The world has witnessed a series of unprecedented challenges that has a significantinfluence on world economies. These challenges has shaped and will continue to shapethe 21st century e.g. climate change, global warming and demographic shifts. The visible, catastrophic, effects of climate change have been observed in recent Californianwildfires, typhoons in south-east Asia and droughts in Africa and Australia and recentlyin Amazon rainforest fire. These episodes have devastated infrastructure, ruined naturalhabitats and inflicted suffering on our collective wellbeing.
Governments have soughtto alleviate the effects of climate change through the Paris Acord. Part of this strategyfocuses on climate-related financial risks that mitigate and limit the rise in globaltemperatures. The British government for instance has committed to reach net zerocarbon emissions by 2050. However, the current political landscape has exacerbatedthe matter when the US president withdrew from Paris Accord. Stakeholders, as theresult, put much pressure on companies to raise the awareness of the concept of ethicalfinance and to adhere with the Principles of Responsible Investments (PRI) and to baninvestments in “Sin Stocks” that could have a negative impact on human being andenvironment. Islamic financial institutions’ portfolios (asset approximately USD 2trillion in 2018) do not include sin stocks. Policymakers and prudential supervisorsinstigate changes in governance and regulations to ensure companies comply with the requirements of the green and low-carbon economy. Regulatory bodies are alsorequired to continue to raise the disclosure bar to address these climate-related risksand to “green” the financial system.
The above has shed the light on a new finance paradigm with different agency dynamics with respect to stakeholders in which maximization of shareholder wealth could beeasily challenged. This motivates financial institutions to create more innovative andsustainable financial instruments e.g green bonds to combat climate change and to helpcompanies meet their environmental and sustainability goals. More recently, the Bank of England governor Mark Carney and François Villeroy deGalhau, governor of the Banque de France, state, “If some companies and industriesfail to adjust to this new world, they will fail to exist”. HSBC has recently announcedtheir global commitment to provide $100 billion in sustainable financing andinvestment by 2025. The objective of this special issue conference is to promote both theoretical and empirical research on the challenges and opportunities, developmentsand dynamics of Sustainable Finance and Responsible Investments and its impact onemerging markets and world economies.