Financialisation and Environmental Goals of 2030 Agenda

Abstract

One of the phenomena impacting economies around the world is the process called financialisation. Changes in regulations and behaviour of both financial and nonfinancial firms shifted the balance of power away from the real economy and towards the financial sector. Some economists argue that financialisation has had negative effects on society, e.g., it has increased inequalities and made economies more prone to crises. This paper aims to identify and analyse three categories of risk arising from financialisation that may pose a threat to the environmental goals of the 2030 Agenda. According to some predictions, the first category pertains to class division; the negative effects of climate change will not be shared equally. Since financial markets are deemed to be partially responsible for the increasing class inequalities, there is indeed a risk that working- and middle-class people will bear the burden of climate change. This leads to the second category of risk: the risk of insufficient regulation concerning unsustainable financial activity. While some steps have been taken in recent years to regulate financial markets, there may not be enough incentive to switch towards environmentally sustainable financial activities. The third category of risk concerns the change in rhetoric imposed by financialisation. Financial markets are seen more and more as the economy and not as an extension of it. There is a risk that adhering to the 2030 Agenda’s goals may be seen primarily as a hindrance for financial markets instead of perceiving these goals as necessary steps required to mitigate the negative consequences of climate change.