Module 1

THE EVOLUTION OF SUSTAINABLE FINANCE

FINA 421
January 19th, 2026
AGENDA + TOPICS COVERED

Housekeeping
Concept of Sustainability
Where does it come from?
Why?
Climate Change
Greenwashing
Kyoto Protocol
Paris Agreement
ESG
Group Discussion about readings
SUSTAINABILITY- DEFINITION

"Sustainable development is development that meets the needs of the present without compromising
the ability of future generations to meet their own needs."
-Brundtland Report
1987

environmental

Key Pillars to Sustainability

social

economy
 WHERE DID THIS DEFINITION COME FROM?
POST WWII
17th Century Major environmental
The natural issues start arising. The
environment was being discoursed transformed 1980s
altered by humans CO2 from a focus on pollution In 1987, the ‘Our
mostly air and water to global concern about Common Future’ report
pollution, the survival of the human by the UN Brundtland
deforestation by race, its future generation Commission was
Europeans and the planet. published.

500 BC 1800s 1970s

Now
Ancient authors The Industrial The sustainability
Sustainability is now a
shared concerns of Revolution brought an movement accelerated
common term used
environmental increase anxiety and quickly. The word
however, it is viewed as
degradation by discussions about over sustainability started
‘trendy’
humans, and consumption of natural being used, but with
‘deceptive’ , and
suggested less harmful resources by scholars many different
‘ambiguous’
practices. and citizens. meanings and context.
1952

Source: The Sustainable Agency, 2022

SUSTAINABILITY TIMELINE- BREAKDOWN

500 BC- Early Roots of Sustainabilty

Indigenous cultures practiced sustainable agriculture and

resource management.

Example: Native Americans using controlled burns to

maintain ecosystems.

No mention of the word sustainability, but it was

clear they understood that certain practices
enabled long term preservation and rewards
SUSTAINABILITY TIMELINE- BREAKDOWN

1700s
The start of talking about Environmental and Social
issues.

Notable air and water pollution.

The beginning of European deforestation

1798, Thomas Malthus famously predicted

that population growth would always surpass
food supply.

Later- these environmental issues are affecting the

Europeans livelihood- due to Climate Change

Interesting optional reading Climate change lessons from the Irish Potato Famine | The Narwhal
1800S

When did CO2 emissions

start rising?‌

1700‌

1800‌

1840‌

1850 onwards‌

Submit‌

Your Canva profile name won’t be shared‌

 1800S- BEGINNING OF CLIMATE CHANGE

CATALYSTS FOR CLIMATE CHANGE

Industrial Revolution

George Perkins Marsh’s in 1864- predicts

potential human extinction on Earth due to
our interventions on the natural
environment.

Environmentalist groups – mainly for wildlife

conservation – 1892

In 1896, a seminal paper by Swedish scientist

Svante Arrhenius first predicted that
changes in atmospheric carbon dioxide levels
could substantially alter the surface
temperature through the greenhouse effect
(source: NASA)
WHAT IS CLIMATE CHANGE?
Defintion
Long-term shifts in temperatures and weather patterns. - UN

natural
changes in the sun’s activity
Causes of shift in temperatures
large volcanic eruptions
human activities

intense droughts melting polar ice

Consequences of temperature water scarcity catastrophic storms

shifts severe fires declining biodiversity

rising sea levels
THE LAST 7 YEARS HAVE BEEN THE HOTTEST
ADVERSE EFFECTS OF AN INCREASE IN AIR
TEMPERATURE
RISING IN EARTH’S TEMPERATURE GHG THAT CONTRIBUTE TO THE RISE

Consequences of rising temperatures on the coastlines

CONSEQUENCES OF A 4 DEGREE INCREASE

High Impacts for SIDS and LDCs

The impacts are likely to hit the world’s poorest regions the hardest, since they
4
have the least economic, institutional, scientific, and technical capacity to cope
and adapt. Small Island Developing states (SIDS) and Least Developed Countries
(LDCs) have identified that a global warming of 1.5°C as the level above which
there would be serious threats to their own development and, in some cases,
3
survival.

Rainforests turning into deserts

Warming that will occur in the tropics is larger when compared to the historical
2
range of temperature and extremes to which human and natural ecosystems
have adapted and coped. The projected emergence of unprecedented high-
temperature extremes in the tropics will consequently lead to significantly
larger impacts on agriculture and ecosystems.
1

Rising sea levels

Sea-level rise is likely to be 15 to 20 percent larger in the tropics than the global
mean. 0
year year year year year

Irreversible loss of diversity among plants and animals

RESPONSE TO CLIMATE CHANGE- CORP & STATE

Concept Climate Mitigation Climate Adaption

Mitigation focuses Adaptation focuses on

on reducing the managing the impacts of
Defintion
causes of climate climate change that are already
change. happening or expected.

Actions that limit

or prevent
greenhouse gas Actions that adjust societies,
Actions emissions or ecosystems, and infrastructure to
enhance natural cope with climate impacts.
systems that
absorb carbon.
1970S- THE BREAKTHROUGH
1970-1980

1970 1972 1972 1987

First Earth Day Sustainability First UN conference Publishing of ‘Our
Not too long after, in 1971, For the first time, the word was held on the Common Future’
GreenPeace was founded. ‘sustainability was used’, within
similar context that we use today. Human Environment report by the UN
A conference where Brundtland
environmental disasters and crisis
was the core theme of the Commission
conference. Popularized the term sustainable
development.
Victims of environmental
disasters shared their stories.
1980-2000

From a historical perspective, the concept of sustainability was formulated at the first United Nations Conference on the
Environment in 1972, but it has only really taken shape since 1987, when the publication of the so-called Brundtland
Report ("Our Common Future") clarified the goals of sustainable development.

Greenwashing appears. The term was coined by Jay Westerveld in a 1986 essay examining the dubious practices of
1986
the hotel industry.

Global warming became recognized on a wider scale after a NASA scientist testified to the world that the climate
1988
was changing. Around this time, though, businesses started to consider environmentalism as a selling point

1990 Sustainability as a “buzzless buzzword”.

1995 The first COP meeting was held in Berlin, Germany in March, 1995.

1997 UNFCCC put forward the first treaty for countries to limit their greenhouse gases – the Kyoto Protocol.
“During Black Friday, 90% of purchases were made using debt, primarily through "buy now, pay later" (BNPL)
programs. This trend reflects a growing reliance on these financing options as consumers seek to stretch their
budgets amid financial constraints. The use of BNPL has surged, with transactions accounting for a significant
portion of online sales during the holiday shopping period”

-Global News
USING CRITICAL JUDGEMENT

Question big, bold numbers: Don’t take

dramatic stats at face value—always ask,
“90% of what, exactly? How was this
measured?”

Look beneath the headline: Check

definitions, sample size, and context—
sometimes “most people” actually
means a small fraction, like under 10%.

Practice critical judgment: When you

see a striking claim, pause and ask, “Who
is saying this, why now, and what might
be missing?”
GREENWASHING

How did the term come about?

Westerveld was inspired by a visit to a
hotel in Fiji in 1983.
The hotel promoted a towel reuse
program to reduce ecological damage.
The hotel was also expanding, which
caused significant ecological disruption.
Westerveld concluded that the hotel's
primary goal was to cut costs, not
conserve resources.

Greenwashing is the practice of making false or misleading claims about a product, service, or
company's environmental impact. It's a way for companies to make consumers believe they're
making environmentally friendly choices, even when they're not.
EXAMPLES OF GREENWASHING
Keurig HSBC
Greenwashing, a criminal Keurig led Canadian buyers to believe they HSBC ranks 13th of the top banks financing
offense! could recycle their single-use plastic coffee fossil fuels in the UK. And still finances
pods by simply breaking open the top, carbon-heavy industries like thermal coal
emptying out the coffee, and throwing the mining. Yet, a bit of progress in
empty carcass into recycling bins. The greenwashing awareness was made when 45
Penalties for greenwashing
capsules weren’t accepted in most Canadian people complained to the Advertising
under the new amendments are provinces, except for Quebec and British Standards Authority that HSBC’s
severe and include Columbia. advertisements were misleading. The
administrative monetary offending ads were then banned but you
penalties up to: C$10 million Fined $3million and ordered to change the can still see them in the image below.
misleading recycling claims on the packaging.
(C$15 million for repeat
t while they highlighted their climate-friendly
offenses) Three times the value
of the benefit derived from
IKEA initiatives in their adverts, they failed to
mention their considerable contribution to
deceptive conduct, or 3% of IKEA is the largest consumer of wood in the
the climate crisis at the same time – an
world, and its timber consumption has
worldwide gross revenues if the estimated $8.7 billion into new oil and gas in
doubled in the last decade. An investigation
benefit cannot be reasonably 2021.
by Earthsight found that IKEA has been
determined (CAD). making beechwood chairs using illegally
It’s an environmental nuance that was absent
sourced wood from the forests of Ukraine’s
victoria paul in the ads – and that, our friends, is
Carpathian region, an area home to
greenwashing.
endangered beasts such as bears, lynxes,
Source: Sustainability Agency wolves, and bison.
SPOTTING GREENWASHING

1 Look for third-party certifications on products like the Forest Stewardship Council (FSC)
Certification for lumber practices, the Route to Net Zero Standard for carbon
emissions, Green Seal for cleaning/household products, or the EPA Safer Choice
certification rather than vague language like “made with natural/organic ingredients.”

2 Be wary of symbolic gestures. One example is Apple not shipping earbuds or wall chargers
beginning with the release of the iPhone 12 in 2020, citing concerns about e-waste. Yet
Apple’s main source of e-waste is through planned obsolescence – the practice of
designing devices meant to have short life spans and be irreparable. Another example is
Amazon naming the new arena in Seattle “Climate Pledge Arena” and promoting a net zero
goal of 2040. Yet the net-zero target only applies to Amazon’s direct operations and does
not include its supply chain, which contributes 75% of the company’s emissions.

Source:The Climate Club

GREENWASHING- CANADA’S TOLERENCE

Canada’s Response to greenwashing: The issuance of Bill C-59

In 2025, Canada saw notable developments in anti-greenwashing regulation, public
awareness and scrutiny. Nearly a year after Bill C-59 received royal assent, Canada's
Competition Bureau (the "Bureau") issued its final guidelines ("final guidelines")
regarding environmental claims on June 5, 2025 after two rounds of public
consultation.

On June 20, 2025, the expanded private right of access under Canada's Competition
Act (the "Act") came into force and on the same day, the bureau released a revised
information bulletin setting out its perspective on private access to the Competition
Tribunal (the "Tribunal").

2025- Major Changes- Major Stakes

Broader scope of environmental claims
Environmental statements by companies, charities, non‑profits, and advocacy groups now
fall under the Competition Act.
Stronger proof requirements
Claims must be supported by credible, widely accepted scientific or industry
methodologies.
More enforcement and legal risk
Individuals and organizations can file greenwashing complaints directly with the
Competition Tribunal.
Stricter rules for public messaging
All public environmental claims must be carefully vetted; investor‑only disclosures are
exempt unless reused publicly.
Source: CarbonHound
RESULT- GREENHUSHING
Response to rising regulatory pressure
Fear of greenwashing accusations leads companies to
scale back public claims, even when progress is real.

Deliberate silence on sustainability progress

Organizations under‑report or avoid sharing
environmental achievements to reduce scrutiny or legal
risk.

Creates transparency and trust challenges

Stakeholders receive less information, making it harder
to assess performance and weakening credibility over
time.

KEY EXAMPLE- RBC

RBC scaled back its disclosures, keeping most metrics standard. They explicitly stated
that they are revisiting their sustainable finance methodology and, considering
Canada’s new anti-greenwashing legislation (C-59), chose not to report progress toward
their previous $500B goal to ensure compliance and dropped their target.
KYOTO PROTOCOL

The Kyoto Protocol was adopted on 11 December 1997.

Owing to a complex ratification process, it entered into force
on 16 February 2005. Currently, there are 192 Parties to the
Kyoto Protocol.
In short, the Kyoto Protocol operationalizes the United
Nations Framework Convention on Climate Change by
committing industrialized countries and economies in
transition to limit and reduce greenhouse gases (GHG)
emissions in accordance with agreed individual targets.

It only binds developed countries, and places a heavier

burden on them under the principle of “common but
differentiated responsibility and respective capabilities”,
because it recognizes that they are largely responsible for
the current high levels of GHG emissions in the atmosphere.

GHG Emission Targets- Binding

2000-TODAY

2015 The Paris Agreement!

2022 The word ‘sustainability’ hits a new record of the amount of times it’s searched.

2026 Group Discussion using Readings

IS “SUSTAINABILITY” A MEGATREND?

What is a megatrend?
Incipient societal and economic shifts such as globalization, the rise of the information society, and the move from
hierarchical organizations to networks

Examples of megatrends:
Electrification in the 19th and early 20th centuries
The rise of mass production
Globalization
Quality movement of the 1970s and 1980s
Rise of the internet
Common theme: presented inescapable strategic imperatives for corporate leaders

What might cause a trend to emerge or accelerate?

Financial crises
Shifts in the social realities that define the marketplace
The threat of conflict over resources
–e.g. Geopolitics of cold war laid foundation for IT Megatrend
Mass social and economic disruption caused by climate change or pandemics
IS “SUSTAINABILITY” A MEGATREND?

GLOBAL POPULATION RAPID ECONOMIC GROWTH SOCIAL & POLITICAL

INCREASE STABILITY
Industrialization of developing nations
•Puts pressure on the planet’s resources Growing global demand for energy
•Growing threats to social and political
The world’s population is expected to and natural resources
stability, driven by income inequality
grow by 40% to 9,8 billion by 2050 The world’s center of economic
and public health issues
•The World Bank estimates that the world gravity is shifting towards Asia,
needs to produce 70% more food by 2040 where sustainability-driven risks
•Increased activism and influence of
and opportunities are greatest
pension funds, sovereign wealth funds,
•Climate change mitigation and
and large asset managers
adaptation policies
•Urbanization
•A general decline in the credibility of
governments (especially where climate
change has been politicized), forcing
business to take action
•Increased stakeholder expectations for
improved sustainability performance
from both companies and investors
 LETS COMPLETE THE SLIDE TOGETHER- 2026
Using the readings we had this week, where is Sustainability at today? Has it matured? How do corporations view Sustainability?
 PARIS AGREEMENT- 2015
The Paris Agreement is a legally binding international treaty on
climate change. Adopted by 196 Parties at the UN Climate Change
Conference (COP21) in Paris, France, on 12 December 2015. It
entered into force on 4 November 2016.- UNFCC

Its overarching goal is to hold “the increase in the global average

temperature to well below 2°C above pre-industrial levels” and
pursue efforts “to limit the temperature increase to 1.5°C above
pre-industrial levels.”

World leaders have stressed the need to limit global warming to

1.5°C by the end of this century.

Crossing the 1.5°C threshold risks unleashing far more severe

climate change impacts, including more frequent and severe
droughts, heatwaves and rainfall.

To limit global warming to 1.5°C, greenhouse gas emissions must

peak before 2025 at the latest and decline 43% by 2030.
BRUNDTLAND REPORT- ESG IN BUSINESS

E
Environmental

S Social

Governance

G NEXT WEEK’S DISCUSSION

GROUP DISCUSSIONS

Q&A Discuss with your group

Any questions about the readings? Using the reading on the climate change, answer the following
questions.

Questions
ANSWERS
CLASS #3- TO DOS
Start Module 2- Steering Capital for a
Sustainable Future
Module 3- ESG Markets

Instructions for the Mini Assignment #1 will

be shared on Wednesday this week on
Moodle

Readings
Will be shared on Moodle this week- on Wednesday.

Videos to Watch LINKS ARE SHARED ON MOODLE

Challenges in Sustainable Finance

THANK YOU!