Abstract
This chapter introduces the main theme of the book which makes the case for the necessity to hardwire sustainability into financial mathematics, specifically our equations of value and return, and discusses the implications of such a transformation for money mechanics. The growing momentum in sustainable finance, while encouraging, has not yet penetrated the analytical content of finance theory and our risk and time focused equations remain intact. Furthermore, the debate seems to consider the logic and principles of money creation as exogenous to the sustainability challenge and opportunity. The book identifies the need to rethink and revise our spaceless financial value framework and equations where space, as analytical dimension and our physical context, along with our responsibility for space impact, has been abstracted away. The space value of money principle and ensuing equations are proposed as a plausible avenue through which we can achieve the necessary transformations and secure the sustainability and future expansion of human productivity across time and space.
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Notes
- 1.
The TCFD framework remains a central building block and its importance and relevance are unaffected by the recent developments following the publication of the IFRS S1 and S2 standards.
- 2.
The Financial Stability Board’s Task Force on Climate-related Financial Disclosures recently published its latest TCFD status report in October 2023 (TCFD 2023), where they announced that “the ISSB standards represent a culmination of the Task Force’s work and that the TCFD would be disbanded upon release of its 2023 status report” (TCFD 2023, ii).
- 3.
Task Force on Climate-related Financial Disclosures, Taskforce on Nature-related Financial Disclosures, International Sustainability Standards Board, Transition Plan Taskforce, Streamlined Energy and Carbon Reporting, Sustainability Accounting Standards Board, Net-Zero Banking Alliance, Glasgow Financial Alliance for Net Zero, Carbon Disclosure Project, Global Reporting Initiative, Sustainable Stock Exchanges initiative, Race To Zero, Net Zero Insurance Alliance, Net Zero Asset Owners Alliance, Net Zero Asset Managers Initiative, Principles of Responsible Investment.
- 4.
On the 20th of September 2023, in a much debated announcement, the UK Prime Minister made a number of changes to the Net Zero commitments made by the government without of course changing the broader strategic commitment to reach Net Zero by 2050 (UK Government 2023b). “Pragmatism, not ideology” is one of the key rationales given for the change and it is mainly aimed at addressing the concerns of an electorate facing a cost of living crisis.
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Papazian, A.V. (2023). Introduction. In: Hardwiring Sustainability into Financial Mathematics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-45689-3_1
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