Funding from the Mercator FoundationHow Can We Make Climate Protection Financing Sustainable?

17 March 2025, by Newsroom editorial office

Photo: pexels/Akil Mazumder

For a new project, a University of Hamburg research team will connect with the financial sector to develop innovative financing and investment strategies in tackling the challenges of climate change and biodiversity loss. As part of a research alliance with the University of Kassel project receives roughly €2.5 million in funding from the Mercator Foundation.

Sustainable investment requires guaranteed financial stability and ecological benefits—both are key challenges. The new Forschungsverbund klimakompatibles Finanzsystem (research alliance for a climate-compatible financial system) will investigate a wide range of questions, such as: How can capital for sustainable projects be mobilized? What role do sustainable financial products play in economic transformation? And what is the impact of regulatory measures?

Strengthening financial system resilience

The team hopes that the research results gained by analyzing extensive databases, self-collected data, and processes, among other things, can be developed into innovative financing strategies which are economically viable and ecologically sustainable and increase financial system resilience to ecological crises.

On behalf of the University of Hamburg, the research collaboration is coordinated by Prof. Dr. Alexander Bassen, professor of capital markets and corporate management, Prof. Dr. Timo Busch, professor of management and sustainability, and Prof. Dr. Kerstin Lopatta, professor of financial accounting, auditing, and sustainability. Prof. Dr. Christian Klein, Chair of Sustainable Finance, is heading the project, which is running from the beginning of 2025 to the end of 2027, at the University of Kassel.

Close cooperation with practitioners

“We urgently need solutions to reconcile financial markets and sustainable development. Our project investigates how climate protection and financial markets interact,” says Prof. Dr. Alexander Bassen. A particular focus is thus on translating the research results into practical financial and economic strategies that foster targeted sustainable investments.

To this end, the researchers work closely with stakeholders from politics, business, and financial institutions. “We are investigating how financial flows can be geared towards climate-friendly transformation,” says Prof. Dr. Timo Busch. Prof. Dr. Kerstin Lopatta adds: “Our goal is to increase the transparency and comparability of climate and biodiversity risks. This helps identify decision-relevant information without creating unnecessary red tape.”