An Analysis of Networks, Ideas and Dynamics in European Financial Governance
Over the last years, the perceived importance of the financial sector in contributing to the transition towards a sustainable socioeconomic system and to the mitigation of climate change in particular has been rapidly increasing. As a consequence, a variety of actors and initiatives that seek to connect finance with sustainability have emerged. In the process of the community of sustainable finance becoming more interconnected and more ambitious policy recommendations being articulated, the ideas used by different actors to engage with ‘sustainable finance’ are increasingly in dialogue or in contestation with one another. Rather than directly comparing policy proposals, most of which are only at the beginning to be explored and implemented, I propose to take one step back and instead focus on the underlying ideas that actors use to define what things are all about and what is to be done. To sort and delineate these underlying ideas I use the concept of paradigm, which was developed by the philosopher of science Thomas Kuhn and since then has been used in political science and International Political Economy. Since the issue at hand is the financial system, it is reasonable to assume that ideas coming from the study of finance and economics will have some impact. However, the necessity of bringing in expertise from different fields such as environmental science as well as the contestation of mainstream economics by competing schools of thought inside economics suggests that a mere translation of textbook solutions is unlikely. In addition to that, ideas taken from the expert community undergo another process of translation and adaptation once they are brought to the political and regulatory arena. My research seeks to unpack and map the positions and movements of ideas and ultimately regulatory proposals that draw from different paradigms in the expert network of sustainable finance. I use social network analysis, qualitative and quantitative text analysis, interviews and participant-observation to conduct the research.
The main case study, which serves as a starting and reference point to explore the network of sustainable finance, rather than as a singular case which is used for comparisons, focuses on the EU and in particular the High-Level Expert group on sustainable finance (HLEG) that was launched by the European Commission in January 2017 and whose final report was delivered on January 31st, 2018. The action plan on sustainable finance, tabled by the Commission in March 2018 and the legislative and non-legislative measures that are currently formulated within the European institutions will also form part of the analysis. The focus of the research lies, however, less on the negotiation among different political positions and stakeholder interests after sustainable finance has been ‘discovered’ by the EU. Instead, I focus on the mechanisms and the interaction that enabled sustainable finance to acquire the necessary salience to become a matter for EU regulation.
The regulatory efforts of the EU are insofar noteworthy as they would be the first instance of a comprehensive set of measures on sustainable finance in a major Western financial market. Additionally, the reforms would be the first to incorporate the recommendations of the Financial Stability Board’s task force on climate related disclosures. Hence, the EU case provides a good test for where the debate on sustainable finance stands currently and which paradigm can be assumed to set the tone as sustainable finance matures as a policy and regulatory issue.
Initial findings suggest a segmentation of the development of sustainable finance into 3 periods.
So far, 8 major clusters that are distinguishable by personal overlap, cross citations, and a shared understanding of the issuecan be discerned. These clusters ‘move’ inside the networks with regards to their centrality and importance with the one of the initially dominant communities having lost its privileged position. Furthermore, the broader socioeconomic context like the Global Financial Crisis, the change of focus after the ‘failure’ at CoP 14 in Copenhagen as well as the Paris agreement and the publication of the Sustainable Development Goals have had an influence both on the dominance of the respective clusters as well as on the developments that they have underaken.
The way how finance is connected is important insofar as financial sector dynamics have a considerable influence on the socioeconomic transitions as banks and investors have a significant stake in determining which sectors, technologies and enterprise structures will be allowed to obtain funding and thus prosper in the future. In the EU, the reforms undertaken in the framework of the Capital Markets Union (CMU) are likely to further exacerbate the significance of the financial sector and of financial regulation.
I completed a BA in International Relations at the University of Groningen and a M.A. in International Political Economy at the University of Warwick.
Already during my studies I was an active member of the Netzwerk Plurale Ökonomik and the International Student Initiative for Pluralism in Economics (ISIPE). After finishing my Master’s degree, I worked for the Netzwerk as academic coordinator in conceptualizing and contributing to the setup of the pluralist economics education website Exploring Economics.
Also, I worked as Research Assistant on a project assessing the state of German Economics undergraduate education at the University of Kassel.
Economic ideas, financial regulation, metrics for quantitative measurement in financial regulation, European integration, philosophy of science, sociology of scientific knowledge, networks of knowledge production, history of economic thought, financialization.
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Dimmelmeier, A. & Pürckhauer A. (2017) Exploring Economics: Die Lehrplatfform für plurale Ökonomik. FGW Impuls
Dimmelmeier, A., Hafele J. & Theine H. (2019) “Die Daten sind nun mal die Daten: Legitimationsmuster und Wissenschaftsverständnisse in der Pluralismusdebatte”. In Petersen et al. (eds) Perspektiven Einer Pluralen Ökonomik. Springer VS Deutschland.