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Edition #5
Growth and Power

Signe Skov Jensen
Edited by Maija Utriainen

Defining sustainable finance: did anyone ask the Global South?

When I first encountered the term ‘sustainable finance’ in a random job description in my last year of university, my first reaction was to sigh. Yet another use of the word ‘sustainable’ in front of a less conventional concept to make it seem more sexy? The worst thing was – it was working. Despite my fatigue with seeing the word ‘sustainable’ used in too many poster ads on the street and on random brands of yogurt in the grocery store, I had fallen straight in, and the words had piqued my interest. Importantly, at the time, my concern was not with the power of the ‘sustainability’ discourse in terms of greenwashing, but simply with the word’s overuse, having ultimately produced a lack of meaning.

In the years that have since passed, it has become clear to me that sustainable finance as an industry has come to stay. Indeed, major and local banks alike have sustainable finance divisions, and  investing in exchange-traded funds (ETFs) with a sustainability lens has been popularized. A scholarly interest has also appeared, with research institutes and master’s degrees on sustainable finance being established across academia. Even the international development sector is getting involved through sections such as the UN Environment Program’s Finance Initiative, the UN Development Program’s Sustainable Finance Hub, or the UN International Network of Financial Centers for Sustainability.

But this blooming of sustainable finance across sectors and geographies, of course, does not come without complications. There are plenty of illustrative examples of how ‘sustainable’ finance has greenwashed, pinkwashed, or impact-washed. These are processes that entail using deceptive marketing and communication to disseminate a public image of a company or fund as contributing to environmental, social, or impact purposes – when, in reality, said company or fund has far from contributed to such goals. For instance, a prominent investigative report of November 2022 estimated that half of European climate investment funds still include fossil fuels and aviation in their portfolios (Smit, 2022). This is evidence of a clear double standard being present within the sustainable finance industry. Despite such gloomy realities, one must admit that sustainable finance has still succeeded in transferring immense capital flows towards much needed world issues such as climate adaptation projects, renewable energy, the circular economy, biodiversity, and the SDGs at large – areas of investment that until just a decade ago in most markets were niche rather than mainstream.

In fact, specifically green financial products have caught the attention of markets in the Global North, with a few cities consistently appearing within the top 15 of the Global Green Finance Index: London, Amsterdam, New York, San Francisco, Paris, and the Scandinavian capitals of Copenhagen, Oslo, and Stockholm (Wardle, Mills and Mainelli, 2022). I would note these cities for their entrepreneurial, ‘forward-thinking’ identities and recent startup culture (Korneti, 2021) and go even further than their green finance titles in naming them hubs of sustainable finance. I conceptualize these hubs as embodying both financial assets, regulation, and policy. They consist of investors, financial institutions, asset and wealth managers, politicians, regulators, and lobbyists to name just a few. In being the largest markets for sustainable finance assets in the world, this handful of hubs are the ones drafting and governing the discourse on ‘sustainability’ in the global economy.

While debates on impact-washing are, rightly so, taking place across all of the above-mentioned locations in the Global North, there is one central notion that seems to escape the debate: whatever we decide to define as ‘sustainable’ in the Global North is likely to somehow affect the countries whose markets for sustainable finance have yet to grow. Europe, and especially its sustainable finance hubs, has a crucial role to play in addressing this question and ensuring that the Global South is not just considered but involved and heard in current debates on definitions of ‘sustainability’.

As someone born and raised in one of the world’s sustainable finance hubs, Copenhagen, I feel all the more conscious of Scandinavia’s responsibility in crafting the current sustainable finance discourse. After all, we have weaved pictures of our nations in recent years that on the world stage make us appear as an almost irresistible utopia. In this way, we appear tolerant, transparent, and equalitarian to most outsiders. This is not to say that such characteristics are not applicable – everything is relative, and I would argue they still make up the fabric and values of Scandinavian societies – but reality, of course, is always more nuanced than what seems. It is common that we market ourselves as progressive and inclusive by pointing to history: for example, that Denmark was the first country to abolish the slave trade, or the first to legalize same-sex marriage. That, however, far takes away from the fact that we were still an imperial power committed to slavery for centuries, and that the LGBTQ+ community in Denmark historically has and still does face discrimination today.

Admitting to these nuances in our own narrative instead of painting a ‘first mover’ identity is important if we are to address the issue as of now: the soft power Scandinavian countries hold in conceptualizing the sustainable finance industry of the future. We make up less than 0.3% of the world population but sit on soft power in terms of our global image as sustainability leaders and hard power in the size of the market for green financial products within each of our countries. This is why we face a big responsibility in the conversations on sustainability we are currently taking leadership in, and why we must do our utmost in diagnosing and reevaluating any discourses and policies on sustainable finance that could possibly (re)produce inequalities in the Global South in the future.

Of course, disempowerment and structural inequalities ingrained within the global economic system is nothing new. In recent decades in history, it presents itself most clearly in the way the system dismantled and then reformed itself in the face of decolonization. Wealthy individuals from colonizer states would pull their financial assets out of a colony in the very moment of independence and then store it in what was considered ‘safe’ havens such as Switzerland – only to reinvest it in the now decolonized state a couple of decades later in the form of foreign direct investment (FDI) or store it in new tax havens such as the Bahamas (Ogle, 2020). This pattern not only shows obvious hypocrisies in European ideas of who is considered a ‘safe’ capital haven and who is considered ‘worthy’ of investment, but it illustrates how Europe contributed to financial instability in newly independent states. This, simultaneously, was happening at a time when European capital was needed most as a form of unconditional reparation and building of new, strong, and independent national economies in the Global South. These actions of removing capital before reinvesting it were all symptoms of a larger issue: that whenever Global South countries have since sought independence, they have had to rationalize and build their national economies by way of Euro-American economic logics (Hickel, 2021). Such ideas were hegemonic in their construction of the global capitalist system, and so newly independent countries were left with few choices available to the development of their own economies that were not heavily influenced by Euro-American ideas of what an ‘economy’ is.

How does this then translate to the issue of defining the ‘sustainability’ in sustainable finance? In short, it all fits into a perfect jigsaw puzzle of Euro-American norm diffusion and the power it has in shaping policy agendas outside of its own dominion. Norm diffusion in itself can be explained as one country’s decision-making being dependent not solely on international and national factors, but also on decisions made in other countries. Furthermore, it has been argued that its ‘typical mechanism is conditionality: in order to access certain resources, national governments must comply with given policy requirements’ (Gilardi, 2012). If this ‘conditionality’ sounds familiar, it is because it is a common critique of finance disbursement from institutions such as the World Bank and the International Monetary Fund towards the Global South, and the European Union towards the post-Soviet bloc. Therefore, in many ways, there are signs that norm diffusion of policies come with conditions that may or may not perpetuate or worsen existing inequalities.

Simultaneously to the above processes, the ‘sustainability’ of sustainable finance is being defined by regulation across the world, most notably in the recent – yet long overdue – EU Taxonomy on Sustainable Activities. This taxonomy sets out to facilitate more green investment while hindering greenwashing and includes meticulous indicators for reporting measures. Whether positively or negatively, the regulation’s definition of a ‘sustainable’ economic activity is certain to transform the entire sustainable finance ecosystem.

It is exactly due to the concept of norm diffusion and in knowing the historical ability of EU regulation in creating similar ripple-effects across its outer borders (as was the case with its GDPR policy, now present across the world due to global supply chains) that I am now growing increasingly worried. After all, the European Union fosters the interests of its own members before it considers external stakeholders – and I believe the same thing might be said for the top sustainable finance hubs in Europe trying to influence such regulation. Why, in the end, would they feel naturally inclined to think of the ‘other’ before the ‘familiar’ of their own backyard? They are concerned with regulating their own market before anyone else’s, and for this reason, I doubt that the economies of the Global South take the number one spot on their list of concerns.

I should underline that attempts such as the European Union’s to regulate an already complex market, on as tricky an issue as greenwashing, is already a feat on its own and should most definitely be applauded. I also still do believe that sustainable finance hubs such as the ones in Scandinavia are doing their best to influence such policies in a positive way. However, it does not kill the thought in the back of mind that, somehow, the Global South has been excluded from or disregarded in important conversations – and that their economies and livelihoods stand to lose due to the future norm diffusion of sustainable finance definitions.

Why is it, for example, that most conversations surrounding the sustainability of finance grounded in the Global North mostly focus on the environment? I take issue with the immediate jump of the EU to construct a definition of an environmentally sustainable activity while a social taxonomy was abandoned for a later point in time. In fact, BNP Paribas has found that as many as half of investors focus their investment strategy less on social factors than they do the more well-known components such as the environment (Saul, 2022).

The definition of ‘sustainability’ as according to the UN’s Brundtland report of 1987 equally weighs the environmental, economic, and social components, and it is therefore an issue that the social component so often is considered a box-ticking exercise, while the environmental and economic components take the main stage. As a matter of fact, the overt focus on the environment is so painstakingly clear that I find myself thinking that the most part of the industry is equating sustainability entirely with environmental sustainability.

I believe Global North countries consider themselves as faring ‘better’ than Global South countries on many social indicators. While this is generally accepted to be true,  – to return to my previous argument on the nuanced realities of Scandinavian countries – it does not mean that we can downplay our own issues and ignore the social component of our sustainability definitions. Who knows? I personally believe that including the Global South in more of our sustainability conversations would make us aware of our own shortcomings, and allow for more nuanced discussions on both inequality and environmental action within our own countries and economies.

All of the above is to say that the Global South can provide essential insights to current ‘sustainability’ definitions within sustainable finance. Whether sustainable finance hubs are currently including and voicing the concerns of the Global South is difficult to say, and so with this piece, I have simply sought to demonstrate that they most rightly deserve a place at the table. Operating within the limits of the global capitalist system and knowing our history of disempowerment and economic disenfranchisement of Global South countries, being inclusive in our conceptualization of ‘sustainable’ finance is the very least that we can do.


Gilardi, F. (2012) ‘Transnational diffusion: Norms, ideas, and policies’, in Handbook of International Relations. Thousand Oaks, Calif: SAGE Publications, pp. 453–477.

Hickel, J. (2021) ‘The (anti) politics of central banking: Monetary policy, class conflict and the limits of sovereignty in South Africa’, Economy and Society, 50(1), pp. 57–77. Available at:

Korneti, H. (2021) The 50 Best Startup Cities, Valuer. Available at: (Accessed: 2 December 2022).

Ogle, V. (2020) ‘“Funk Money”: The End of Empires, The Expansion of Tax Havens, and Decolonization as an Economic and Financial Event’, Past & Present, 249(1), pp. 213–249.

Saul, J. (2022) ‘Fixing the S in ESG’. Available at:

Smit, E. (2022) The Great Green Investment Investigation, Follow the Money - Platform for investigative journalism. Available at: (Accessed: 1 December 2022).

United Nations World Commission on Environment and Development (1987) Brundtland Report: Our Common Future. Available at: (Accessed: 10 December 2022).

Wardle, M., Mills, S. and Mainelli, M. (2022) ‘The Global Green Finance Index 10’.

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