The challenge for green growth to succeed lies in securing sufficient financial backing to empower and scale the efforts of entrepreneurs driving sustainable innovation. This need for investment will be discussed in the next paragraph. Figure 3.4: Positions of both green growth and de-growth (Source: Created by the author) 3.3 Finance in Planetary Boundaries The purpose of the global financial system is to allocate the world’s savings to their most productive uses, ideally channelling a greater share toward sustainable development. In the context of green growth, understanding the role of financial investment is crucial to transitioning towards a sustainable economy. As Christophers (2019) outlines, institutional investors such as large banks, asset managers, and pension funds, continue to channel significant capital into fossil fuel industries, despite increasing awareness of climate risks. Christophers highlights the complexity of this investment landscape, where financial actors are often reluctant to shift funds away from fossil fuels due to perceived economic stability and returns in these assets. This inertia poses a considerable challenge to achieving green growth objectives, as maintaining these investments conflicts with planetary boundary limits. In order to realise the large-scale benefits of new green technologies and avoid investments that worsen environmental crises, the finance industry must reshape their investment focus. To support a transition aligned with sustainability, reallocating capital toward renewable energy sectors is essential, fostering green innovation and systemic shifts that reduce environmental impact. Green growth promoters argue that strict environmental policies might lead to economic shrinkage which could lead to social unrest. The challenge for green growth to succeed lies in securing sufficient financial backing to empower and scale the efforts of entrepreneurs driving sustainable innovation. This need for investment will be discussed in the next paragraph. Figure 3.4: Positions of both green growth and de-growth (Source: Created by the author) 15 3.3 Finance in Planetary Boundaries
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