Where is sustainable finance in the CMU?

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Short-termism in financial markets has been a topic of discussion in academic and policy circles alike, particularly in the wake of the financial crisis. The sustainable finance agenda could get the financial sector in sync with the needs in the real economy. Nonetheless, the capital markets ecosystem is currently underdeveloped and many underlying conditions are still missing. At present, there is a variety of approaches to ESG integration, preferred asset classes and investment strategies. A larger pool of sustainable assets is needed in order to bring about significant change.The use of financial regulation as a tool to provide incentives or disincentives for investments deemed (un)sustainable should be exercised with great caution. Transparency, proportionality, the right incentives, and ultimately financial performance will allow sustainable finance to go from niche to mainstream.