao Tome and Principe Mauritania 0.000000 Saint Lucia Mauritius 0.000001 Samoa Mexico 0.000022 Saudi Arabia Moldova 0.000003 Senegal Mongolia 0.000016 Serbia Montenegro 0.000009 Seychelles Morocco 0.000003 Sierra Leone Mozambique 0.000001 Slovakia

0.000000 Maldives

0.000000 Ghana

Burkina Faso Burundi

0.000020

0.000000 Vietnam 0.000042 Zambia 0.000000 Zimbabwe 0.000000 0.000002

0.000000 Uruguay 0.000000 Uzbekistan 0.000008 Vanuatu

0.000003 0.000000 0.000000

0.000000 0.000021 0.000000

0.000000 United 0.000009 Kingdom 0.000000 United States 0.000043

0.000052 Ukraine

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Graph 7.21 Worldmap of CC GC index per country

climate change losers as well as having fewer CO2 emissions per country and global followership. The greener the country is colored, the higher the bonds premium are advised to be paid out in this country as for being a higher climate loser and having fewer CO2 emissions without global connectivity, hence contributing less to the climate problem and being advised to be climate bond followers. Countries that range in the middle of the index are displayed in yellow in the display spectrum from countries ranked on taxation strategy in red to the highest bonds premium recipient country colored in green. Graph 7.22 ranks 158 countries based on their relative CC GC index status from the highest climate taxation country to the highest bonds premium recipient country.

7.16

Discussion

Climate justice accounts for the most challenging global governance goal. In the current climate change mitigation and adaptation efforts, the financing of the ambitious goals has leveraged into a blatant demand. Action on environmental protection of a stable climate is considered

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Graph 7.22 Country ranking of CC GC index for 158 countries

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an economic game with multiple actors and various predicaments (Di Bartolomeo et al., 2021). The transition to a zero economy with renewable energy is an economic game theoretical problem on the international level but also over time. Problems such as free riders occur, meaning that if one party removes pollution and environmental damages, other parties can enjoy a stable climate without costs (Di Bartolomeo et al., 2021). If one country pursues climate change mitigation, other countries can benefit from the stable climate and avoidance of natural disasters without any own efforts, which therefore leads to myopic first moverhesitancy, inter-temporally suboptimal choices and international political and diplomatic tensions (Nordhaus, 2008, 2013; Semmler, 2021). In the international arena, the contemporary state-of-the-art of climate negotiations is sometimes hindered by compliance hesitancy and lack of commitment on the part of emissions-producing competitive nations that experience the benefits of economic productivity under climate change (Chappe, 2014; Puaschunder, 2020b). Environmental treaties addressing the issue of climate change face problems of enforceability of international environmental law, in particular in soft laws, such as policy declarations, which are not legally binding (Chappe, 2014). Ambitious goals that are dependent on a wide range of multiple actors are often vague, which hinders their actual implementation and therefore leads to widespread non-compliance with no real possibility of enforceability (Chappe, 2021). Procedural obstacles in the length of negotiation processes, coordination of multiple actors for ratifications as well as missing treaty violations sanctions mechanisms delay necessary climate action (Chappe, 2021). Fairness in climate negotiations often becomes an economic predicament of multiple community forces working concurrently which add to the complexity of finding common consent (Haurie et al., 2014). The political economy of climate control is constraint by policy-makers facing election cycles incentivizing them to have short-time decision horizons and obligations to serve their voter communities, which can obstruct international accord and a true motivation to change the status quo of consumption patterns and energy generation (Di Bartolomeo et al., 2021). Political leaders often tend to be focused on short-term objectives that influence their overall ability to make decisions under uncertainty and complexity (Chappe, 2021; Semmler, 2021). Short-termism may lead to the undervaluation of the costs of carbon emissions over time (Di Bartolomeo et al., 2021; Heal, 2000). Myopic focus on only close

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communities at a given time can be changed in an internationallyorganized competitive race for climate benefits distribution for the reduction of CO2 emissions (Di Bartolomeo et al., 2021). In the weighting of the burden of global warming, the regional impacts, losses but also benefits of a warming earth have been neglected until recently. Understanding the economic gain prospect distribution around the world and over time, however, is essential for sharing the gains and losses of climate change equally between countries and over time. Following the introduction of the gains from climate change, a macroeconomic model was proposed to distribute the benefits of a warming earth in a fair way based on which countries are losing and which countries are relatively winning from a warming earth until the year 2100 (Puaschunder, 2020b). Overall, GDP-related climate change gains and losses will be distributed unequally throughout the world. An index determined how far countries are deviating from their optimum productivity levels based on the optimum temperature for GDP productivity and over time. When unidimensionally focusing on estimated GDP growth given a warmer temperature, over all calculated models assuming linear, prospect or hyperbolic gains and losses around the peak condition, the world will be gaining more than losing from a warming earth until the year 2100 (Puaschunder, 2020b). Based on the climate change winners and losers WL index of 188 countries of the world, fewer countries (n = 78) are expected to economically gain more from global warming until 2100 than more countries (n = 111) will be losing from a warming earth (Puaschunder, 2020b). Other researchers have also elucidated the economic impact of climate change on the world and found stark international differences (Burke et al., 2015). Burke et al. (2015) estimate how climate change will affect GDP per capita. In addition, the International Monetary Fund found in a cross-country analysis of the long-term macroeconomic effects of climate change vast country inequalities in global warming effects (Kahn et al., 2019). A macroeconomic cost–benefit analysis leads to the quest for an optimum solution on how to distribute climate change benefits and burdens within society and over time. As economic gains and losses from a warming earth are distributed unequally around the globe, ethical imperatives lead to the pledge to redistribute economic gains due to climate change to territories that lose from global warming pursuing the goal of climate justice. Responsibility for the environment is thereby derived

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from ethical imperatives and hope for harmony with the environment and future generations (Jonas, 1979; Nikulin, 2021). Based on the overall relative climate winners and losers index, global warming benefits are proposed to be redistributed in a fair way to offset climate change loser countries for climate change mitigation and adaptation efforts (Puaschunder, 2020b). Climate justice comprises fairness within society, between countries but also over generations in a unique and unprecedented tax-and-bonds climate change gains and losses distribution strategy. Climate change winning countries are advised to use taxation to raise revenues to offset the losses incurred by climate change in climate change loser countries. Within the winning countries, foremost the gaining GDP sectors and carbon-emitting industries should be taxed proportional to their CO2 emissions. Climate justice within a country should also ensure that low- and high-income household’s share the same burden proportional to their dispensable income, for instance, enabled through a progressive carbon taxation that curbs consumption. Those industries that caused climate change could be regulated to bear a higher cost through a carbon tax. In addition, retroactive billing through a corporate inheritance tax during mergers and acquisitions could reap benefits from past industry wealth accumulation that potentially contributed to global warming. Climate change loser countries could raise revenues by issuing bonds that are subsidized by the relative climate winning territories and also have to be paid back by taxing future generations in order to shift the economic burden of climate stabilization financing in time (Puaschunder, 2016b, 2020b). 7.16.1

Implications

This chapter sophisticated the idea of a fair global warming benefits distribution that grants climate justice around the world and over time in proposing a taxation-and-bonds transfer strategy. The novel policy recommendation features climate bonds funded by taxation in some countries with differing bonds premium and maturity yield regimes based on different variables such as climate change gains and losses, climate flexibility, CO2 emissions production and consumption as well as greenhouse gas emission changes. The responsibility to protect from global warming was attributed to countries that have favorable conditions to draw from public finance in bank lending rates, crisis and resilient finance capabilities as well as science diplomacy and economic ties, which all offer best

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conditions to enact a universal climate justice scheme. The interest rate of an international green bond could either have a high or low bond yield in order to incentivize countries or market actors to lower greenhouse gas emissions and transition to a zero-carbon economy. Empirically this chapter proposed a taxation-and-bonds strategy over the entire world to fund climate change alleviation. The transfer in the form of tax-debt mechanisms would feature some countries’ financing green bonds via carbon taxation revenues, while other countries are climate bonds premium payment recipients. The bond recipients would be funded by the climate taxation countries for receiving bonds. The bonds could be tradable, issued and controlled by global governance institutions, such as the International Monetary Fund, the World Bank, the United Nations or the World Trade Organization. The bond scheme may be issued by a global governance institution for the entire group of contributors. Based on ten input variables of (1) climate change-related economic prospects, (2) climate flexibility as the range of temperatures a country has, (3) the CO2 emission production and (4) CO2 emission consumption levels, (5) the CO2 emission changes as well as (6) bank lending rates as an indicator for access to capital, (7) the country’s financial crisis intervention propensity, (8) the country’s resilience finance capabilities and (9) the country’s science diplomacy ranking and (10) the country’s global connectivity ranking; the determination of a country falling into two categories was proposed to be made: Category 1 are countries that give the guarantee for climate bonds paid by their taxes when the bond defaults. Category 2 are countries that get the revenue from the bonds and can invest in a large-scale transition of markets and de-risk their economics. The bonds can be traded in the overall market. Nine indices were empirically created as a basis to determine which country should be using a taxation strategy and which country should be granted climate bonds. Similar to the Euro-bond issued by the Euro country group, the taxation-and-bonds strategy should be a transfer vehicle to enact the economics of inclusion. Countries that are having a rising GDP prospect and are polluting and consuming goods and do not change their polluting behavior as well as benefit from low bank lending rates, should repay bonds with their taxes as a transfer to countries that face a declining GDP prospect, are not emitting CO2 in production and consumption or have declining CO2 levels and face higher bank lending rates. Those countries should face a higher responsibility to protect from global warming that has a financial crisis intervention

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propensity and resilience finance capabilities as well as are well-connected in science diplomacy and economic terms. Given the global need for cooperation and an intergenerational compact in the eye of the complexity and long-term impetus of global warming, this chapter put forward a proposal for incentivizing global actors by gaining a share of the economic benefits of climate change. Over multiple periods, market actors are thereby brought to cooperate on financing climate change mitigation in competing over CO2 reduction efforts in the hope to gain a favorable position on a climatetaxation-obligation to climate-benefits-recipient spectrum. Competing over a relatively-determined position on the redistribution scale via CO2 emission reduction over time will naturally lead to a transition to a zero-carbon economy. This chapter integrated the climate winners and losers model with the climate flexibility model in a transition to a green economy model via climate taxation and green bonds (Puaschunder, 2020b). In particular, nine indices were presented that paid attention to where a country is on the gains and losses spectrum as well as the climate flexibility and CO2 emissions in production and consumption and CO2 emissions changes as well as financial lending rates in order to propose a differentiated interest rate regime for bonds payoffs that pay tribute to future GDP prospects under climate change, who is causing the problem of global warming in production and consumption and the overall willingness to change the country’s carbon footprint as well as country-specific access to market capital starting levels (Puaschunder, 2020b). A better propensity to enact a common climate justice solution on the international level is attributed to countries that have a historically-proven financial crisis intervention expertise and resilience finance capabilities as well as are connected in science diplomacy and economic terms. An international climate change fund could be based on nine indices that integrated the relative country’s initial position on the climate change gains and losses index spectrum and a country’s climate flexibility understood as the future climate wealth of nations trading assets in combination with CO2 emissions production and consumption levels as well as changes in CO2 emissions over time and the bank lending interest rate per country (Puaschunder, 2020b). The responsibility to protect from global warming could be based on financial crisis intervention expertise and resilience finance capabilities as well as global leadership as bestowed by science diplomacy and economic interconnectedness on a global level.

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Implementation

Historically, the first green bond was issued by the World Bank in 2007 (Braga et al., 2020a; Semmler, 2021). International banks—such as the World Bank and the International Monetary Fund—but also central banks are today the main climate bond issuing authorities (Braga et al., 2020a; Heine et al., 2019; Semmler et al., 2021). Global governance institutions are already intermediaries for redistribution efforts. Similar models exist, for instance, in the European Union European Investment Bank serving as an intermediate credit demand by low-income countries and a credit supply backed by taxes of advanced countries. For instance, the European Investment Fund (2022a, 2022b) under the European Guarantee Fund channels funds to developing economies and supports economies hit by the economic fallout of the COVID-19 pandemic. An international intermediary financial institution could manage and guarantee the loans in a taxation-and-bonds strategy to stabilize the climate. International organizations—such as the World Bank, International Monetary Fund or the United Nations—have the global governance strength to support an international green fund climate change mitigation and adaptation efforts and incentivize countries for a transition to renewable energy. First ideas in green global governance exist in the Global Green New Deal (GGND), which features a concerted plan of a policy package to instigate global change (Boyle et al., 2021; O’Callaghan & Murdock, 2021). The GGND was first proposed by the United Nations Environment Program (UNEP) in 2009 (UNEP, 2009). The UNEP describes the GGND as a policy package with the objectives of reviving the world economy, reducing carbon dependency and furthering sustainable growth (UNEP, 2009). The UNEP GGND focuses on economic stimulus, domestic regulatory reform and international cooperation. State-led economic stimulus fosters decarbonizing carbon-intensive sectors of the economy such as energy, transport, buildings and agriculture (UNEP, 2009). Domestic policy reform includes eliminating environmentallyharmful subsidies and strengthening environmental legislation (UNEP, 2009). International cooperation advocates for changes to the policy architecture governing international trade, aid, global carbon markets and technology transfers (UNEP, 2009). Via a GGND international agreement, global governance institutions could generate global social norms that foster a domestic implementation

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of a green stimulus. Policy measures may thereby be pegged to COVID19 recovery efforts, such as in the United States Green New Deal and the European Green Deal plans (European Commission; The White House of the United States, 2021a, 2021b, 2021c; United Nations, 2020; United Nations General Assembly, 2020, Art. 47; United States Congress, 2019; Vivid Economics; World Trade Organization, 2020, 2021). A global governance approach as pursued in the GGND could shape the conduct of an array of international actors and identify emerging trends in global governance of the system dynamics of climate change efforts. The implementation of the financing of climate change mitigation and adaptation efforts could become a concerted action of multiple entities: First, mitigation is likely to be tackled on an international level by global governance institutions. Adaptation is likely to be more prevalent on a country level. Financing climate mitigation and redistribution of climate change gains to economically-losing territories in the wake of climate change could become the central focus of international entities, such as the United Nations, the World Bank and the IMF. Redistribution of climate gains to territories that have a decreasing GDP prospect in light of global warming could be accomplished via taxation and bonds if global entities support such a plan concertedly. For instance, the United Nations could target at a binding climate agreement between countries during their Conferences of Parties (COP) meetings. All UN joining nations would then sign up for an implementation of climate gains redistribution via taxes-and-bonds schemes. Alternatively, or complementary, the World Bank and/or the International Monetary Fund (IMF) could work out a redistribution scheme via their existing contributions key and loan programs. While the United Nations features a democratic ‘one-country-one-vote’ voting system, the World Bank and IMF have a voting scheme that is also weighted by the national financial contributions of all participating entities. As a universal dispute resolution for non-compliance with the outlined plans, prospectively the World Trade Organization (WTO) or International Law Commission of the United Nations in New York could serve as panels for oversight, monitoring and evaluation control. Governments and multilateral organizations are also found to be essential to support the issuance of green bonds as private funds show higher yields, volatility and beta prices (Braga et al., 2020a). As for climate change adaptation funding, on the national level, central banks could become intermediaries for issuing country-specific and

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industry-specific bonds. Country-wide bonds could feature an interest rate bandwidth around the universal bank lending rate for climate bonds that is determined by international entities. Within the bandwidth, central banks could offer green bonds with specific premium bond payments for industries based on the industry carbon emission levels. Industry-specific interest rates could turn the traditional price-cutting behavior that drives corporations to seek for cheap and often non-renewable energy sources to opt-in for a competitive race-to-the-top for beneficial interest rates that gratify choices for renewables. A beneficial industry shift could also be fortified by COVID-19-rescue and recovery packages that are in line with the Green New Deal program in the United States and the European Green Deal as well as the Next Generation EU in Europe (European Commission; The White House of the United States, 2021a, 2021b, 2021c; United Nations, 2020; United Nations General Assembly, 2020, Art. 47; United States Congress, 2019; Vivid Economics; World Trade Organization, 2020, 2021). The Green New Deal and the European Green Deal in combination with the European Sustainable Finance Taxonomy and the Next Generation EU are the most widescale efforts to marry the idea of economic inclusive growth in line with the natural resources pool and the environment. Problematic may be the largess of funds needed that may exceed the capacity of funding agencies within smaller nations. The lending capacity remains a political problem, on the international and national levels. From an international perspective, questions arise about power dynamics of interest groups that may influence the agenda of the World Bank, the IMF and central bank grantors. Political pressure of different constituency groups may be driven by collective action problems. In the implementation of such a climate gains redistribution scheme, global governance institutions play a crucial role with plurilateral summit capabilities. Comprised of all nations of the world, global governance entities have the capacity to instigate the idea of a ‘Global Green New Deal,’ which could globalize ideas of the Green New Deal and the European Green Deal to enact a binding taxation-and-bonds solution for climate change. Empirically-driven redistribution schemes could thereby build the support of all international actors involved and imbue a notion of economically-driven rationality in fairness that could win countries to act and comply. Global governance institutions, such as the World Bank, IMF or the United Nations, could thereby act as norm entrepreneurs and action catalysts of a Global Green New Deal that redistributes the gains

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of a warming earth to places that face economically-declining economic prospects. The preliminary insights brought forward in this chapter were meant to advance novel understandings of the important role that global governance institutions can play in supporting and implementing a Global Green New Deal that targets at redistribution to overcome global inequalities in regard to climate change. Global governance entities can shape the conduct and array of international actors to contribute to a commonlyagreed global plan. Economically-driven indices could aid in taking the political nature out of redistribution politics and historically-laden international relations. This chapter was targeted at drawing attention to the need for future research on this nexus and meant as a first step in finding economically-driven redistribution schemes. In the future, global governance institutions are believed to play an increasing role as ‘global society’ leaders to tackle large-scale complex problems—such as climate change but also COVID-19 alleviation— and play a fundamental role in global social norms creation and global public policy implementation by identifying change agents on the national level (Barnett & Sikkink, 2011). Future research should pay attention to emerging trends in global redistribution models to alleviate climate inequalities and enact climate justice around the world and over time. Global governance institutions could thereby further build on researchdriven inequality parameters in order to derive concrete policy implementations of global norms of equity via global taxation-and-bonds-schemes (Boyle et al., 2021; O’Callaghan & Murdock, 2021). Future writings could also investigate the underexplored role of global governance institutions in changing country-level dynamics according to global world power resolutions. The global governance research literature could be fortified by insights into the dynamics of modern relations of global societies as dense networks of states with common values and agreed-upon principles (Barnett & Sikkink, 2011). How powerful global governance institutions could help the legitimacy and lead in a cascading of social norms that are internalized in a network of change agents on the local levels should be explored (Finnemore & Sikkink, 1998). As for concrete redistribution plans, different means of transfer should be explored in future studies, ranging from taxation models, direct or indirect transfers, credit guarantees, bonds issuance as well as conventional repayment schemes.

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Economic Impetus

In this chapter, an overall redistribution key was introduced to determine per-country transfers based on the climate change winner or loser status and climate flexibility as well as the contribution to the climate change problem measured per country and over time by CO2 emissions of production and consumption as well as CO2 emission changes and the bank lending rate per country. In order for the redistribution scheme to work, those countries with climate change losing prospects and low ranges of climate flexibility as well as low CO2 emissions in production and consumption as well as decreasing CO2 emissions and high bank lending rates could be granted climate bonds prospects with high bond yield rates that are financed by countries that have climate change winning prospect and high ranges of climate flexibility as well as high CO2 emissions in production and consumption as well as increasing CO2 emissions trends and low bank lending rates via taxation. Countries in the middle of the climate change winners and loser index spectrum and with medium climate flexibility levels as well as medium rates of CO2 emissions in production and consumption or non-changing CO2 emissions rates and medium bank lending rates should have a mixture strategy of taxation and bonds with moderate bond yield rates. Those countries that are high climate change winners on the winners and loser index spectrum that have high climate flexibility as well as have high rates of CO2 emissions in production and consumption and increasing CO2 emissions levels as well as low bank lending rates should issue bonds funded by taxation that offer high bond yield rates in countries with climate change losing prospect and low ranges of climate flexibility as well as low CO2 emissions in production and consumption and decreasing CO2 emissions as well as high bank lending rates. A better propensity to enact a common climate justice solution on the international level should predestine countries to face a higher responsibility to act on global warming and lead the world solution for climate justice. Those countries that have a historically-proven financial crisis intervention expertise and resilience finance capabilities as well as are connected in science diplomacy and economic terms should thereby take on a leadership role in raising the funds for the common climate justice taxation and transfer bonds solution. These countries would raise the funds necessary to be redistributed to countries that do not have a good starting ground on financial crisis intervention and resilient finance

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expertise and are not well-connected in regard to science diplomacy and economic transfers. The idea of differing climate bond regimes is also extendable to sectorspecific bond yield interest rate regimes. On a country level, high CO2 emitting industries should face a climate taxation in order to set market incentives for a transition to renewable energy. The revenues generated from the taxation of carbon-intensive industries should be used to offset the losses of climate change and subsidize climate bonds. Within a country, the bonds could be offered by commissioning agents, such as local investment banks, who could install industry-specific premium bonds payments and maturity bond yields based on the environmental sustainability of an industry, e.g., as measured by the European Sustainable Finance Taxonomy or U.S. attempts to include nature into national accounting. The more sustainable an industry performs; the higher bond yield should be granted in sector-specific interest rate regimes within a country. This strategy should set positive market incentives via subsidies. Funding industries for not polluting could change the traditional race-to-the-bottom price-cutting behavior driving CO2 emitting energy supply to have industries compete over subsidies for using clean energy. In this way, bond yield differences between industries could set positive market incentives for a transitioning to renewable energy productivity solutions. An in-between country regime could enact fairness on the different starting grounds of countries as relative climate change winners or losers coupled with incentivizing countries and/or corporations to compete over better bond conditions. Incentives could thereby target at lowering CO2 emissions or moving production to places that are climate losers in order to help revitalizing economies that have a shrinking prospect under climate change. 7.16.4

Feasibility and Limitations

The combined tax-and-bonds strategy and the incentives to shift from tax net payers into a common world climate bond to become the recipient of funds for the transition to a renewable economy could de-risk bonds (Braga et al., 2020b). Such tax-and-bonds redistribution schemes could be administered by the World Bank or the International Monetary Fund. Global governance institutions would have the power to shift countries from net taxation-funded creditors to net beneficiaries

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with high bond yield premium payments from one period to another. Similar attempts have been introduced in the literature—for instance, see Semmler et al., (2021) in their World Bank Report and Braga, Semmler and Grass (2020b). All these attempts have similarities with a disaster insurance scheme or adaptive model-predictive policies in a multi-country policy setting (Braga et al., 2020b; Bréchet et al., 2014). As for limitations of the proposed ideas, it is to note, that bond yields have many drivers, the most important being risk (Semmler et al., 2021). In addition, yields are not only incomes by asset holders but also drive capital cost for the issuer—high yields mean high capital cost (Semmler et al., 2021). Bonds are issued conditional on empirical trends and facts that drive the yields in the interest rates they pay (Semmler, 2021). 7.16.5

Future Studies

Future studies on climate change impacts may address the different tipping points and disaster drivers of temperature rise, weather extremes and sea level rises as this current model only considered temperature as the main determinant of economic growth (Dietz et al., 2021). The simplistic model of only prospecting the impact of temperature on GDP growth was chosen as a first starting point to sketch out the potential of climate winners and losers models for redistribution and inequality alleviation strategies. The first model introduction is by no means inclusive of all environmental eventualities and economic drivers. It is yet a first step in the direction of balancing out the worldwide climate inequalities and provides a first peg of economic climate change gains to redistribution capacities. In this regard, future index extensions could also address the CO2 emissions levels and CO2 emissions changes per capita. The current state of this chapter will hopefully set the stage for future research that refines the variegated impact of climate, weather and coastal risk as future economic determinants in order to lead toward a more just balance of economic gains and losses around the world, also per capita. Future Law and Economics extensions should particularly pay attention to the disparate impact of climate policies on marginalized and vulnerable societal groups. In a heterodox opening of the macroeconomic aggregate, the disproportionally hard effect of policies on gender, race and other vulnerable populations must be addressed with special heterodox attention.

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For the legal community, the proposed tax-and-bonds strategy appears as a concrete application of a commitment bond strategy (Armour et al., 2021; Ayres & Abramowicz, 2011; Bishop, 2019; Omarova, 2020). 7.16.6

Monitoring, Evaluation and Accountability

The effectiveness of policies will depend on the national circumstances, the design, interaction and stringency in the implementation (Kato et al., 2014; Semmler, 2021). Integrating climate policies in broader development agendas will also require to be attentive to the local regulations and standards, the prevailing tax regime and carbon consumption charges, tradable permits and financial incentives but also voluntary agreements, information instruments and future research and development (Semmler, 2021). Especially, the improvement of new technologies will be essential for transforming the energy sector for a broad-based renewable energy sector establishment (Mazzucato, 2013; Semmler, 2021). Government initiatives to fund and subsidize the transition to renewable energy via research and development-enhanced innovations are needed (Mazzucato, 2013). The respective technologies are expected to become more efficient and less cost-intensive over time (Braga et al., 2020a; Heine et al., 2019; Mazzucato, 2013; Semmler et al., 2021). The recent World Bank Report on green bonds and climate taxation (Semmler et al., 2021) outlines that carbon pricing and green bond initiatives are growing but still concentrated in high-income countries (especially Europe) and China (classified as upper-middle income). A taxand-bonds strategy in which climate change gains payments could be redistributed could open the market and motivate even internationallydeveloping parts of the world to participate in order to be funded for their low CO2 emissions levels in comparison with advanced countries. To this day, most green bonds tend to be project-specific and a new infant market operation (Semmler, 2021). Governance on green bonds and the current experience with sustainability financing will determine the future of green energy in learning-by-doing of sector-specific but also long-run outcomes (Semmler, 2021). 7.16.7

Future Outlook

The Coronavirus crisis offered the unique historic potential to peg alltime-high governmental rescue and recovery packages to environmental

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long-term causes (Puaschunder, 2020c, 2021). The United States Green New Deal as well as the European Green Deal and Sustainable Finance Taxonomy as well as the Next Generation EU will grant unprecedented opportunities to scale up green investments through green bonds as part of a fiscal program to benefit the populace whole-roundedly (Semmler, 2021). Green investments are governmental and corporate environmental expenses in equipment, technology, materials, energy and purchased services to improve the companies’ environmental performance, develop green management and reduce environmental risks (Ren et al., 2022). Green investments are aimed at achieving effective energy systems and climate markets, which play a significant role in reducing pollution emissions and promoting sustainable development (Ren et al., 2022). Increasing capital investment in green technology can improve the production efficiency of enterprises and realize the replacement of nonrenewable with renewable energy, thereby alleviating the negative influence of enterprise production activities on the environment (Ren et al., 2022). In the Chinese market, Ren et al. (2022) found that green investment can achieve low carbon upgrading of the industrial structure and significantly reduce local environmental pollution, but it has no impact on environmental pollution in neighboring areas (Ren et al., 2022). Green investment can reduce environmental pollution by improving the efficiency of energy conservation and emission reduction, expanding technological innovation capabilities and upgrading the industrial structure (Ren et al., 2022). Environmental pollution is diminished by technological innovation, upgrading the industrial structure, enhancing energy conservation and increasing emission reduction efficiency. Regression results of a dynamic threshold model show that green investment has a nonlinear impact on environmental pollution that is dependent on institutional quality (Ren et al., 2022). A higher degree of regional corruption can lead to a gradual decrease in the role of green investment in reducing environmental pollution (Ren et al., 2022). Improvements in marketization and intellectual property protection can increase the positive influence of green investment in reducing environmental pollution (Ren et al., 2022). Alternative market-driven solutions appear in the Cap-and-Trade scheme but also in Socially Responsible Investing (SRI) and market solutions to curb harmful CO2 emissions that can only be effective if implemented on a worldwide scale (Puaschunder, 2021). While there has

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been a macroeconomic debate about the monetary size of the current governmental rescue efforts and if the largess of governmental aid may trigger inflation and unbearable debt levels, the heterodox need for a diversified view and disparate impact of inflation and interest rate regime effects become apparent at the same time (Puaschunder, 2021). From the environmental point of view, one can argue that money will always be there and replaceable but environmental tipping points and irreversible lock-ins may depreciate welfare long-term and terminal. In the next step, the European Taxonomy for sustainable activities could serve as the basis of CO2 emissions per industry measurements and thereby lead to a respective redistribution key between industry contributions to the climate change problem (European Union Technical Expert Group on Sustainable Finance, 2020). Future open research questions are the economic validation and measurement of positive and negative externalities of all these endeavors over time but also a disparate impact assessment, which can be granted by a truly heterodox viewpoint (Woo, 2021). Methodological heterodoxy could open the spectrum of macroeconomic models with a more comprehensive treatment of preferences, climate-sensitivity of infrastructure as well as different technologies’ impact on the success of climate mitigation and adaptation policies (Mazzucato, 2013; Semmler, 2021). Introducing the idea of climate taxation and green bonds in an incentives-driven tax-and-bonds strategy is a new heterodox method that establishes green bonds as a possible macropolicy aimed at ensuring to share the burden but also the benefits of climate change over time, between countries and markets but also within society in an economicallyefficient, legally-equitable and practically-feasible way.

7.17

End Thoughts

Climate change imposes massive environmental challenges and unforeseeable human living condition degradation risks. With rising unpredictable risks and a complex ecosystem challenge as never before being imposed on humankind, the call for science-informed united action against climate change has reached unprecedented momentum. In all the mentioned contemporary tragedies of our lifetimes, science diplomacy appears as a beacon of light and ray of hope to connect the world in a united wish to overcome challenges successfully and grow

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stronger on externally-adverse shocks. The results offer invaluable quantified information on the importance of specific nations to lead on science diplomacy solutions to overcome the climate change problem. Advocating for science diplomacy enlightens science as a profession, which is often criticized for being a competitive field with a hostile collegial climate and negative socio-psychological externalities. Science diplomats would be trained to be socially-versed and diplomatically-fit. Science diplomacy could also help scientists find meaning and add value in their profession beyond impact factors and could touch the laypeople’s everyday life with quality results. Science diplomacy could also address the call for heterodox scientific methods granting interdisciplinary and international exchange a prominent role in science. Lastly, in the most recent call for heterodox scientific ethics, science diplomacy could serve in genuine support of creative thinking to develop innovative ideas in a protected environment, inspiring others to move traditions forward respectfully, thoughtfully and meaningfully and allow for breaking hierarchical dynamics in mutual exchange of insights while meeting in collective appreciation for the differences. As for future research endeavors, to this day, the question remains whether scientist diplomats or diplomat scientists are more effective than conventional modes of governmental and governance diplomacy and international relations. Until today, we have no clear economic model that investigates what science diplomacy ingredients are favorable and how science diplomacy is related to macroeconomic stability and resilience variables.

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Puaschunder, J. M. (2021). Focusing COVID-19 bailout and recovery. Ohio State Business Law Journal, 16(1), 91–148. Rawls, J. (1971). A theory of justice. Harvard University Press. Ren, S., Hao, Y., & Wu, H. (2022). How does green investment affect environmental pollution? Evidence from China. Environmental and Resource Economics, 81, 25–51. https://doi.org/10.1007/s10640-021-00615-4 Romer, P. M. (1986). Increasing returns and long-term growth. The Journal of Political Economy, 94(5), 1002–1037. Romer, P. M. (1990). Endogenous technological change. Journal of Political Economy, 98(5), 71–102. Sachs, J. D. (2014). Climate change and intergenerational well-being. In L. Bernard & W. Semmler (Eds.), The Oxford handbook of the macroeconomics of global warming (pp. 248–259). Oxford University Press. Sachs, J. D. (2021, November 17). Fixing climate finance. Social Europe: Politics, economy and employment & labor. Semmler, W. (2021). Economics of climate change. Lecture notes, The New School for Social Research. Semmler, W., Braga, J. A., Lichtenberger, A., Toure, M., & Hayde, E. (2021). Fiscal policies for a low-carbon economy. World Bank Report. https://doc uments1.worldbank.org/curated/en/998821623308445356/pdf/Fiscal-Pol icies-for-a-Low-Carbon-Economy.pdf Semmler, W., Lessmann, K., & Tahri, I. (2020). Energy transition, asset price fluctuations, and dynamic portfolio decisions. https://ssrn.com/abstract=368 8293 Sharp, P. (2016). Domestic public diplomacy, domestic diplomacy, and domestic foreign policy: The transformation of foreign policy. Oxford University Press. Stroebe, W., & Frey, B. S. (1982). Self-interest and collective action: The economics and psychology of public goods. British Journal of Social Psychology, 21(2), 121–137. Szkarłat, M. (2020). Science diplomacy of Poland. Humanities and Social Sciences Communications, 7 (1), 1–10. The United States Congress. (2019). Recognising the duty of the Federal Government to create a Green New Deal. https://www.congress.gov/bill/116th-con gress/house-resolution/109/text The Vienna Statement on Science Diplomacy, International Institute for Applied Systems Analysis (IIASA). (2022). https://iiasa.ac.at/network-with-us/vie nna-statement-on-science-diplomacy The White House of the United States. (2021a). President Biden and G7 Leaders launch Build Back Better World (B3W) Partnership. https://www. whitehouse.gov/briefing-room/statements-releases/2021a/06/12/factsheet-president-biden-and-g7-leaders-launch-build-back-better-world-b3wpartnership/

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The White House of the United States. (2021b, March 31). The American Jobs Plan. https://www.whitehouse.gov/briefing-room/statements-releases/ 2021/03/31/fact-sheet-the-american-jobs-plan/ The White House of the United States. (2021c). The Build Back Better Agenda. https://www.whitehouse.gov/build-back-better/ Tokyo Climate Center, Japan Meteorological Agency. (2022). https://ds.data. jma.go.jp/tcc/tcc/products/gwp/temp/list/year_wld.html United Nations. (2020). Climate change and COVID-19: UN urges nations to ‘recover better.’ https://www.un.org/en/un-coronavirus-communicationsteam/un-urges-countries-%E2%80%98build-back-better%E2%80%99 United Nations Environment Programme. (2009). Global Green New Deal policy brief . https://www.unep.org/resources/report/global-green-new-deal-pol icy-brief-march-2009#:~:text=UNEP%20outlines%20a%20GGND%20with,car bon%20dependency%20and%20environmental%20destruction United Nations General Assembly. (2020). Comprehensive and coordinated response to the Coronavirus Disease (COVID-19) pandemic. https://www. un.org/pga/74/wp-content/uploads/sites/99/2020/09/Omnibus_Finalclean.pdf Uzawa, H. (1965a). Optimum technical change in an aggregative model of economic growth. International Economic Review, 6(1), 18–31. Uzawa, H. (1965b). Technical change in an aggregative model of economic growth. International Economic Review, 6(1), 18–31. Uzawa, H. (2009). Economic theory and global warming. Cambridge University Press. Vitek, F. (2017). Policy, risk and spillover analysis in the world economy: A panel Dynamic Stochastic General Equilibrium Approach. International Monetary Fund. Vivid Economics. (2021). Greenness of Stimulus Index. https://www.vividecon omics.com/casestudy/greenness-for-stimulus-index/ Webometrics. Ranking Web of Universities. (2022). https://www.webometrics. info/en/distribution_by_country Wirl, F., & Yegorov, Y. (2014). Renewable energy: Models, implications, and prospects. In L. Bernard & W. Semmler (Eds.), The Oxford Handbook of the Macroeconomics of Global Warming (pp. 349–375). Oxford University Press. Woo, A. (2021, April 16). Environmental fascism and The Zero Waste Movement. Panel on Monitoring and Evaluation in Environmental Economics. The New School New York. World Bank. (2015a). Green bonds attract private sector climate finance. World Bank Brief. World Bank 2015b Report. (2015b). World Bank.

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CHAPTER 8

General Discussion and Future Prospects

Abstract In today’s world, resilient finance has become a prominent term. The importance of financial markets in humane sustainable endeavors has grown steadily. The post-pandemic financial constraints met with the largest-ever rescue and recovery aids granted in the history of modern times have opened opportunities to use finance in service of the greater good to an extent as never before in the history of modernity. All these trends have emerged resilient finance to promise to lift entire market industries onto a more socially conscientious level and humankind to a sustainable future. In light of the contemporary post-pandemic era, the massive amount of rescue and recovery aid grants resilient finance an unprecedented opportunity for a reset to embark on a better, more just and equal world. Academia nowadays questions the central focus on efficiency in economics for the sake of attention to inclusive resilience. For society the question arises if the finance sector has an obligation to serve the higher societal progress. Governments’ role in this appears as the great equalizer for inequality alleviation via reset funding. On all the aspirational goals of these long-term investment projects, science and also the implementation can benefit from learning from the young what future world they aspire to live in. Future research should couple macroeconomic calculus with shedding light on economic disparate impacts of economic crises. Monetary policy to alleviate negative externalities of external shock crises could pay attention to the inequality pandemics © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. M. Puaschunder, The Future of Resilient Finance, Sustainable Development Goals Series, https://doi.org/10.1007/978-3-031-30138-4_8

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impose on specific societal groups. If handling all the challenges of our lifetimes successfully based on common values of justice, equity, ethics of inclusion and general trust, the COVID-19 pandemic holds the potential for becoming renowned as a great reset and ultimate driver of positive change for this generation and the following. Future prospective developments of resilient finance may entail ethics of finance diplomacy in the closer integration of finance and political goals. In a future prospect, a financial recovery program to support humanitarian endeavors in Ukraine could be based on the historical example of the European Recovery Program building up the Western world economic boom of the 1960s and 1970s. The concept of political divestiture, which most recently has been extended into green finance and sustainability conscientiousness, is likely going to grow in the future. Decentralized finance options are additional prospects of the future, which promise to hold the key for a transitioning of the energy supply. The integration of finance and sustainability should also be scrutinized in the domain of cryptocurrencies. Those who give funds and regulatory bodies overseeing the cryptocurrency use in exploring outer space should consider ethics of sustainability and humane ethical notions in the planning of space travel. An additional area of concern appears in FinTech’s use of 5G technology. Harmful use of information leading to social credit scores and marginalization of certain groups are potential threats to this new technological advancement. Investigating the unprecedentedly described role of social online media information for markets driving inflation and/or debt could aid to understand the hidden behavioral dynamics that are constantly building and fueling economic booms and downturns. Future research in the wake of the Green New Deals of the Western world and the Sustainable Finance Taxonomy shed light at natural resources as assets for nations. The United States White House currently pursues a plan to integrate natural resources in national accounting. The World Bank redefines Wealth of Nations for natural resource assets. The American Association for the Advancement of Science currently also stresses the role of technology for the Sustainable Development Goals (SDGs). Future research may also aim at innovatively painting a novel picture of the mass psychological underpinnings of business cycles based on information flows with particular attention to digital communication. The attention to efficiency in economics and leadership in management and finance could be questioned to pass for focus on followership as a resilient sustainability strategy. Future research may delineate the dynamics and implementation of social responsibility

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within markets in the interplay of the public and private sectors as well as financial markets. Concrete macroeconomic research could specifically unravel how contemporary media communication produces certain types of expectations that form collective moods and how changed consumption patterns result in systemic global economic outcomes. The concept of social volatility should be scrutinized in light of the digitalization exacerbated during COVID-19. A prospective future research outlook and implications are offered aimed at improving the economic future with inclusive resilient finance in our post-COVID-19 world to come. On an aspirational goals level, human rights extensions for specific attention to climate change victims and country-specific losses from climate change are currently vibrant areas of research to alleviate disproportionate effects of global warming. Human rights online also paying attention to the sustainability of the internet are also argued to be the next generation of human rights in the digital era. All these areas of innovative science will guide a future of resilient finance that ennobles humankind while preserving natural resources and flourishing sustainable living. In today’s world, resilient finance has become a prominent term. The importance of financial markets in humane sustainable endeavors has grown steadily. The post-COVID-19 era demands for focus on resilience. The rising inequality gap within society during a global pandemic has raised the call for transparency and accountability of financial markets. The post-pandemic financial constraints met with the largest-ever rescue and recovery aids granted in the history of modern times have opened opportunities to use finance in service of the greater good to an extent as never before in the history of modernity. Academia has been called for attention to resilience rather than efficiency (Alves & Kvangraven, 2020). All these trends have emerged resilient finance to promise to lift entire market industries onto a more socially conscientious level and humankind to a sustainable future. As the fourteenth-century great plague of the Black Death having heralded the Renaissance through advancements in mechanization, healthcare equality and values of self-determined social justice, today’s time for resilient finance opens the gates for a new Renaissance that is built on sustainable financial service values. Finance in the Renaissance saw the Italian House of Medici use state investments to build lasting cultural values in architecture, arts and sciences. The German Fugger bankers started social equity housing projects and determined the value

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of finance in service of the community. The Spanish crown used funds during the Renaissance to explore new worlds, which led to the discovery of the Americas in the new world, in the hope of better living conditions than areas that were struck by crises. In light of the contemporary post-pandemic era, COVID-19 accounts for the most widespread and large-scale complex external shock changing every sphere of human being (Gelter & Puaschunder, 2021; Puaschunder & Gelter, 2021). The COVID-19 pandemic is likely exacerbating existing inequalities between the finance world and the real economy given the flexible financial market performance capabilities to exchange losing for winning industries during downturns and the sticky real economy dependence on wages and trickle-down economic effects (Puaschunder, 2021a, 2021c). In addition, homeownership and inflationadjusted salary schemes become a driver of inequality in our longestlowest-ever inflation regime (Puaschunder, 2021a, 2021c). COVID-19 also made apparent vast differences in healthcare provision around the world and the country differences in quality care (Puaschunder, 2022b; Puaschunder & Beerbaum, 2020a, 2020b). Within workplace settings, digitalization will become essential and drive an already-existing gap between e-skilled and e-unskilled labor (Gelter & Puaschunder, 2021; Puaschunder, 2021a, 2021d; Puaschunder et al., 2020a, 2020b). The COVID-19 crisis rose inequality that persisted prior to the outbreak of the novel Coronavirus, for instance, in access to affordable quality healthcare inequality around the world or income (Gorz, 2003). Other inequality patterns that were not so obvious became accentuated by COVID-19 to a point that inequality became apparent to a broader population—for example, we saw rising inequality in the finance world versus real economy gap but also disparate effects of inflation and a low interest rate regime became more and more obvious in an analysis of socio-psychological propensities determined by industry classes. At the same time, the COVID-19 pandemic has elements of an expurgatory catharsis and an opportunity for a reset to embark on a better, more just and equal world. In record speed, the world has seen drastic changes implemented in the healthcare, finance and economics sectors. The way we lived, worked and structured our days has changed dramatically since the outbreak of the crisis. In the aggregate, the modes of operation of corporations, governments and governance were challenged and redefined throughout the crisis as we go along with the recovery.

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Science has advanced to focus on real-world relevant resilience and started to question the obsession with efficiency (Alves & Kvangraven, 2020). Unprecedented policy shifts coupled with extraordinary rescue and recovery packages sprouted throughout the world. In most cases, these aids are pegged to noble causes and the wish to make the world a better place for this generation and the following. While it is still too early to tell whether the efforts in the aftermath of the crisis will become established and fruitful transitions to a better state will happen, already now it is apparent that the rescue and recovery help offers a once-in-alifetime generational shift and a potential gateway to a new era in which resilient finance transforms our society to become more social and inclusive. Throughout the history of humankind, very many different crises throughout the world have heralded advancement in the overall grand theme of developments that were adopted. What will it take for the COVID-19 crisis to be remembered by historians as the beginning of a golden age or a new renaissance? Learning from the examples of previous pandemics, we can say that strong governmental support for productive causes has a history of transferring society to higher social welfare levels. The combination of economic stimulus with social and environmental pledges could trigger extraordinary societal development. Building growth on economic capital enhanced with a humane focus will foster trust and the social glue as for breeding societal courage that also something good can come out of a devastating crisis. Today’s society holds the largest levels of inequalities of which some are more obvious and blatant, whereas other inequalities are more implicit or just emerging. Foremost, a deep finance-real economy gap opened, which polarized even further in the eye of low key interest rates and inflation. The flexible substitutability of financial fund components in the exchange of loss segments for winning industries increases financial market profits, while at the same time, real economy agents often faced liquidity and sustainability constraints, which were exacerbated in an overall climate of inflation. In this sense, the generally low interest rate creates a situation that the financial world lives at the expense of the real economy. The financial market hegemony, therefore, capitalizes on the real economy by creating security in making money from money and the exchange of non-profitable industries without creating wider cultural value or social capital. People’s life choices in their profession they follow boils down to a rational versus emotional propensity state during external shock crises.

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In the aftermath of the COVID-19 external shock, social justice pledges have risen steadily culminating in an all-time-high. As disparate effects of inflation and the low interest rate regime have become apparent in the wake of rescue and recovery packages floating economies with liquidity, the socio-psychological impetus of low interest rate regimes hit real economy agents the hardest. Today’s leadership in the public and the private spheres has to address these challenges and work toward contributing to causes such as inequality alleviation, social fairness and equal access to opportunities while protecting those who have a disadvantage to participate in markets with redistribution means. While the finance world features impersonal judgments with efficiency, the real-world consumption is based on personal judgment tainted with emotions. Intuitions guide both worlds in their choices, as do personal networks and social reference groups. New hierarchies of statuses of affect arise based on the origins of wealth generation. Money skills in the finance world are pitted against life(style) skills acquired in the real economy. The laws of the creation of value determine a novel balance of power based on trust in the economy and gain prospects. Trust is established and reinforced together in networks and contexts that draft the social bubbles of information exchange. Fast-speeded digital media about market predictions connects us in uncertainty online. For society the question arises if the rational finance sector has an obligation to serve the higher societal progress and fund the real economy with the fruits of the spirit of capitalism (Boltanski, 1987). The instrumentalization of human beings and specifically human dimensions of life in the finance sector wears down the authenticity and individuality of daily life (Boltanski, 1987). Market actors of the future will have to align these two worlds. Legal scholars and law practitioners will be required to balance their powers to share benefits among them for the good of all society. The governmental role in this appears as the great equalizer for inequality alleviation via reset funding. Governments all over the world can advocate for a sustainable finance world and equally accessible economic growth benefits. Governmental leadership can bring back the financial world in the service of improving and stabilizing the real economy through a stricter separation between investment and consumer banks, which already began in the course of the regulations following the 2008/09 recession. Central banks could offer diversified interest rates. Low key interest rate for driving innovation and economic growth

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in the financial sector that refunds higher interest rates for the real economy savings for consumers in order to avert socio-psychological fallouts of over-indebtedness in households. Online currencies, such as the currently planned European Central Bank digital currency, could help a transparent use of the currency over time to strictly divert interest rate profits and avoid arbitrage or interest rate swaps in diversified interest rate regimes. Mutual collateral insurance between the financial world and the real economy would also be possible in order to spread overall market risk. Throughout history bonds have been used to finance long-term strategies with unknown outcomes. Bonds are now discussed to enable innovations while repayments’ interests should be redistributed to the real economy. In order to enact this diversified bond effect, one could think of commitment bonds but also a diversified interest rate regimes based on the professional starting ground or individual recipient’s representing industry. As an equalizer between the financial market and real economy stability, taxing the COVID-profit industries, especially digitization winners, could create fiscal space for redistributing some of the economic gains to industries that lose from COVID-19. Taxation of digitalized economic growth during our forced digitalization disruption could provide the necessary redistribution funds to back the liquidity-dried real economy sectors—such as the service industry, foremost in gastronomy and tourism. In addition, the finance sector could be governmentally-obliged or at least incentivized and encouraged to use the current profits for future large-scale investments that add societal long-term value. For example, large construction projects but also innovation in research and development are valuable macroeconomic multipliers that can benefit society as a whole in the short run and long term (Epstein, 2020; Keynes, 1936/ 2003). Governments and intergovernmental bodies, like the European Union, have the long-term vision and financial freedom to operate on deficits but also the regulatory means in legal frameworks to enact largescale redistribution and long-term wealth creation in grand investments for the future. The COVID-19 pandemic could be used as a gateway of transition and become a major reset offering also exciting opportunities and long-lasting positive societal advancements. The potential focus of bailouts and recovery ranges from urban-local or national to even global and future-oriented beneficiaries, as pursued in public investments on

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climate stabilization in the United States Green New Deal or European Green Deal. On all the aspirational goals of these long-term investment projects, science and also the implementation can benefit from learning from the young what future world they aspire to live in. Future research should couple macroeconomic calculus with shedding light on economic disparate impacts of economic crises. Monetary policy to alleviate negative externalities of external shock crises could pay attention to the inequality pandemics impose on specific societal groups. Research with the help of novel online technologies to determine disparate impacts on specific groups could help address the shades of the collective moods of certain societal groups during crises. Knowledge of the diversified propensity to certain kinds of affects triggering subsequent unfavorable behavioral patterns would allow us to paint a deeper shadow of the invisible hand creating socio-psychological inequality. Future legal scholarship could also elucidate the affectivity of events in order to provide group-specific modes of policy responses. Different professional groups may feature different affective outfalls from crises given a certain propensity to face constraints, financial flexibility and differing opportunities to consume and invest. Attentive policy work may target certain affect propensities but also different affect stages during crises and through the individual lifespan. Affective fallouts may become a different layer of scrutiny on social stratification within society in order to highlight the different shades and alleviate the negative effects of inequality prevailing in society. Linking the world of feelings to the world of money will aid in capturing how catastrophes bleed into ordinary real-world lives in emotions that then guide consumption and life choices. All these insights will offer the most novel ways how to find the right communication and socio-psychological means to avert crises wholeroundedly and meaningfully. Pursuing the greater goal of deriving recommendations on how to stabilize economic markets in the instant communication century will add to purely economic calculus in finding an optimum balance of deregulated market systems and governmental control. The future of the post-COVID-19 era holds difficult ethical challenges: With the planned post-COVID-19 bailouts representing more than 60 percent of the money ever issued in the history of the U.S., should the finance float be pegged to an obligation to return to human well-being

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and promote the pursuit of sustainable growth? Can the finance sector lacking emotional fallouts return peace of mind to the real economy and soothe the hurtful anxieties of certain societal groups with a heightened propensity to emotionally destructive states? Is there a moral sense or honor to put the finance world into service for the sake of human feelings that nurture the arts and culture of human progress? Should excellence in finance obligatorily be pegged to ethics of inclusion and economics of the environment driving large-scale redistribution mandates within society, between countries and over time in-between generations? If handling all these challenges and efforts successfully based on values of justice, equity, ethics of inclusion and general trust, the COVID-19 pandemic and our generation hold the potential for becoming renowned in the history of humankind as a great reset and ultimate driver of positive change for this generation and the following. This could become the postCOVID-19 Renaissance and Reformation of immaterial social capital as in the end; life is about reality, the real presence in the real conditions of existence. If we stop the real-world social or care for those around us, society loses itself in forgetting what life is about. The novel Coronavirus SARS-CoV-2 imposes the most unexpected external economic shock on modern humankind. In order to alleviate unexpected negative fallouts from the crisis, global governance and governments around the globe engaged in bailouts and recovery packages of extraordinary size and scope. In confronting the crisis, economic bailout and rescue packages are currently also addressing widespread social inequality alleviation. In the eye of social inequality, governments around the world are therefore pegging bailout and recovery targets to social equality goals. As we are entering the age of corporate social justice and inclusive societies, governmental aid appears as a powerful force for alleviating discrimination or re-balancing a disparate impact toward creating a more right, just and fair allocation of economic gains. Inspired by the economic success story of the New Deal reform of the United States to recover from the Great Depression of the 1920s, the Green New Deal (GND) is the most advanced governmental attempt to secure a sustainable economic solution in harmony with the earth’s resources. The GND advocates for using a transition to renewable energy and sustainable growth in order to stimulate economic growth (116th Congress of the United States, House Resolution 109, Introduced February 7, 2019).

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In the history of humankind, new ground-breaking trends but also striving for excellence survived throughout times if innovation ennobled society and advanced the general welfare. The current COVID-19 crisis brings about the largest-ever wave of effort to combat a disease, improve the general healthcare but also to alleviate inequality. New Deal efforts could draw from the strength of law and economics to fight discrimination and breed social equity. Excellence and luxury are nowadays found in a truly inclusive society that is built on the hallmarks of antidiscrimination. In the wake of the rising social justice sentiment all over the world, social justice is defined as a multiplier luxury in offering the hope of a better, more equal society. Social justice pioneers are the heroes of our times and their excellence should be celebrated and gratified as the luxury moment that needs to be protected to trickle down in society. Direct attempts to diminish inequality and foster social justice comprise of increasing state-sponsored jobs to improve economic equality. A 10-year national mobilization targets work security and uplifting working conditions by high-quality healthcare, affordable housing for all, economic security, access to clean water, air, healthy food and nature, education, clean, renewable, zero-emission energy, repairing of infrastructure, energy efficient smart power grids, improved living conditions by pollution elimination, clean manufacturing and positive work collaborations without discrimination. The success in the implementation of the current post-COVID rescue and recovery aid will depend on a deeper understanding of the interaction and interdependence of economics within society. Longer-term outcomes and impacts of resilient finance around the world will determine the living conditions and peace prospects of this generation and those to come. Environmental demands for a transition to a green economy are met in most novel economic attempts to stimulate the economy under the umbrella of sustainability and social inclusion—such as outlined in the Green New Deal and European Green Deal including a Sustainable Finance Taxonomy (Puaschunder, 2020c, 2021b, 2021d). Future behavioral economics advancements and finance leadership will include the use of behavioral insights to improve the societal welfare under these novel frameworks. Behavioral insights for a greening of the economy will include microeconomic foundations but also build on a growing body of behavioral macroeconomic findings of the unequal distribution of climate change gains and losses (Puaschunder, 2020a, 2020b).

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On the international ground, the United Nations is currently extending the understanding of human rights under climate change (Ishay, 2023; Office of the U.N. High Commissioner for Human Rights, 2015). Human rights offer universal legal guarantees to protect individuals from the negative impacts and harm of climate change by states and international forces (Ishay, 2023). The UN addresses the negative impacts of climate change in order to derive “an obligation to respect, protect, fulfil and promote all human rights for all persons without discrimination” (Ishay, 2023; Office of the U.N. High Commissioner for Human Rights, 2015). The call aims for “affirmative measures to prevent human rights harms caused by climate change” (Ishay, 2023; Office of the U.N. High Commissioner for Human Rights, 2015). The climate change impacts on people’s access to “health, housing, water and food” are stressed alongside the disproportionate effect on vulnerable populations (Ishay, 2023; Office of the U.N. High Commissioner for Human Rights, 2015). “States must ensure that appropriate adaptation measures are taken to protect and fulfil the rights of all persons, particularly those most endangered by the negative impacts of climate change such as those living in vulnerable areas” (Ishay, 2023; Office of the U.N. High Commissioner for Human Rights, 2015). “Legal instruments such as The Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights, and other human rights instruments require States to guarantee effective remedies for human rights violations” (Ishay, 2023; Office of the U.N. High Commissioner for Human Rights, 2015). These documents provide the necessary protection to secure human rights harms inflicted by global warming. States are demanded to extend human rights protection from climate change and environmental harm, including regulating business activities (Ishay, 2023; Office of the U.N. High Commissioner for Human Rights, 2015). Climate change curbed with human rights legislation—such as the UN Charter, the International Covenant on Economic, Social and Cultural Rights and other international human rights instruments—also allow for international cooperation and global solidarity. Clean energy, green finance and technologies for sustainable production and consumption are additional complementary remedies. The United Nations Guiding Principles on Business and Human Rights protect human rights infringements from the harm imposed by corporations (Ishay, 2023). Principle 15 of the Rio Declaration on Environment and Development calls for States to adopt a precautionary principle on environmental harms and irreversible

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damages (Ishay, 2023; United Nations, 1992). Concrete human right areas that are in danger in the wake of climate change include the right to life, the right to self-determination, the right to development, the right to food, the right to water and sanitation, the right to health, the right to housing, the right to education and the rights of those most affected by climate change principle. Today’s Global Green Deal pursuits have similarities. The U.S. as well as Europe focused on direct monetary capital injections in order to combat the economic fallout of the crisis. In the granting of funds, the governments also pegged a program to fund the future in sustainable finance options that are in harmony with the social compound and the greater environment as well as future generations. Similar to mechanization trends in the Renaissance after about onethird of the known world population had ceased, today’s advancements in digitalization led to leading economies addressing the crisis with a heightened perpetuation of digital opportunities. In the mobilization of funds, governmental assessment of sustainability was stressed, e.g., in the Sustainable Finance Taxonomy but also the U.S. SEC requirements. Asia also shifted economic productivity to renewable energy sources, partially enabled since the UN COP agreement after the Copenhagen Accord in 2009. The Green New Deals have become spring feathers of change in the national and international accounting of natural resources. The Joseph Biden Kamala Harris administration has launched efforts to put nature on the nation’s balance sheet (Reamer, 2023). The Biden-Harris White House multi-year strategy plans to connect environmental conditions with economic outcomes in collecting data and using innovative methods to better capture nature’s role in the U.S. economy. The environment-economy connex is meant to inform policy for natural resource preservation but also business opportunities (Reamer, 2023; The White House, 2023a, 2023b). National accounting standards will thereby include resources like land, water, minerals, animals and plants (Reamer, 2023; The White House, 2023a, 2023b). The results are expected to influence public and private sector endeavors. Linking nature with the economy in a more inclusive and comprehensive accounting will also inform international relations and science diplomacy. The involved agencies are the “White House Office of Science and Technology Policy (OSTP), the Office of Management and Budget (OMB), and the U.S.

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Department of Commerce working with more than 27 federal departments and agencies on the development of the final National Strategy to Develop Statistics for Environmental-Economic Decisions” (Reamer, 2023; The White House, 2023a, 2023b). The overall effort is believed to change the appreciation and perception for natural resources as key to economic prosperity, financial risk accounting in light of climate change, international trade opportunities and quality of life (Reamer, 2023; The White House, 2023a, 2023b). On the global level, integrating natural resources in economic productivity prospects has the potential to change power dynamics and international politics driven by economic opportunities. Linking nature to the economy and productivity as well as human standard of living is also the driver for the World Bank to advocating for “Changing Wealth of Nations” (World Bank, 2023). The World Bank has been measuring wealth since the 1990s and holds a consistent global database for 146 countries from 1995 to 2018 (Onder, 2023). Comprehensive wealth is based on produced capital (machinery, structures, urban land), non-renewable natural capital (fossil fuels, minerals), renewable natural capital (cropland and pastureland, forest timber and eco services, protected areas, fisheries, mangroves), human capital (male/ female, employed/self-employed) and net foreign assets (assets-liabilities) (Onder, 2023). The yearly reports are now improved by adding carbon storage, renewable energy and aquaculture pilot systems (Onder, 2023). Integrating natural capital in global macroeconomic and financial models is thereby meant to feature systematically forward-looking wealth estimates. Future research endeavors thereby include the impact of climate on diversification (Onder, 2023). There is the demand to understand the interlinkage of the economy and the environment as a source to inspire restoration and conservation policies (Onder, 2023). The concerted efforts are believed to stimulate environmental policy and protection, change sustainable development and macroeconomic calculus. Policy and regulatory settings are meant to be aligned with wealth derived from natural resources. Natural resource accounting is also likely going to change the estimation of competitiveness around the world. The integration of local community assets is meant to facilitate conservation holistically. Scientifically, environment and economics interactions are likely inspiring ground-breaking insights for monetizing the value of natural assets and stimulate the future discourse on resilient finance.

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On the global level, we had the Sustainable Development Goals of the United Nations advocating for the marriage of finance with sustainability. At least eight of the goals are aligned with the impetus of resilient finance, when thinking about pledges of Good Health and Wellbeing, Clean Water and Sanitation, Affordable and Clean Energy, Sustainable Cities and Communities, Responsible Consumption and Production, Climate Action and Life below and Life on Land. Future prospective developments of resilient finance may entail ethics of finance diplomacy in the closer integration of finance and political goals. With the ongoing East–West tensions, the world has seen financial means as powerful strategic assets in determining political outcomes. The concept of political divestiture, which most recently has been extended into green finance and sustainability conscientiousness, is likely going to grow in the future qualitatively and quantitatively. Decentralized finance options are additional prospects of the future, which promise to hold the key for a transitioning of the energy supply. Groundbreaking advancements include decentralized energy sharing systems, which could make use of household-to-household energy supply grids that cut out major corporate energy storage needs, which entail energy losses and insecurity as well as energy dependencies and political tensions. The integration of finance and sustainability should also be scrutinized in the domain of cryptocurrencies. For one, cryptocurrencies bring enormous potentials to make business transactions and financial flows more efficient—e.g., in the cutting out of fiat money and transportation and storage costs of physical assets—and with this hopefully also more environmentally preferably. At the same time, cryptocurrencies’ use and production in mining use enormous amounts of energy. In addition, cryptocurrencies’ relatively new status makes them appear as risky market options, e.g., when considering the potential of governmental regulations curbing cryptocurrency usage and the international divergent regulation and market attitude toward cryptocurrency use. Similar to the Renaissance featuring sea explorations, we currently are seeing the use of cryptocurrencies to raise funds for explorations—this time into outer space. Cryptocurrency use for most future-oriented endeavors is an area of extension for ethics around financial means. Like using a hammer, the tool itself can be used to do good or bad. Finance for the exploration of future territories should be scrutinized for the ethical imperative in the act of conquering outer space. Those who give funds and regulatory bodies

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overseeing the cryptocurrency use in exploring space should consider ethics of sustainability and humane ethical notions in the planning of space travel. An additional area of concern appears in FinTech’s use of 5G technology. Not only the market pull to push consumers into this new technology in the competitive race between Asia and the West, but also the privacy aspects of data collected by big technology market leaders, which should raise attention and at least market oversight if not clear regulatory action. Harmful use of information leading to social credit scores and marginalization of certain groups are potential threats of this new technological advancement, which policy-makers, as well as industry leaders, should be made aware of in advance of fully rolling out the technology upon customerkind. Online payment options should not only be monitored for risk, security and safety precautions, but also larger legal concepts and ethical imperatives should be applied. For instance, the role of social media in law, policy and finance has risen steadily in the last decade. The new Renaissance now pushing digitalization may feature attention to the ethics of social online media. Investigating the unprecedentedly described role of social online media information about markets driving inflation and/or debt could aid to understand the hidden behavioral dynamics that are constantly building and fueling economic booms and downturns. The role of social online media for financial market stability should become scrutinized with attention to online macrodynamics. This research could also inform the contemporary quest to address the influence of social online media on customary law practice. Insights about social online media dynamics could also back the attempts to imbue a notion of human rights online. Most recent developments indicate that there is also an increasingly affective quality of language online that turns crisis communication into a hidden inequality accelerator. The general populace now faces a divide of affective differences in the perception of COVID-19 external shock communication that underlines the immaterial wealth of capital. Capital leverages as a shared skill that materializes in everyday life decisions and grants peace of mind. But this feature in capital leads to a reduction of emotions and real economy experiences. One argumentation around online media has featured the need for attention to human rights in the virtual space. Human rights guide interactions based on moral standards of human behavior. Despite the

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universal and inalienable character of human rights and their protection by national and international law, surprisingly human rights have just recently begun to be addressed in relation to digitalization. Potential developments of human rights are envisioned in the artificial age regarding the attention that may shift from human rights protecting against surveillance by national governments toward regulation against the interference of big data insights reaping online entities. Privacy protection—like enacted in the General Data Protection Regulation in Europe and the Right to Delete—may leverage into an inalienable human right to protect humans in the digital millennium. The US Digital Millennium Copyright Act (DMCA) is another way to secure copyright protection of intellectual property in the virtual space. With freedom of expression pitted against hate speech control in online social media platforms, future applications of human rights to online contexts should imbue the concept of dignity into virtual worlds featuring anonymous actors in order to find a well-balanced virtual space offering rights-to-speak freedom and respectfully-protected human grace. With a heightened degree of anonymity possible in virtual spaces, human rights online should focus on quality assurance when it comes to the credibility and accuracy of online content. Online bots, fake accounts but also Search Engine De-optimization (SEDO) via clickfarms are the newest developments in the digital millennium infringing on the right to know and access to accurate information that can also cause social upheaval and financial turmoil. With the International Law Commission monitoring the use of social online media for establishing customary law and legal practice guidelines, a new generation of human rights online should address the role of accuracy and democratization of social media platforms. In the future, human rights obligations of governments and monopolistic internet firms but also individual virtual market actors may ennoble online spaces to flourish a new generation of human advancement in the digital age. Another trend arising on the horizon is the growing importance of digitalization for science. The American Association for the Advancement of Science acknowledges the importance of technology and innovation for accomplishing the Sustainable Development Goals (SDGs). Technology is attributed as a long-term perspective for foreign affairs and policy-making. The internet brings along ample possibilities to progress with no borders and work toward a shared set of values. Following the progress in science and technology (S&T) in academia aids in establishing technology science

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diplomacy hubs that can transform communities around the world. Technology also allows to connect the private sector to public sector endeavors in a Multi-stakeholder Forum on Science, Technology and Innovation for the Sustainable Development Goals. Future research may delineate the dynamics and implementation of social responsibility within markets in the interplay of the public and private sectors as well as financial markets. In order to promote a successful rise of Socially Responsible Investment (SRI), an understanding of the essential stakeholders’ perception of SRI and their attribution of success factors for financial social responsibility is key. Defining SRI in its various forms and foci could help explore motivational factors of financial social responsibility as well as gather information on success factors for SRI—with special attention to changes implied by the COVID-19 pandemic. The implementation of sustainable finance should ideally be assisted by public and private efforts. Governments should provide information on societal challenges and advocate for the adoption of socially responsible corporate practices. The set-up of partnerships requires global governance to foster partnership-enhancing environments. In networking forums, multiple stakeholders can be encouraged to discuss social concerns and find consensus on commonly shared goals and network support. Regional initiatives can coordinate local action and govern the implementation of CSR. Global governance of corporate social conduct may advance corporate and financial social responsibility in the future. Based on stakeholder consensus, governance may set standards and support governments in subsidizing CSR frameworks that are backed up by institutional support. Global governance and stakeholder management on CSR standards in sync with universally agreed upon responsible finance principles may help the corporate management to adopt social responsibility policies in business plans and financial asset management. Accountability and transparency are prerequisites for the advancement of Corporate Social Responsibility (CSR). Institutional efforts may also incentivize and sanction corporate social performance based on transparent quality control. Evaluations help assess and benchmark the transparent social impact of sustainable goal partners. Transparent goal accomplishment strategies will monitor the partners’ contributions. Benchmarking and impact assessments will derive best-practice learning models for future PPPs.

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Concerning Financial Social Responsibility, securing a long-term sustainable market option trend will be key. Global governance on information disclosure about SRI options will help drive the trend toward sustainable investments. International financial institutions and government policies must work toward providing market actors with information on SRI. Financial institutions and experts are encouraged to consider environmental and social responsibility promoted by media reports, social rating criteria as well as social responsibility proxy voting strategies. SRI innovations will ensure concurrent economic market prosperity and societal advancement. Research on political divestiture holds the potential for governments to reach corporations on political concerns. Evaluating up-to-date research on political divestiture will increase the effectiveness of financial social responsibility and allow promoting of SRI within the financial community. Addressing measurement deficiencies of political divestiture will help generating alternative SRI measurement techniques. In the wake of the ambitious bailout and recovery plans, a law and economics view could highlight necessary disparate impact facets of economic fallouts to a common crisis that should be considered when choosing capital transfer targets strategically driven by fairness mandates and with a long-term view in mind (Puaschunder, 2021d, 2022a). As for the continuous assessment of programs, diverse stakeholders should be included for the controlled evolution of large-scale transformation to a more inclusive world. Empirical knowledge of how to balance climate change benefits and burdens within society, between differentlyaffected nation-states and over time among overlapping generations will help deriving novel policy strategies in the age of inclusive care. In the end, to the young and the diverse groups within society and around the world but also over time, the relevance, effectiveness, efficiency and impact of all these endeavors will matter the most on a grand scale and with a future-oriented discounting outlook. Future novel theories, methods and models could capture the dynamic interaction of behavioral nudges and economic incentives in the protection of humankind and the environment. By learning from our crisis response resilience and deriving universal strategies for the future, we will hopefully emerge from COVID19 stronger as a society in the long term and with gifts of better lives for future generations to come (Brunnermeier, 2021). The future of resilient finance may focus on the role of decentralized finance approaches. Foremost cryptocurrencies but also the role of

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social online media for financial markets appears as a future societal area of concern. Future research may aim at innovatively painting a novel picture of the mass psychological underpinnings of business cycles based on information flows with particular attention to digital communication. Concrete macroeconomic research could specifically unravel how contemporary media communication produces certain types of expectations that form collective moods and how these change consumption patterns result in systemic global economic outcomes. After a thorough literature review of financial market theory with special attention to heterodox viewpoints, the history of economic cycle’s theories could lead to the analysis of the role of information in creating economic booms and busts. The concept of social volatility should be scrutinized in light of the digitalization exacerbated during COVID-19. Social volatility adds to quantitative volatility any social aspects that influence and shape economic markets offering an innovative way to explain how and what information represented in the media creates economic ups and downs. The media’s untapped potential in setting potentially favorable or unfavorable anchors and building unknown economic choice architectures could become introduced. The core of research could investigate how online social mass media communication shapes individual decisionmaking. Contrary to standard neoclassical ideas of time in discounting, a behavioral economic approach could be applied by dividing time into past, present and future prospects. This fungibility of dependent moments adds temporal volatility. The highly fickle ‘now’ present moment unmasked as a slippery reference point should be addressed in the theory of subjectivity and reflected upon behavioral economics’ hyperbolic discounting present bias. Social online media fetishizing breaking news waves of concurrently presented similar information missing out on diversification potential but instead creating echo-chambers of alternative realities but also the crucial role of fast-paced uncensored social online platforms in perpetuating human present biases should become scrutinized. As for social volatility, fat tail phenomena and robustness literature should be coupled with social systems’ ideas. Affect Theory, Believes and Desires Theory would become the theoretical backbone to describe fallible likelihood estimations when the pains and joys over markets are felt collectively and social volatility waves break. How integrating indexicality, modality and subjectivity are related to intentionality should be explored.

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Reference point dependence on age and the ‘now’ could be investigated in light of Prospect theory to see how losses and gains represented in the past or future may lead to biased decision-making patterns. The present bias potentially overinflating social volatility risks based on emotionality could be thematized. Empirically, the COVID-19 pandemic serves as an external shock coming down on society with a direct impact on societal moods and subsequently connected economic changes. Future empirical work could explore the role of communication and temporal foci in social media to create social volatility underlying economic downturns with attention to legally required public disclosure statements. The economic consequence of the endogenous crunch of the 2008 World Financial Recession could be compared to the external economic shock of the COVID-19 pandemic in order to retrieve crisis-specific recovery recommendations. More concretely, a literature review on the history of economic cycle theories could lead to the analysis of the role of information in creating economic booms and busts. An empirical investigation could scrutinize what socio-psychological mechanisms potentially accelerate economic meltdowns with attention to collective moods to shape daily choices and present behavior. The role of temporal foci could be explored—whether it makes a difference if information focuses on the past, present or future. Empirically, the social media use of publicly traded firms during the COVID-19 pandemic could be scrutinized. Social media communication about COVID-19 could be qualitatively analyzed and contrasted with legally required disclosure statements in the corporate sector. The analysis should cover the sharing rate (retweets) of Twitter postings about COVID-19 and contrast the temporal focus of Twitter tweets with Securities and Exchange Commission (SEC) filings. A content analysis of retweet propensities will elucidate what moves information on social online media. Social Representations Theory and the Core-and-Periphery Analysis content analysis based on word count could serve to categorize various approaches to introduce the external pandemic shock. The qualitative exploration could target at showing economic cycles’ natural complexity influenced by socio-historic trends and their representation. Addressing the different uses of the internet and modern communication tools with conventional market communication but also understanding how temporal foci and emotional prospects can shape echo-chambers of information and create collective moods offers to detect

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concrete media strategies and communication contents that stabilize economies during external shocks. The operationalization could measure the retweet rate and content of corporate posts about COVID-19 in order to determine what moves a Twitter post. Why is one Twitter post more likely shared than another? What are the contents of shared posts? After determining what contents are more likely to be shared, backtesting could clarify if there is any change in market pricing of the corporation under scrutiny if a COVID19 post gets shared heavily. Lastly, this information could be compared to SEC filings about COVID-19 of the same corporations and tested if the SEC filings had a significantly more severe impact on corporate stock prices than the retweeted Twitter posts. The retweet likelihood could be measured by emotional content. The content and time focus of Twitter tweets could qualitatively be compared to SEC filings in relation to stock market movements and their release date. Methodologically, linguistic text analyses of reports about the societal situation and the economy aim at depicting how social media versus legally-required disclosure statement representations echo in economic correlates measured by the stock market of corporations retrieved online. Communication could be rated on being positive, negative and neutral based on Polarity indices and having a past, present or futureoriented outlook based on Hofstede’s cultural future-oriented versus past-tradition-oriented indicators. Overall, such research projects could target at investigating whether social media information has a different impact on corporate stock market performance than conventional information about corporate performance in SEC filings. Prospective findings will have implications for the discussion culture of individuals and leaders as well. All these qualitative analyses would pave the way for quantitative studies on temporal volatility, echo-chambers and framing online experiments. The results of the field experiment could be backtested with Amazon Mechanical Turk data, in which respondents are likely to see specific social media posts and their reposts. A behavioral economics experiment could backtest the results in an Amazon Mechanical Turk (AMTURK) online survey enabled via Qualtrics in order to investigate the role of social online media in cultivating human present biases or setting an anchor of favorable and unfavorable time prospects. Different numbers of retweets cues could prime individuals into different perceptions of truth. The number of posts and reposts could be varied between

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subjects. Different temporal perspectives and emotional contents could be varied between subjects to then decide on the accuracy and personal retweet likelihood and provide demographic information. Stringent hypothesis testing could clarify if ‘now’ eliciting media information increases the present bias. Another hypothesis could outline if positive information triggers more consumption and investment in the domains of culture, economics, education, environment, foreign aid and infrastructure than negative information. Another hypothesis would be useful to see if ‘future’ information triggers more consumption and investment in the domains of culture, economics, education, environment, foreign aid and infrastructure than ‘past’ information. Further hypothesis testing could show if positive or negative emotions or forward-looking or past-ruminating temporal foci lead to a delay in consumption and investment in the domains of culture, economics, education, environment, foreign aid and infrastructure. Another hypothesis could target at elucidating that the more exposed individuals are to posts, the more likely they believe their content is true. The final hypothesis could capture age-dependent discounting preferences as an alternative reference point. Overall, communication influences on market expectations and performance shaping economic cycles will reveal information contents that either cause social volatility bleeding into economic downturns or serve as crowd control stabilizers. Future research could acknowledge that human beings’ communication and interaction online results in socially constructed volatility that echoes in economic correlates. Understanding how social media forms economic outcomes promises to explain how market outcomes can be shaped by strategic communication with special attention to new media technologies. The discussion could highlight the uniqueness and differences between social media communication and legally required reportings during the 2019 COVID-19 pandemic economic fallout. The results promise to explain how an external shock can be fueled by social media communication and online interaction. The market communication about the pandemic serves as a historic trace, whose conservation offers important insights into how the socio-psychological interpretation of an external shock echoes in economic fundamentals. Implications could stress how communication can counterweight and alleviate the building of collective moods bleeding into disastrous mass movements causing turmoil in the financial market and steering economic fallouts with negative implications for societies’ weakest

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segments. Recommendations on how to build stable economic systems by avoiding emergent risks and communicating market prospects favorably may help crafting the fundamental architecture of future more stable markets informed by heterodox open economics ideas and off-mainstream public policy experts. A revolution in management science could also focus away from leadership to address more relevant aspects of strategic followership. Management theory and practice offer the most extensive account of leadership. Business Schools around the world teach and educate leadership skills and practical advice on how to be a successful leader. In the wealth of theoretical knowledge and practical insights on leadership, to this day, however, our understanding of followership is limited despite the fact that not everyone wants to lead on a constant basis and it is technically impossible for everyone to lead all time long. In fact, most of our lives we spend being led and following the crowd. Future innovative research could address followership in the finance domain. The importance of attention to followership in finance is underlined by the personal gain opportunities through strategic finance followership. Guidelines on how to enhance wealth through wise followership in the finance sector could help bridge inequality gaps. Finance followership in the global governance domain could also enlighten the contemporary climate change redistribution strategies. Future prospects and research avenues may explore followership in finance, management, business and governance research and teaching. Understanding the larger picture of finance followership dynamics could help the finance community to improve the overall market performance and curb harmful volatility. Finance followership on the agenda of leadership-focused business studies, management science and teaching faculty promises to soothe fickle financial market dynamics. Calming hurtful finance followership that fuels bubbles that burst and let prices implode through understanding when and why investors follow and unfollow trends appears as innovative market stabilizing means. Overall, elucidating how followership imbues irrational exuberance when herds follow or get spooked to unfollow and lemming away from previouslyoverrated leadership appears as the most needed behavioral finance insights micro- and macroeconomists have long waited for to come from business and management theorists and practitioners. Future research could now target at outlining personality characteristics that predestine to be a leader or a follower. Situational cues that

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elicit leadership or followership potential should be studied. Behavioral insights could follow up on how to improve leadership skills and followership strategies implicitly by nudges and winks. The domain of finance followership could be expanded to other areas where wise followership and strategic followership insights could be useful—for instance, in health, partnership, educational and career choices, followership could become a vibrant research field of tomorrow. Over lifetime experiences could be studied when considering that children and elders are prone to be followers. What child followership strategies set children on a favorable path to success could become subject to scrutiny by educational psychologists or early career business management experts. Overall, followership focus promises to democratize management and leadership theory for the masses who voluntarily decide to be followers or do not strive to be leaders. Opening eyes for followership excellence for the broad population could help every human simply navigate more efficiently through life in a more conscientious leadership or followership choice. In the eye of a worldwide healthcare crisis having unfolded with COVID-19 and the lurking impact of COVID-19 Long Haulers on all economics on a massive scale, the need for understanding the connection between health and capital on the individual, nuclear family level, corporate community standards and conduct as well as the overall economy has become an essential pillar of economic growth. In the individual finance and investment literature, personal expenses due to sickness and work impairments due to chronic diseases are hardly mentioned. Resilient finance of tomorrow could address the deeper connection between health, well-being and productivity of nations. On the family level, unhealthy individual dynamics may lead to additional cognitive complexity that deters from reaching full productive potential as well as may cause critical life events, such as divorce, which can have drastic financial outcomes with long-term implications. On the corporate level, COVID-19 has opened the gates for corporations focusing on the overall health status of employees fostering prevention and health safety precautions as never before in the history of industrialization. Lastly, over entire populations, there is a strong connection between health levels and productivity, which directly influences the Gross Domestic Product of countries. Future research should connect the Keynesian multiplier with healthcare expenditures. Governmental money spent on healthcare may have a multiplied multiplier effect on the overall economy but—to this day—economic literature remains scarce on the economic effect of healthcare-dependent

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multipliers. Attention to the importance of health and well-being for individual financial success, familial functioning as well as entire populations and overlapping generations may innovatively leverage health capital and health wealth into a category of Socially Responsible Investment and Sustainable Finance in the post-COVID-19 era. Future efforts to integrate natural capital into national accounting should be fortified. Foremost the European Sustainable Finance Taxonomy but also the United States research on how to integrate natural resources into national accounting standards can guide on the preservation and conservation of natural wealth. Climate justice redistribution strategies could become pegged to sustainable finance and the natural resource-based wealth of nations. Future measurements should refine the concept of climate flexibility defined as the range of temperature variation of a country (Puaschunder, 2020b). In a changing climate, temperature range flexibility is portrayed as a future asset for international trade of commodities but also for production flexibility leading to comparative advantages of countries. A broad spectrum of climate zones has never been defined as an asset and comparative edge in free trade—but climate change will require territories to be more flexible in terms of changing economic production in the future. The more climate variation a nationstate possesses, the more degrees of freedom a country has in terms of GDP production capabilities in a differing climate. These preliminary insights aid in answering what financial patterns we can expect given predictions the earth will become hotter. Already now, the degree of climate flexibility is found to be related to human migration inflow and is predicted to determine the future climate wealth of nations in a climatechanging world (Puaschunder, 2020b). The actual natural external impact but also human-built influences on the natural wealth of nations should lead in the unprecedented outlook on the future climate wealth of nations in the age of the Anthropocene. How future climate change-induced market changes are pegged to scarcity of climate flexibility and a prospect of commodity price spikes in the interrelation between environmental, political and demand patterns should become unraveled. A discussion of the mentioned topics could also address the contemporary divide between economic fundamentals, financial market performance versus the real economy fallout. The final remarks should also target at highlighting winning and losing industries only to follow the mandate to find creative strategies how to redistribute the gains of the crisis in order to offset the economic fallout losses in proposed

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inequality alleviation strategies. A prospective future research outlook and implications can be offered aimed at improving the economic future of healthcare, workforce, city planning and education based on strategic communication and emotional assets but also favorable time prospects with a touch for sustainability. In all these mentioned features resilient finance promises to deliver a future more sustainable, meaningful and humane world to come.

References Alves, C., & Kvangraven, I. (2020). Changing the narrative: Economics after Covid-19. Review of Agrarian Studies, 10(1), 147–163. Boltanski, L. (1987). The making of a class: Cadres in French society. Cambridge University Press. Brunnermeier Academy at the Princeton Bendheim Center for Finance. https:/ /bcf.princeton.edu/markus-academy/ Brunnermeier, M. (2021). The resilient society: Economics after COVID. Princeton University Press. Epstein, G. (2020, March). The Coronavirus consensus: “Spend, Spend, Spend”. Dollar & Sense: Real World Economics. http://dollarsandsense.org/arc hives/2020/0320epstein--spend.html Gelter, M., & Puaschunder, J. M. (2021). COVID-19 and comparative corporate governance. Journal of Corporation Law, 46(3), 557–629. Gorz, A. (2003). The immaterial: Knowledge, value and capital. Seagull. Ishay, M. R. (2023). The human rights reader: Major political essays, speeches, and documents from ancient times to the present. Routledge. Keynes, J. M. (1936/2003). The general theory of employment, interest and money. Harvard University Press. Office of the U.N. High Commissioner for Human Rights. (2015, November 27). Understanding Human Rights and climate change. Submission of the Office of the High Commissioner for Human Rights to the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCC, COP21). Onder, St. (2023., May 9). The changing wealth of nations (CWON). The World Bank Group. Presentation delivered to the U.S. Committee for IIASA at the National Academy of Sciences, Washington, DC. Puaschunder, J. M. (2020a). Behavioral economics and finance leadership: Nudging and winking to make better choices. Springer Nature. Puaschunder, J. M. (2020b). Governance and climate justice: Global south and developing nations. Palgrave Macmillan.

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Puaschunder, J. M. (2020c, October 30). The Green New Deal: Historical foundations, economic fundamentals and implementation strategies. The FinReg Blog: Global Financial Markets Center Duke University School of Law Blog. https://sites.law.duke.edu/thefinregblog/author/julia-m-puaschunder/ Puaschunder, J. M. (2021a). Alleviating COVID-19 inequality. ConScienS Conference Proceedings, pp. 185–190. Puaschunder, J. M. (2021b, June 21). Equitable Green New Deal (GND). In Proceedings of the 22nd Research Association for Interdisciplinary Studies (RAIS) conference (pp. 27–32). Puaschunder, J. M. (2021c). Focusing COVID-19 bailout and recovery. Ohio State Business Law Journal, 16(1), 91–148. Puaschunder, J. M. (2021d, March 1). Monitoring and Evaluation (M&E) of the Green New Deal (GND) and European Green Deal (EGD). In 21st Research Association for Interdisciplinary Studies (RAIS) conference proceedings (pp. 202–206). Puaschunder, J. M. (2022a, October 31). Advances in behavioral economics and responsible competition leadership: Tackling searchplace discrimination. TechReg Chronicle on Behavioral Economics, Competition Policy International, 2022a. Puaschunder, J. M. (2022b). Ethics of inclusion: The cases of health, economics, education, digitalization and the environment in the post-COVID-19 era. Ethics International. Puaschunder, J. M., & Beerbaum, D. O. (2020a, September 28–29). Healthcare inequality in the digital 21st century: The case for a mandate for equal access to quality medicine for all. Proceedings of the 1st Unequal World Conference: On Human Development, United Nations, New York, NY. Puaschunder, J. M., & Beerbaum, D. O. (2020b, August 17–18). The future of healthcare around the world: Four indices integrating technology, productivity, anti-corruption, healthcare and market financialization. Proceedings of the 18th Research Association for Interdisciplinary Studies Conference at Princeton University, Princeton, NJ, pp. 164–185. Puaschunder, J. M., & Gelter, M. (2021). The law, economics and governance of generation COVID-19 Long-Haul. Indiana Health Law Review, 19(1), 47–126. Puaschunder, J. M., Gelter, M., & Sharma, S. (2020a, September 28–29). Alleviating an unequal COVID-19 world: Globally digital and productively healthy. Proceedings of the 1st Unequal World Conference: On Human Development, United Nations, New York, NY. Puaschunder, J. M., Gelter, M., & Sharma, S. (2020b, August 22). COVID-19 shock: Considerations on socio-technological, legal, corporate, economic and governance changes and trends. Proceedings of the 18th International Research Association for Interdisciplinary Studies Conference on Social Sciences &

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Humanities, pp. 82–93. http://rais.education/wp-content/uploads/2020/ 08/011JPB.pdf Reamer, A. (2023, January 19). National strategy to develop statistics for environmental-economic decision: OSTP/Commerce/OMB. https://www.aea web.org/forum/3447/national-strategy-statistics-environmental-economicdecisions The 116th Congress of the United States (2019). Recognising the duty of the Federal Government to create a Green New Deal. https://www.congress.gov/ bill/116th-congress/house-resolution/109/text The White House. (2023a, January 19). Fact Sheet: Biden-Harris Administration releases national strategy to put nature on the nation’s balance sheet. Retrieved https://www.whitehouse.gov/ostp/news-updates/2023/01/19/factat sheet-biden-harris-administration-releases-national-strategy-to-put-nature-onthe-nations-balance-sheet/ The White House. (2023b). National strategy to develop statistics for environmental-economic decisions: A U.S. system of natural capital accounting and associated environmental-economic statistics. Office of Science and Technology Policy. Office of Management and Budget. Department of Commerce. https://www.whitehouse.gov/wp-content/uploads/2023/01/ Natural-Capital-Accounting-Strategy-final.pdf United Nations. (1992, June 3–14). Report of the United Nations Conference on Environment and Development. Rio de Janeiro. World Bank (2023). The Changing Wealth of Nations (CWON). https://www. worldbank.org/en/publication/changing-wealth-of-nations

Index

0–9 2008 World Financial Crisis, 6 2008/09 World Financial Recession, 17, 48 2020 Global Risks Report , 71 5G technology, 338

A Academic institutions, 214 Academics, 43 Access, 16 Accountability, 103, 132, 189, 212 Active endowments, 37 Adaptation, 19 means, 46 Ad hoc asset management, 262 capital injection, 262 liquidity assistance, 262 Affective fallout, 31 propensity trajectories, 62 Affect Theory, 355

Affordable housing, 38 Africa, 22, 114 Agriculture, 169 Altruism, 66 American Association for the Advancement of Science (AAAS), 224 Anglo-Saxon countries, 104 Architecture, 81 Artificial Intelligence (AI), 23 Asia, 22, 109 Aspirational goals, 3 Assessment centers, 41 Asset management, 262 Assets, 30 Australia, 24, 104 Australian Financial Service Reform Act, 113 Australian Securities and Investment Commission, 113 Austria, 76 Awareness, 60

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 J. M. Puaschunder, The Future of Resilient Finance, Sustainable Development Goals Series, https://doi.org/10.1007/978-3-031-30138-4

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INDEX

B Bailout, 8, 18 Ballot, 38 Bandwidth, 197 Bank holiday, 262 Banking, 186 and credit regulation, 186, 191 executives, 43 Bank lending rate, 174, 211, 295 of bonds, 171 Bank of England, 186 Bank Recovery and Resolution Directive (BRRD), 8, 33 Banks, 66 Behavioral aspects, 76 economics, 153 economist, ix insights, 153 Law & Economics, 19 Belgium, 76 Benchmarking, 104 Best practices, 40, 61 Beta prices, 197 Biases, 153 Big data, 23 Biodiversity, 31, 154 Biological contamination, 205 Biosphere, 205 Biotechnology, 104 Blockchain technology, 186, 203 Bond, 43 beneficiaries, 241 grantor, 241 issuance, 202 pricing, 218 strategy, 295 yield, 167 yield-at-issue, 247 Borrowers, 218 Brazil, 24, 114 Bretton Woods institutions, 224

British Covid Corporate Financing Facility (CCFF), 113 Broad-based asset management, 262 capital injection, 262 liquidity assistance, 262 BTC (Bitcoin), 204 Budget, 123 Burden sharing, 163 Burma, 42 Business, 39 Business-as-usual path, 230 Business cycles, 338, 355 Butterfly effects, 121

C Canada, 24, 111 Cap & trade, 45 Capital, 18 accumulation, 57 injection, 262 streams, 230 Carbon divestiture, 42, 46 financing, 154 tax, 45 taxation, 166, 233 Cardinal temperatures, 230 Case studies, 15 Cash allowances, 26 Categorical imperative, 169 Centers for Disease Control and Prevention (CDC), 120 Central banks, 25, 186 Central Europe, 104 CEO remunerations, 106 Children, 17 China, 36 China Monetary Response, 113 Circular economy, 31 Cleanability, 81

INDEX

Clean energy, 19, 35, 156, 199 technologies, 233 Climate action, 312 agenda, 46 bond financing, 258 bond solutions, 43 control, 312 disasters, 177 economics, 153 flexibility, 171 gains and losses spectrum, 211 gains redistribution, 175 inequalities, 202 justice, 173 protection, 177 refugee, 22 risks, 201 stabilization, 21, 233 stabilization financialization, 163 zones, 258 Climate change abatement, 234 gains and losses, 23 geo-impact of, 211 losing territories, 272 resiliency financing, 215 winners and losers, 168 Climatorial imperative, 169 CO2 emissions, 171 consumption-based, 171, 301 trade-adjusted, 171 Collective moods, 121 Colonization of space, 186 Commodities, 166 Communication, 262 Community investment, 15, 18 loans, 67 values, 68 Comparability, 159

367

Compatibility, 24 Comply or explain, 86 Conditionalities, 191 Conferences of the Parties (COP), 224 Confidence, 119 Confrontations, 38 Conservation, 38 Consumer boycotts, 38 Consumer(s), 20, 38, 76, 81, 108, 115, 118, 132, 161, 163, 200, 202, 231, 342, 343, 351 Consumption, 16, 174 Conventional bonds, 177 Cooperation, 213 Cooperative banking, 103 COP-26, 81 Copenhagen Intergovernmental Panel on Climate Change Conferences of the Parties (COP), 216 Copyright protection, 352 Corporate(s) community, 126 environmental risk management, 201 executives, 20 governance, 39 inheritance tax, 170 social justice, 1, 56 Social Responsibility (CSR), 20 Corporations, 131 Cost-benefit analysis, 313 COVID-19 pandemic global recession, 17 long-haul, 23 shock, 116 Creative destruction, 11 Credit(s), 38, 56, 167 guarantees, 202 rules, 262 Crisis management, 1

368

INDEX

Crisis-robust sustainable finance solutions, 103 Cryptocurrencies, 2, 12, 16, 186 Currency swaps, 111

D Darfur, 35 Debt, 25, 262 Decarbonization, 159, 196 Decentralized energy grids, 156 financial networks, 19 financing, 154 Deficit spending, 26 DEFI (decentralized finance), 203 Delegated Regulations, 159 Democracy, 232 Democratization, 16, 21 Denmark, 24 Deregulated markets, 57 De-risking the economy, 218 Developing world, 25 Development, 41 Dialogues, 37 Digitalization, 19 disruption, 23 Digitalized economy, 24 productivity, 20 Digital Millennium Copyright Act (DMCA), 352 Dignity, 23 Diplomatic relations, 214 Disadvantaged minorities, 39 Disclosure, 60 Discrimination, 39 Disparate impact, 15, 18, 62 Disparity(ies), 28, 57 Disproportionate burden, 231 Distributional imbalances, 231 Diversification, 17, 166

Diversity, 17 management, 59 matrix, 85 Divestiture, 18 acts, 15 Drivers, 258 Dual-banking system territories, 76

E East-West tensions, 16, 213 Eco-friendly infrastructure, 199, 238 Ecological debt debt, 229 economics, 153 environment, 36 impact, 153 sustainability, 130 Economic(s), v booms and downturns, 338 disruption, 24 fallout, 15 governance, 18 growth, 15, 17, 191 interconnectedness, 317 intervention, 26 of environment, 154 progress, 129 sanctions, 16 stimulus, 25 turmoil, 16 Economic upheaval, 245 Economy, 82 Education, 20 Efficiency, 1 Employment, 18, 230 Endogenous growth theory, 177 Energy availability, 186 efficiency, 191 financing, 154 storage, 350

INDEX

Enforceability, 312 Environment/environmental, 36 conditions, 29 decision-making, 153 degradation, 106 equity, 30 ethicality financing, 56 financialization, 153 governance capabilities, 201 harm, 205 inequalities, 186 limitations, 197 preservation, 154 protection, 59, 155 risks, 186 sustainability, 176 treaties, 312 Environmentally-friendly energy consumption, 204 Environmental Protection Agency (EPA), 84, 153 Environmental, social and governance (ESG), 19 Equalizer, 123 Equator Principles, 192 Equitable society, 232 Equity mandates, 29, 125 ESG disclosure, 159 Ethics/ethical concerns, 186 financial leadership, 41 imperatives, 29, 82, 125, 216 investing, 103 mandates, 22 of inclusion, 24, 217 Europe, 22, 104 European European Action Plan on Sustainable Finance, 190 central Bank, 24 Finance Taxonomy, 186 Green Bond Allocation Report, 159

369

Green Bond Standard, 154, 159 European Green Deal, 21, 82, 186 Sustainable Finance Taxonomy, 26 European Guarantee Fund, 317 European households, 76 European Investment Bank, 195 European Parliament, 111 European Securities and Markets Authority (ESMA), 159, 160 European Sustainable Finance Taxonomy, 9, 21 European Union (EU), 21, 200 climate transition benchmarks, 154, 159 member states, 195 Evaluation, 212 Exploration, 186 Externality, 45 Extraterrestrial land, 22 Extreme temperatures, 260

F Fairness, 16, 29, 232 Feasibility, 212 Fiduciaries, 43 Fiduciary duty, 185 Finance/financial alliances, 33 assets, 185 conscientiousness, 5 diplomacy, 15 institutions, 19, 192 intermediaries, 162 leadership, 40 managers, 185 markets, 34 market stability, 48 performance measurement, 56 politics, 36 portfolio managers, 116 regulators, 186

370

INDEX

social responsibility, 41 stability, 191 success, 129 world, 15 Financial crisis intervention, 171, 262 resilience capabilities, 211 Financialization, 31 Finland, 76 Fintech, 162 First Amendment, 85 First-mover advantage, 41 Fiscal and monetary stimulus, 72 Followership, 153 Food, 120 Foreign Foreign Direct Investment (FDI), 17, 42 investment drain, 6 Fossil fuel divestment, 42, 43 France, 76 Freedom of expression, 352 of speech, 85 Free trade, 48 Freshwater, 155 Future generations, 39, 235 -oriented beneficiaries, 69 world, 82

G Gender equality, 191 Geographically-determined economic prospects, 216 German German Federal Government, 128 German Prevention Act, 128 Germany, 76 Global Global Acceptance Index (GAI), 85

Global Carbon Project, 259 Global Challenges Foundation, 189 community, 211 Global connectivity, 171, 211, 307 Global Economic Connectivity, 252 Global Economic Trade Freedom, 306 economy, 17 Global Economy Ranking Trade Freedom Index, 267 governance, 17 governance institutions, 82 Global Green New Deal, 82, 186 liquidity, 8, 24 Global Reporting Initiative (GRI), 61, 185 society, 201, 320 stability, 223 warming, gains of, 232 Globalization, 56 Goal attainment, 1 Governmental intervention, 78 officials, 20 Great Green Transition, 191 Great reset, 116 Green banking, 191 bond, 166, 177 Bond Principles, 185 buildings, 199 energy, 45 finance, 19, 36, 191 finance transitions, 192 financing, 198 FinTech, 2, 186 Green New Deal (GND), 28 industries, 164 insurance, 201 micro-prudential instruments, 193 policy measures, 193 regulation, 15, 18

INDEX

technology(ies), 162, 200 wave, 111 Greenhouse gas (GHG) emissions, 172, 186 Greening economy, 28 Greenwashing, 84 Gross Domestic Product (GDP), 17 growth prospects, 263 sector composition, 263 Guarantees account guarantee, 262 asset guarantee, 262 blanket guarantee, 262 liability guarantee, 262 Gulf Region, 22, 114

H Health, 59 consultants, 77 Hedge fund, 166 managers, 237 Hedging, 75 Helicopter funding, 257 Heterodox approaches, 59 economics, 157 Heuristics, 153 High-level Expert Group on Sustainable Finance, 190 Historical debt, 216 incidents, 68 Holistic medicine, 136 Homeowners, 123 Homeownership, 340 Hong Kong, 113 Household savings, 108 Household-to-household energy supply grids, 350 Housing prices, 123 Human

371

capital, 174 capital flows, 171 decision-making, 153 health risks, 205 protection, 205 Human rights, 59 Humanitarian, 48

I IFRS, 162 Implementation, 29 Incentives, 176 Inclusion, 17 Inclusive, 15 growth, 28 societies, 32, 82, 345 Index, 176 India, 113 Indirect transfers, 202 Industrialization, 57 Industry, 72, 169 Inequality, 26 alleviation, 15 Inflation, 16 Information brokerages, 162 Innovation, 66 Institutional frameworks, 103 investors, 103 Insurance, 186 Integrating Reporting (IR), 185 Integrity, 41 Intellectual property, 352 Interconnectedness, 58 Interest rate, 26 Intergenerational equity, 163 Intergovernmental Panels on Climate Change (IPCC), 194, 224 International climate risk mitigation, 46 developments, 103

372

INDEX

environmental law, 312 exchange, 78 International Institute for Applied Systems Analysis (IIASA), 213 International law, 16 International Law Commission, 197 International Monetary Fund (IMF), 17, 83 political relations, 32 public servants, 20 relations, 20, 224 trade, 171 Internet of things, 186 Investment decisions, 19 Investments, 70 Investors, 20 Iran, 48 Islamic banking, 76 ISO quality standards, 61 Israel–Palestine region, 42 Italy, 76 IT revolution, 130

J Japan, 24, 113 Job creation, 191 Job loss, 73 Jurisdictions, 86 Justice, 16, 29

K Kaldor-Hicks’ compensation criteria, 169 Keynesian multiplier, 126 Keynes, John Maynard, 23 Kurzarbeit , 112

L Land degradation, 155 Landlords, 123

Latin America, 166 Leaders, 27 Leadership, 153, 211 advantages, 11 theory, 2 trainings, 153 Lease, 123 Legal concerns, 186 impetus, 203 Legal Count Index (LCI), 85 Legal Environment Index (LEI), 85 Legislative action, 103 compulsion, 68 reforms, 132 Lending, 262 interest rate, 264 rate, 264 LGBTQ+ status, 85 Liberalization, 130 Libertarians, 48 Lifestyles, 127 Limitations, 212 Liquidity, 2 constraints, 24, 116 swap, 24 Living expense unaffordability, 76 Lockdowns, 16 Lower-income segments, 38 Low-income countries, 26 Low interest rate regimes, 35 Lowy Global Diplomacy Index, 214

M Macroeconomic model, 214 Malnutrition, 76 Management, 82 Marginalized groups, 78 Maritime law, 205 Market

INDEX

developments, 69 liquidity assistance, 262 volatility, 166 Mars, 16 Maturity, 251 bond yields, 176 Media, 43 Medical care, 26 Mergers and acquisitions, 314 Meta-analysis, 46 Metrick-Schmelzing Banking-Crisis Intervention Database, 262 Microfinance, 103, 154 Migration, 267 Minimalism, 81 Mitigation, 19 policies, 234 Mobile payment, 204 phones, 204 Monetary means, 56 policy, 344 pressures, 16 Monetization, 25 Money, 122, 186 Monitoring, 190, 212 Monitoring and Evaluation (M&E), 83 Moral dilemmas, 186 obligations, 103 Mortgages, 111 Multi-methodological approaches, 157 Multiplier, 23 Multi-stakeholder, 22 Mutual funds, 186

N National Academy of Sciences, 224 Natural resource, 22

373

Negative screenings, 5 shareholder activism, 38 Negotiation, 312 Neoclassical economics, 2 Network analyses, 46 Networking for Greening the Financial System (NGFS), 186 New finance order, 62 New York Stock Exchange (NYSE), 185 New Zealand, 24 Next Generation EU, 186 Nongovernmental organizations (NGOs), 83 North America, 104 Nuclear disarmament, 223 family, 126 Nudging, 153

O Ocean acidification, 155 Oceania, 22 OECD, 61 Oil and gas, 22, 111 Online bots, 352 currencies, 343 social media, 12 Open banking, 204 Optimum temperature for economic productivity, 169 Orbit, 205 Overlapping generations, 29 Overseas Private Investment Corporation (OPIC), 190

P Pandemic

374

INDEX

Pandemic Emergency Purchase Programme (PEPP), 111 prevention, 23 Pan-European Guarantee Fund (EGF), 195 Paris Agreement, 233 Payment moratorium, 262 Pensions, 76 Performance measurement, 41 Personal Remittances paid, 267 Philanthropic, 55 Policy compulsion, 103 Policy-makers, 192, 312 Politics/political activism, 34 crises, 15 divestiture, 34 economies, 153 economy, 312 feasibility, 203 leaders, 312 lobbying, 38 tensions, 19 Pollution, 31 Population, 76 Portfolio, 36, 166, 237 Portugal, 76 Positive-screened funds, 34 SRI ventures, 6 Post-COVID-19, 58 New Age Renaissance, 104 Poverty, 17 Practitioners, 47 Prevention, 27 Principles for Responsible Investment (PRI), 185 Private investors, 43 Production, 174, 263 Productivity, 29 Profit

maximization, 7 return, 34 Prosperity, 24 Proxy resolutions, 38 Prudential Regulation Authority (PRA), 186 Public engagement, v goods, 232 policy, 24, 358 Public–private partnerships (PPP), 7, 61 support, 58 transfers, 76 Publicity, 38

Q Quotas, 86

R R&D expenditures, 58 Ratifications, 312 Rational execution plan strategy, 1 Rationality, 1 Raw materials, 122 Real economy, 15 -estate, 122 Recessions, 29 Recipient country, 295 Reciprocity, 232 Recover aid, 8 Recovery, 23, 27 plans, 108 Redistribution, 196 finance, 68 funds, 2 model, 10 Reduction, in working hours, 74

INDEX

Regional Integrated model of Climate and the Economy model (RICE model), 168 RegTech, 162 Regulations, 40 Relief aid, 35, 69 Religious values, 68 Remittances, 267 Renaissance, 21 Renewable energy, 166, 199 Renewed Sustainable Finance Strategy, 190 Reorder, 69 Repayment, 202, 321 Rescue bailout packages, 8, 72 Resilience finance, 15, 171 developments, 185 expertise, 288 leadership, 2 Resiliency, 1, 115 Resilient finance, 1, 71 Resolutions, 37, 262 Responsibility, 16, 55 Responsibility to Act (RTA), 214 Responsible Responsible Investment in Emerging Markets, 185, 188 Responsible working practices, 60 Rest, 23 Restructuring, 262 Retroactive billing, 234 Risk, 34 premium, 167 Robotics, 23 Roosevelt, Franklin D., 28 Rules, 262 Russia, 35, 114 Russia-Ukraine crisis, 22 S SA 8000, 61

375

Safety standards, 59 Salzburg Declaration, 137 Sanction(s), 16, 36 mechanisms, 5 Savers, 123 Scanning, 63 Science, 213 Science diplomacy, v, 171, 211 advocacy, 213 Scientific advancement, 26 collaborations, 213 Screening, 16, 32 Sea level rise, 202 Search Engine De-optimization (SEDO), 352 Securities and Exchange Commission (SEC), 83 regulation, 84 Security(ies), 25, 223 Service sector, 169 Shareholder activism, 37 advocacy, 37 meetings, 55 profit maximization, 48 wealth, 47 Shocks, 2 Singapore, 24, 113 Small nation island states, 22 Social contract, 40 credit scores, 338 dilemma, 232 entrepreneurs, 56 equality, 20 equity, 15 impacts, 60 online media, 16 responsibility goals, 60 venture capital funding, 55 volatility, 31

376

INDEX

Socially conscientious market acts, 185 Socially Responsible Investment (SRI), 20, 31 Socially responsible ownership models, 104 Societal progress, 49 values, 103 Society, 40 Socio-psychological motives, 66 Soft laws, 312 Solar power, 199, 238 South Africa, 35, 166 South Korea, 24, 114 Space travel, 204 investments, 16 Spending, 122 Stakeholder bail-in, 262 communication, 59 engagement, 15, 18 pressure, 68, 132 Stakeholder-specific, 46 Standard of living, 118 Standards and Poor’s rating, 199 Start-ups, 56 State interventions, 68 Stocks, 34 Stratified impact, 125 Stress test, 262 Sudan, 35 Supervisors, 192 Supply chain, 18 Suspension, 262 Sustainability, 186 Sustainable clothing, 81 development, 40 economic stability, 49 energy solutions, 201 finance, 19, 31, 154

future, 3 productivity, 176 Sustainable Development Goals (SDGs), 16, 61 Sustainable Finance Disclosure Regulation (SFDR), 154 Sweden, 24, 111 Switzerland, 24, 86 Systemic risk, 71 T Taiwan, 113 Tax, 203 Taxation, 202 Taxation-and-bonds, 82, 202 Tax compliance, 233 Taxpayers, 163, 232 Technical inventions, 57 Technological advancements, 57 innovations, 231 Telemedical healthcare, 23 Temperature anomalies, 215 rise, 202 zones, 211 Too-big-to-fail, 213 Trade, 16 freedom, 267 Traders, 75 Training, 41 Trajectories, 120 Transition, 24 to green economy, 20 Transparency, 60, 103, 189 Treaty, 312 on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies, 205

INDEX

377

Trickle-down economic effects, 340 Trust, 232

Volatility, 33, 197 Vulnerability, 76

U Ukraine, 37 Unaffordability, 16, 122 United Kingdom (UK), 24, 104 United Nations (UN), 34, 83 Conference of the Parties (COP27), 81 sustainable development goals (SDGs), 6, 39 UN Conference on Trade and Development (UNCTAD), 185 UN Copenhagen Accord, 21 UN Environment Programme (UNEP) Finance Initiative, 185 United Nations Educational, Scientific and Cultural Organization (UNESCO) Institute for Statistics, 224 United Nations Environment Programme Finance Initiative (UNEP FI), 185 United Nations General Assembly, 196 United Nations Global Compact (UNGC), 61, 185 United States (US), 22, 24, 104, 153 Congress, 56 Coronavirus Aid, Relief, and Economic Security (CARES) Act, 74 Green New Deal, 21 Inflation Reduction Act, 133 Secretary of the Treasury, 57 State of California, 85 Stock Exchange Commission, 185 Student Loan Forgiveness, 133

W War finance, 22 Weather, 176 extremes, 202, 217 Web of Universities, 214 Weltgesellschaft, 130 Western Western European Roman Law-dominated countries, 48 world, 25 White House of the United States of America, 17 Window dressing, 84 Wind turbines, 199, 238 Winking, 153 Work, 23 Workforce, 17 Workplace revolution, 20 World Bank, 17 World Bank Educational Attainment, 214 World community, 228 economic forum, 17, 71 ranking of academic institutions, 214 World Resources Institute (WRI), 189 World Summit on Sustainable Development, 61 World Summit on the Information Society, 61 World Trade Organization (WTO), 197

V Veil of ignorance, 169

Y Yield(s), 33, 197 of bonds, 218