Going green, is it worth it for firms? An overview of market opportunities

Abstract

The common opinion concerning environmental protection is that it may come at additional costs imposed to firms, “What is good for the Earth can hurt companies”. There has been broad consensus on this, making any green or sustainable projects perceived as very costly for firms without a corresponding rise in profit. The aim of this work is to offer a systematic review of the evolution of sustainable finance, starting from the its definition and subsequently providing a mind map which encompasses the role and contribution of financial players, market dynamics and regulation fostering the importance of the role of ESG (Environmental, Social and Governance) factors. Moreover sustainable debt and equity market are developing rapidly especially in the Euro Area and it is clear that the recent increasing importance of sustainable investments (equities or bonds) on the European market is closely related to the activism of the European institutions (Green New Deal, 2019). In this paper we try to map the main financial instruments (in terms of equity and debt) available to companies that adopt a sustainable and responsible growth and investment path. In particular, focusing on the Italian market, the potential opportunities for businesses will be assessed, ascertaining the most relevant frictions for sustainable investments. This document will try to answer the question “Going green, is it worth it for firms?”