ABSTRACT
The environmental performance of corporations should improve if their financial sponsors care more about the environment (Delphi International 1997; Jeucken 2001; Richardson 2002a). A seminal insight of the ethical investment and ecological economics literature is the environmental impact of financial markets (Daly 1992; Kinder et al. 1992; Sparkes 1995, 2002; Costanza et al. 1997a; Haigh and Hazelton 2004). Private financial institutions — such as banks, pension plans and mutual funds — control a huge share of development capital in the world. The biggest environmental impact of financiers is not their own ecological footprint, but the consequences of their allocating capital to other businesses (Rada and Trisoglio 1992; Thomas 2001). Because the financial sector sponsors and profits from economic growth, it should share responsibility for ensuring such development meets society's environmental goals and standards. Thus, if financiers were more sensitive to sustainable development, then probably so would be their borrowers and other financial beneficiaries.
