The Challenge of Mobilizing Finance for Renewable Energy


Text by Max Jerneck, PhD and researcher at Misum

Alternatives to fossil fuels are slowly gaining ground –  much too slowly for the world to have any reasonable chance of avoiding catastrophic climate change and ocean acidification. To speed up the process, there would have to be a sea change in investment patterns. Mature low carbon technologies such as solar and wind are attracting increasing amounts of investment but there is a limit to how much they can expand without coming up against the constraints of intermittency, i.e. the fact that they only generate electricity when weather conditions permit. Breaking into the mainstream would require overhauled electricity grids and technological breakthroughs in energy storage technology. To achieve a real transition from fossil fuels to renewable energy, continuous investments in innovation is needed. Mobilizing finance for this task is a real challenge.

Technological innovation is normally not a very good investment. Potential gains are inherently uncertain, and often do not accrue to innovators but to followers who refine the technology. In the case of low carbon technology, competition from incumbent industries makes the prospects dimmer still. For investors to bet on low carbon technology, they would have to be either wildly over-optimistic, or simply unconcerned with financial returns. These types of investors are always needed to bring technologies to deployment, according to economist and venture capitalist William Janeway. Governments are needed to finance the initial unprofitable phase of development, which often lasts decades, and speculators are needed to bring it to market. Only in a bubble does money pour freely and widely enough for technology to be rolled out, tested and tried in the field. Before the 2008 crisis, a combination of these two motivations drove a minor boom clean technology investment. Governments in Spain, Germany, Italy, and other countries paid generous subsidies for renewable energy, enticing irrationally exuberant investors to pour money into the sector. After the financial crisis and Europe’s turn to austerity, subsidies dried up and investors realized that they had lost half of their money.

Venture capital worked well in an unoccupied technological field such as computers (which also had heavy state-backing from the military) but energy is an occupied ”legacy sector”, where market power has merged with regulatory power, fortifying it against disruption. Creative destruction in such a sector is not be easy, particularly since fossil fuels also experience rapid technological advances, as in shale extraction, fracking, etc. The MIT technology review recently published an article called Why bad things happen to Clean Energy Startups, that chronicled the downfall of Aquion energy, an energy storage startup which apparently had done everything right, yet still went bankrupt. The venture capital model for financing clean technology is,”broken,”  another recent MIT report states. The clean energy transition cannot be financed by the private sector alone; it needs to be supported by governments.

One place where the government has invested quite heavily in renewable energy technology lately is China, where state-owned banks and local governments have generously supported the development and expansion of solar and wind energy. In fact, it is possible that government financial support has been too generous. Critics argue that ”soft budget constraints” provided by government weakens incentives for innovation, and keeps uncompetitive ”zombie” firms alive, leading to serious problems of overcapacity. For years, there has been rumours of an impending solar shakeout in China, but it has yet failed to come. Given resistance from local governments supporting their home firms, I am not sure that it will. Overcapacity can be resolved in two ways, by reducing supply or increasing demand. The Chinese may do so through a combination of measures, either by allowing or engineering a consolidation among renewable energy firms into a few national champions; by increasing domestic demand through installations; by shutting down renewable energy’s main competitor coal; or by increasing demand through foreign installations along the One Belt, One Road route. All of these policies are pursued with varying levels of success. It remains to be seen which combination of options prevail; I may return to them in a future post or article.

I am personally not sure that excess capacity in China’s renewable energy sector should be viewed as a problem. It has been the main cause of the steep decline in solar costs over the past decade, and is compelling chinese officials to increase domestic demand. It has allowed a constituency to take form around the technology which will be hard to unseat. Excess capacity represents facts on the ground which makes the advance of renewable energy harder to reverse. Starting with the 12-five year plan in 2011, solar energy has become one of China’s important strategic industries, which will presumably form a foundation for dominance in electric vehicles and energy storage as well. Since the Chinese state does not seem to apply any financial constraints, the only limiting factor is the technological prowess of Chinese firms, which seems to be growing year by year.

The most advanced emerging technological segments, however, are still dominated by western firms and laboratories. The question is how to bring these through the first difficult phase of development, an important task to advance energy storage and promote exploration to avoid lock-in to the dominant designs currently favored by China. The West is much richer than China and should have no problem mobilizing finance for this task. What is lacking is a sense of urgency and a strategic view of the economy. Five year plans are no longer in fashion, even in France.

Mariana Mazzucato has argued that development banks could fulfill this role. In Europe, that would be the  European Investment Bank or the European Investment Fund. Risky investments in innovation do not sit well with the bank’s mission of providing returns to its shareholders, however. To provide the financially unconcerned actors that are needed, investments might have to be backstopped by central banks. Much like quantitative easing has instilled investor confidence in sovereign bonds, promises to buy equities in innovative startups could do the same for venture capital investments in renewable energy. Central banks have bought various financial assets from old-economy firms since the crisis. A post on FT ALphaville earlier this year by Alexander Barkawi titled why monetary policy should go green pointed out the carbon economy bias of these programs. They are in violation of the Paris Agreement, which states that all financial flows be made consistent with low carbon growth. Venture capitalists do not invest in emerging low carbon technologies because they do not see a viable exit option. Having such an option provided by central banks could alleviate those concerns. Western nations do not have the institutional, political or ideological capacity to finance new industries at any level near that of China, but  the commanding heights of the financial system are still under government control, and could in theory be coupled with venture capital to drive the transition. Given the reluctance of western political leaders to address even immediate afflictions such as mass unemployment, and even willingness to exacerbate them, it is almost impossible to imagine them proposing sensible, let alone bold or visionary, policies to address the much more intangible and slow moving threat of climate change. But these are the sort of ideas that should be lying around in the next crisis.

Written by Max Jerneck, PhD and researcher at Misum

Sustainable investment: time to define what it means


Text by Joakim Sandberg, Wallenberg Academy Fellow and Associate Professor at University of Gothenburg, also Associate Researcher at Misum

The financial industry has shown a growing interest in issues concerning sustainability, both social and environmental topics, over the last 20 years or so. According to some calculations (although they are probably exaggerated), Swedish investments with a sustainability profile amount to roughly 7-10 trillion SEK today. That would be about double the size of the Swedish real economy. A total of 38 fund companies, with a collective 670 fund options, participate in an industry initiative called “the Sustainability Profile” ( This explosion of supply is of course promising for the end consumers, since it becomes easier to find savings options that integrate sustainability concerns. However, voices are being heard that not all funds have equally high ambitions in their so-called green options and that the quality in this regard is varied.

A central problem for consumers is to navigate sensibly through this jungle of products. As noted in a recent report by Konsumentverket (Rapport 2017:5 Om konsumenters möjlighet att välja hållbara investeringar), there are many challenges for most consumers, such as getting to grips with a large quantity of complex information and struggling to understand the concrete sustainability results. One of the central solutions proposed by the report is external and credible eco-labelling of investment options. Such eco-labelling has worked well in other fields, such as groceries and energy. Eco-labelling of investment products could help consumers greatly through identifying the most ambitious funds, assessing the concrete sustainability results of their efforts, and also communicating this in a simple and easy-to-understand manner on the market. This is likely to raise the quality standards in the industry.

Earlier this month, the Swedish Forum for Sustainable Investment (Swesif) hosted an event to introduce and discuss some of the eco-labelling schemes that now are being developed (more info on the event here). Presentations were given by Morningstar, ISS-Ethix/Climetrics, Ecolabelling Sweden (Svanen) and the Responsible Investors Alliance Sweden. These are not the only eco-labelling initiatives currently going on, but they may be a representative share. What became clear during the event is that the initiatives actually point in somewhat different directions: they rest on partly differing ideas of what sustainability consists in (E, S or G); how companies should work with this; what measures (qualitative or quantitative) are suitable; what baselines are adequate for the measures; and so on. What was perhaps most striking were the seemingly different visions of the ideal of sustainable investment: whereas some value precaution, integrity and attention to detail; others rather value effectiveness and “impact”.

The conclusion from all of this seems to be that we need to define more clearly what is meant by sustainable investment. This is, at bottom, a philosophical issue that I have spent many years of my research career on. I have identified two main philosophical understandings of, or perspectives on, sustainable investment: According to the “moral purity perspective”, on the one hand, sustainable investment is fundamentally about choosing the right companies to invest in since the ethics of the investment depends on the ethics of the underlying company (in a backward-looking manner). So, for example, it is better to invest in wind power than in coal since the former simply is a more sustainable industry. According to the “moral effectiveness perspective”, on the other hand, sustainable investment is about influencing the underlying companies to make a difference for society (in a forward-looking manner). That is, the most sustainable investment is not necessarily that which is most “pure” but rather that which is effective in making the world a better place. (For an overview of this research, see this article.)

The challenge that I see ahead of us is to use this kind of research to construct a more robust and research-driven eco-label for investment products. There are many ways in which this can be done. In a report for the Swedish Society for Nature Conservation (Naturskyddsföreningen), I have summarized international research on the effectiveness of the investment strategies used by so-called sustainable funds (find the report here). In brief, the results indicate that a positive investment strategy, especially one that targets small or new firms in great need of capital, is more likely to be effective than a negative investment strategy, i.e. the simple avoidance of large companies in unsustainable industries. There may also be opportunities for funds to influence the underlying companies through owner dialogues, but much more research is needed here. The report gives us a rough roadmap for what investment strategies that should be promoted by a progressive eco-label in the field, i.e. one that follows the moral effectiveness perspective. I will now be working with some of the organizations noted in this text to hopefully make the proposed eco-labels both more progressive and more easy-to-understand for end consumers. Our overarching hope is of course that this research makes a difference for the quality of sustainable investment opportunities in Sweden.

This is what we do at Misum; research that aims to be of both high academic quality and, at the same time, high usability for sustainable market actors.

Text by Joakim Sandberg, Wallenberg Academy Fellow and Associate Professor at University of Gothenburg, also Associate Researcher at Misum

In search of sustainable markets – look for interaction between market practice and policy practice


Text by Lars-Gunnar Mattsson, Professor Emeritus in Business Administration, Stockholm School of Economics,  and researcher at Misum

Public and private concern for sustainable development is a megatrend. To what extent are markets part of the problem or part of the solution? Or maybe both? How can government policies aid or hinder development of sustainable markets? Such questions are fundamental but arguments are most often developed from a predetermined, or taken for granted political and/or theoretical standpoint about markets. My argument is that we need to know much more about how markets function in practice and about interaction between market practice and policy practice in order to better understand sustainable development in a market economy.

There is, surprisingly, hardly any conceptual discussion in the literature and no convincing empirical findings that identify a sustainable market! I argue that a market is sustainable if it in the long run substantially promotes achievement of sustainable development goals. Thus a sustainable market must be dynamic, adapt to new scientific findings, discontinue unsustainable practices, be effective as regards technical and social innovation and consider external diseconomies, and external economies. Thus, somewhat paradoxically from a linguistic point of view, to be sustainable, and keep sustainable, change is necessary. Markets are not a priori given. They are continuously shaped and reshaped by businesses and individuals involved in interaction as sellers and buyers and influenced by public policies. Thus, change is an inherent characteristic of markets.

To make my point, I will refer to the Paris climate agreement in December 2015.  The Agreement was, given earlier failures, seen as a remarkable political and policy achievement. It was based on natural science studies of eco-system processes, acknowledging that human activities cause green-house gas emissions that lead to global warming. The Agreement left it to each government to develop and implement climate mitigation policies.

Human activities affecting green-house gas emissions are, directly and indirectly related to production and consumption of goods and services. In market economies interaction and exchange between actors within a market, and importantly between markets, serve to coordinate and allocate resources, as well as to develop and co-create resources. As government agencies now develop and implement policies based on the Paris agreement, it is important to understand if and how these policies help to perform sustainable market practice or perhaps hinder it. For instance, rules for public procurement might present examples of both positive and negative effects on sustainability.

Policy practice has a content rich tool-box to select a policy mix from. Economic incentives/disincentives, regulations and norms of different nature, investments in infra structure, education and research, as well as in reorganization of policy agencies, information campaigns (“nudging”!), etc. Policies most often leave a considerable degree of freedom on how to comply with them in market practice, a fact that makes it even more important to study market-policy interaction.

With reference to the UN Agenda 2030, one of the 17 Sustainable Development Goals (SDG 13) specifically concerns climate.  To reach the objectives agreed on in Paris, due to the overarching influence of climate change, policy and market practice related interaction are particularly crucial as regards SDG 7 on Energy, SDG 9 on Innovation and Infrastructure, SDG 12 on Production and Consumption and SDG 17 on Partnerships.

Concern for sustainability has generated an increasing number of initiatives in business, civic society and academia. Individual business-focused sustainability initiatives are relevant for understanding interaction between policy practice and market practice. CSR, Corporate Social Responsibility, aims to counter-balance the rise of share-holder value as the prime objective of companies. CSR introduces stakeholder engagement and achievement of Triple Bottom Line results. It has stimulated a major and growing stream of research and practical implementation. CS, Corporate Sustainability, emanating more recently from business strategy literature argues that business practices should consider triple bottom line outcomes. Stake-holder engagement in the business is important. CSV, Creating Shared Value, is also an idea coming from business strategy literature. It suggests that a firm that builds social value propositions in its corporate strategic behavior, creates competitive advantage. According to CSV more public policy intervention in the market is not necessary, it might likely be harmful.

How do these acronym identified principles for individual corporate behavior in markets affect over-all market practice towards sustainability? How do they affect interaction between suppliers, customers and competitors?   If market practice becomes more concerned with climate mitigation, stimulated by the principles for individual firm behavior alluded to above, then policies concerned with the same problems might become more effective.

Interaction between policy practice and market practice is bi-directional. An example is the reshaping of the EU Emissions Trading System. The lackluster performance during the first periods have initiated substantial revisions of the system and it remains to be seen if the new EU policy will create a more sustainable market practice.  Policy-market interaction for sustainable markets is also dependent on sustainable policies.

Public and private actors interact in many cases as aspects of New Public Management. Recent examples in Sweden of out-sourcing of electronic services and public/private partnership demonstrate the problematic nature of creating sustainable markets and sustainable policies.

Research about sustainable development in general, and especially about climate mitigation engages researchers and research institutions in all natural, engineering and social science disciplines and their sub disciplines. In this context interaction between policy and market practice is an important phenomenon that should be studied in an interdisciplinary, and even transdisciplinary, perspective to better understand market economies from a sustainable development perspective.

Written by: Lars-Gunnar Mattsson, Professor Emeritus in Business Administration, Stockholm School of Economics, and researcher at Misum









Who cares about the science?


Text by Lin Lerpold, Associate Professor SSE & Executive Director Misum

During the summer I gave a lecture on how Swedish companies work with sustainability. I was in the United States presenting to a group of relatively educated and international business people, many of them having a Swedish background. For the first time I met with climate change deniers and it was somewhat of a shock for me. Though my lecture took for granted what an overwhelming majority of natural scientists agree on regarding human impacted climate change, I was unprepared for having to argue that climate change was indeed a surety. Of course there must be climate deniers also in Sweden but few would articulate their denial in a country where political correctness and conflict aversion is culturally high. My reaction was to fire back that according to the science it was beyond doubt that human behavior was indeed having a negative impact on our planet. The immediate response, “Who cares about the science?”

On April 22, more than one million people in more than 600 cities around the world united in an unprecedented coalition of organizations and individuals. People marched around the world to stand up for science and to defend the role of science in policy and society. Currently, a draft special report on climate change is now under review by the White House. The report was written by scientists inside and outside government, with input from the public and the National Academy of Sciences and concludes that Americans are most definitely feeling the effects of climate change right now. The report is designed to be an authoritative assessment of the science of climate change. According to the New York Times, some scientists fear that Mr. Trump will seek to bury it or alter its contents before it is formally released during the fall. The NYT headline reads, “Climate Report could force Trump to choose between science and his base”.

As scientists, with science as a belief system, we need to in the current zeitgeist of “alternative facts” ask ourselves why we now have to “Stand up for Science”. We need to go to where science is conducted and disseminated; to our universities and to academia, and consider whether we as institutions and scientists have in any way contributed to the loss of public trust in science, risking a new dark age with devastating consequences to humanity. Might it be possible that our contemporary academic structural incentives, with the sole de facto focus on scientific publications for promotion, has contributed to the demise of scientific influence and impact on society at large?

Though we pay lip service to the traditional three-legged stool mission of universities (research, education and service), we have overwhelmingly become subject to what Edwards & Roy (2017) describe as the “growing perverse incentives in Academia” where only the leg of research is valued in the scientific community which promotes on the number – often quantity over quality – of publications in scientific journals. The scientific journals and their articles themselves are usually neither accessible nor understandable to the general public.

Many research-based universities’ mission is to provide science based education, be it to their own students, practitioners and policymakers, or to society at large. To fulfill that mission, universities need scientists conducting rigorous research, but also scientists able to act as translators of knowledge to their students and the general public. Moreover to justify the resources from public and private funding for research, scientists need not only be scientific knowledge producers and pedagogical transmitters of that knowledge, they also need to help ensure that their research informs and benefits society at large. Scientists must go beyond discourse through, oftentimes, impenetrable articles and be incentivized to also reach those outside the scientific community. Why else should resources be spent on research if not to better serve the development of our society?

This is often called the third leg (academic service), and involves contributing to science-based knowledge and expertise to policymakers, to practitioners, participating in expert evaluations, not least of all disseminating knowledge to the general public through mass media channels, thus having a potential impact more broadly to the general public. This leg of academia, necessarily legitimately connected and based on the scientific research leg, has the greatest potential to engage and make people outside the scientific community better understand and trust science again.

Yet though the three legs of education, outreach and service are most times included in formal tenure promotion requirements in leading universities, only lip service is paid to being a good teacher or knowledge disseminator outside the scientific community. Indeed, teaching is oftentimes considered a necessary evil and referred to as a “burden” or “load” and a scientist in the public eye is many times considered suspect or accused of being too “political” by other scientists when they engage in societal discourse. Instead, only publications in narrowly defined and established scientific journals are valued and considered legitimate in most tenure advancement evaluations.

Academics are humans and readily respond to incentives. The natural wish to achieve tenure and promotion along with the current overwhelming focus on scientific publications to do so, may possibly be linked to the general public’s disregard and even distrust of science. As scientists we do care about the science. We take it for granted as our belief system. How can we ensure that science matters also for non-scientists? How do we, for instance, make my lecture to the international business participants and politicians like Trump care about the science? Perhaps it is through a more balanced three-legged academic incentive structure promoting the legs of education and academic service to society as important as the leg of research.

Written by: Lin Lerpold, Associate Professor SSE & Executive Director Misum

Sustainability at the Academy of Management Conference 2017: Conspicuous silence on the role of the current political context for business


Text by Mette Morsing, Professor in Sustainable Markets at Misum/Stockholm School of Economics.

Back in the days, when I was a PhD student, the SIM Division (Social Issues in Management) of the Academy of Management was the one important Division to join if you had an interest in corporate social responsibility, environmental challenges or ethical issues related to business. This was the only Division where fundamental questions of the legitimacy of business institutions and their responsibilities in society were discussed intensely. US professors Ed Freeman, Tom Donaldson, Sandra Waddock and many others were leading the debate. Later on the ONE Division (Organization and the Natural Environment) emerged with an important focus on the environmental aspects related to business.  My academic “AOM home” was OMT (Organization and Management Theory) but here, like in the other AOM Divisions, ethics, environmental challenges and social responsibilities were regarded as exotic, abstract and somewhat peripheral issues to be part of mainstream research on the firm.

Today, that has changed considerably. The important questions about the role, functioning and legitimacy of business institutions in the context of global challenges are now debated across the AOM Divisions. In other words, CSR and sustainability have become important mainstream research topics at AOM. For example, this year the OMT (Organization and Management Theory), OB (Organizational Behaviour), OCIS (Organization, Communications and Information Systems) and SAP (Strategizing Activities and Practices) Divisions have all attracted a considerable number of research papers, symposia and caucuses on environmental disasters, irresponsibility, unethical behaviours, corruption, inequality, human rights abuse and climate change.

Undoubtedly the current rise in business scandals has contributed to raise the attention among management scholars about these urgent matters. But perhaps even more important for triggering the scholarly attention is the current global questioning among politicians of man-made climate change, their denial or disregard of science, and their inability to find solutions but rather stimulate harsh political disputes about immigration. As we have all seen, governments are currently in dramatic ways setting a changed tone for societal progress. This new tone has created uncertainty and a tense situation for businesses awaiting the changes of regulatory frameworks that will influence their space to navigate. The media furnishes our society on a daily basis with these socio-political changes.

Therefore, it was surprising to find a conspicuous silence in the AOM community about the socio-political context that so heavily influences these crises in today’s world. Across the AOM Divisions and in the many presentations, debates and panels on the challenges to ethics, responsibilities, environment and climate change, the current political transformations in society were not mentioned. Instead there was a conspicuous silence. Perhaps the new political tone is taken for granted among management scholars? Perhaps current politics is not for management scholars to engage in? Perhaps it is too complex for a single-argument paper? Or perhaps the current political systems have become a taboo in a US management scholar context?

One exception, though, was the ONE Division (Organization and the Natural Environment) that hosted a rather popular “ONE plenary”: “Green management under pressure”. This group took the liberty of debating the dangers of the current global political transformations in relation to sustainable development in a mode that included empirically substantiated knowledge as well as normative input.

In this context it is worth reminding ourselves that this is exactly what professors Tom Donaldson and Jim Walsh (2015) called for in a recent article: empirical analysis, practical opportunities and normative theorizing. They challenge the current theory of the firm, inviting us all to reflect on providing novel answers to four basic questions on the role of business in the current societal context of the planet: (1) what is the purpose of the firm? (2) to whom should the firm be accountable? (3) who should be in control of the firm? and (4) how do we define a successful firm? What the “ONE plenary” session at AOM did was to add a fifth and important question about politics: what is an appropriate political context to support sustainable development? And a sixth equally important question about temporality: today, what are the important political transformations in the current business context?

While the research agenda on unethical behaviour, irresponsibility and sustainable development has successfully spread from the SIM and ONE Divisions to a much larger debate on the role of business in society across AOM Divisions, perhaps it is time to reconsider the next move: to engage AOM management scholars in exploring the role of today’s political context for business.

If we as management scholars want to remain not just novel and cutting edge in a scholarly sense, but also want to remain relevant to today’s business and society, we need to provide some thinking about how systemic injustice, corruption, human rights abuse and climate change are not just externalities of poor business management to be repaired by (other) managers. These problems are also closely related to the political systems and governance structures. Some management research has already engaged exploring for example political CSR and sustainability governance (e.g. Crane, Matten and Moon, 2010; Scherer and Palazzo, 2007, 2011). It is good. It is theory. It is conceptual. However, we still need to understand how we as management scholars can integrate the current governance structures that businesses today are operating in. That will make our own community not only relevant but also potentially influential.

So, while the SIM and the ONE divisions over the past decade seem to have successfully integrated their research agendas across the AOM Divisions, there still seems to be an obvious silence to break and a relevant new challenge to pursue: how to bring the global current political climate into the AOM scholarly debate?

Footnote. Academy of Management is a management scholarly community with 20 000 members and 10-12 000 of these meet every year at the annual conference in the United States.


Written by: Mette Morsing, Professor in Sustainable Markets at Misum/Stockholm School of Economics.


How was the Paris agreement possible?

Stefanos Mouzas, Professor of Marketing and Strategy at Lancaster University, recently visited Misum to present and discuss his on-going research on policies to address climate change at two different seminars.


Misum´s Lars-Gunnar Mattsson with Professor Stefanos Mouzas from Lancaster University and the sustainable development goals (SDGs) that they find the most important.

How was it possible to reach the Paris agreement, considering the problems associated with the Kyoto Protocol, relying on market processes and the failure of the Copenhagen Summit?  Mouzas finds the Paris agreement to be an extraordinary collective, policy process outcome. It was based on the shared understanding of the need to reach an umbrella agreement between all countries, in different stages of development, to make the global economy carbon neutral in the 2050s. The preparation for the agreement had involved many consensus-building meetings, including some bilateral climate agreements (in 2014) between the US and respectively China, India, Mexico and Brazil.

Actions, reactions and recursive interaction by individuals represent the micro-foundation on which the umbrella agreement between 195 countries based on consent could be reached. The agreement was inclusive and non-adversarial, included voluntary intended contributions from all countries, including financial and technical support from rich countries, freedom for countries to work out and implement their own climate plan that should be published and scrutinized, reviewed, up-dated and re-submitted. This according to Mouzas created a powerful, non-legal enforceability.

Mouzas’s main message was the need to develop consent among actors built on intuitively perceived mutual expectations and repeated interaction that served to transform mutual expectations into rules of expected behavior.

The question addressed in the second seminar was: What enables responses to climate change across scales, from small-scale to large-scale? Mouzas distinguished between the mechanisms explaining why a certain response to climate change occurs and processes that explain how responses move from small-scale to large-scale. He presented a conceptual framework demonstrating interaction between three mechanism variables:

  • underlying interests, what people care about
  • entitlements to resources that develop capabilities
  • facilitate the achievement of consent to exchange

and three process variables:

  • foster recursive interaction,
  • develop mutual expectations
  • develop regulations by values

It followed that policy practice should serve to shape mechanisms and processes that interact to enable responses across scales. For instance, to facilitate achievement of consent by recursive interaction and redevelop regulation by values based on underlying interests.

Mouzas’s presentations referred to major ideas developed by several Nobel Prize-winning economists: Arrow, Schelling, Myerson, Sen, Tirole, Hart and especially Eleonore Ostrom´s ideas on how to escape the “tragedy of the commons”.

Written by: Lars-Gunnar Mattsson, Professor Emeritus at Stockholm School of Economics, and one of the researchers in Misums platform Sustainable Socioeconomic Development.

”Welcome 2017: No new fashion items in 2016, are you really sure Tina?” Blogpost #6 from Tina Sendlhofer

The last blogpost about #tinasyear

In short: I feel fantastic with my choice to refrain from buying new fashion items for 12 months. As my own behavioural project proceeded, I gained confidence and strength from my decision to disengage (partially) from one of the biggest societal ills: consumerism.

I remember that about a year ago I was full of energy and motivation to change my behaviour. Was it always easy? Certainly, it was not! I experienced cognitive challenges especially at the beginning and the turn of the seasons. It was quite difficult to withstand indulging in what fashion companies seemed to scream at me from all their posters in the streets, or the advertisements on facebook. I imagined these beautiful photographs and advertisements communicating to me personally: Tina, if you do not get the latest, new spring, summer, autumn or winter colours or styles, then you will not fulfil the role that society has given you. You will not look good and achieve happiness. Act accordingly! Come and buy.

When I had my fashion out-coming to my closest peers, I felt at times supported – but at times I also experienced heavy criticism. For the latter, I have already lived quite a strict lifestyle: no alcohol for ficw years, no meat for one year, a minimum of dairy products for one year and no palm oil-based food products such as chocolate! When I proudly announced that I would now also stop buying new clothes, they reacted instantly: what is the fun in your life then? You are leaving out all the fun stuff in life! You are going to be lonely. You are too extreme!

These critical and rather unsupportive behaviours made me of course contemplate whether I had made the right choices for my 2016 year. Clearly, I was breaking the norm. The norm of what is “appropriate” or “makes us feel good” that I strongly believe we have indeed constructed ourselves. In these cases, it was even tougher for me to restrain from lecturing them: do you really believe – after some reflection – that this norm makes you truly happy in the long run? Especially when it comes to the norm of fashion consumption, I strongly disagree. I am wondering if those who comply are truly happy when hunting for the latest style, and then being told after six months that this style does not make them look good any more and it is time for an instant change! What kind of concepts have we created and are still buying in to? A system in which large fashion corporations tell us how we are supposed to look beautiful and therefore achieve happiness? And if we do not own the latest styles, that we cannot look as attractive and achieve such great happiness as those who are always up to date?

To my surprise, some of my critics stretched so far as to start to purchase fashion for me. They were afraid I would not look “good” enough if I restricted myself to wearing the clothes I had piled up in my closet. Their efforts really put me in a moral dilemma. Should I take the gifts and live with my somewhat hypocritical behaviour of indirectly living and therefore supporting the consumption patterns I was so heavily criticising? Or should I return the gifts and snub those who meant well?

I have received many good comments from other peers. They got inspired and some even started to question their own consumption patterns, or lifestyles. In them, I found support and approval for my decision. That reinforcement has been important to keep me going.

Overall, the past year has taught me a lot. Firstly, it taught me that it takes a strong personality to break the norm. Despite the variety of rationales supporting my chosen lifestyle, the majority of my closest peers did not support my resolution. Secondly, it taught me that one can change one’s behaviour. It is tough but with a little bit of self-discipline I truly believe it is possible. For everyone. No one drags us into the stores, it is our own free will to enter. Thirdly, breaking the norm also gave me some extra free time and money. I have never spent many hours in stores, but this year I did not even need to think about going there. Fourthly, I realised I had stocked up over the years an enormous amount of clothes. That really made it easy for me to live with my choice. In fact, I could reduce them by almost a quarter and still feel I had enough items. Lastly, it feels satisfying to know I can, by my own will, decide to break with what is expected of me and still feel good. I feel happier with my choices when I feel I have better control over doing what I really want to do. And I have more time to spend my energy on topics that matter to me.

Even though I have not bought anything new since the beginning of 2016, I am not sure if I will continue with it. I am trying to figure out an alternative style of fashion consumption. What I am sure of, though, is that I will stop buying from fast fashion companies that offer fashion for unfair prices. Unfair for those who pay for our fast-changing (fashion-)lifestyles. Our wealth is perhaps too cheap. Those who pay the bill are nature and the humans who are exploited for our wrong behaviours.

Written by: Tina Sendlhofer, PhD student at Misum

#tinasyear #MakeAChange

Also read:

Blog post #5

Blog post #4

Blog post #3

Blog post #2

Blog post #1


Thoughts on the INET Debate about Helicopter Money, Oct 19 2016

The Money Multiplier Lives: Thoughts on the INET Debate about Helicopter Money between Richard Koo and Adair Turner at the Piecing Together a Paradigm-conference in Budapest (Oct 19-22 2016), arranged by Institute for New Economic Thinking in Budapest.


The introductory event of the INET Young Scholars’ Initiative conference was a debate between Richard Koo and Adair Turner about helicopter money, although I am not sure that “debate” is the right word: as Turner put it, he agrees with “99 percent” of his opponent’s view. Both believe that the advanced world is suffering from a lack of aggregate demand, which should be corrected through expansive fiscal policy (although Koo favors public spending over tax cuts while Turner seems agnostic on the issue). Their disagreement concerns whether fiscal expansion should be financed by selling bonds or printing “helicopter money.” Turner favors helicopter money because he believes that a growing public debt could induce Ricardian equivalence, i.e. the belief among economic actors that the government debt would at some point in the future have to be repaid with higher taxes, prompting people to set aside money for that purpose instead of spending it. Koo favors bond-financed fiscal policy because he believes that helicopter money could eventually cause runaway inflation. Helicopter drops, he believes, would remain as “excessive reserves” on banks’ balance sheets, which at a later date could be multiplied and lent out to borrowers in excessive amounts. Somewhat surprisingly, his opponent agrees with this view, but argues that the risks could be contained. With the right tools, governments would be able to “mop up” excessive reserves once the money helicopters have returned to their platforms.

In other words, Koo and Turner adhere to the fractional reserve view of banking, the idea that banks lend by multiplying reserves created by the central bank. In his IMF paper on helicopter money, Turner writes:

If [banks] are subject to reserve requirements which limit their deposits (or other categories of liability) as a multiple of reserves held at the central bank, then their capacity to do so in aggregate is constrained by the quantity of reserves (monetary base) which the central bank chooses to create.

Critics would argue that banks are not constrained in this way. In practice, central banks cannot refuse to supply banks with reserves, since they correspond to loans that have already been made. As Alan Holmes, former vice president of the Federal Reserve Bank of New York, wrote in 1969 “in the real world, banks extend credit, creating deposits in the process, and look for the reserves later.” Refusing to supply reserves would merely raise their price, ratcheting up interest rates until the central bank would have to choose between sticking with its policy and watch the credit system collapse, or give in and supply the needed reserves. That is what happened, I believe, when Paul Volcker tried to restrict reserves during the monetarist experiment 1979 – 1982.

I must say that I was a little surprised to learn that Koo and Turner adhere to the fractional reserve view of banking, since I thought that it had gone out of fashion. In 2014, the Bank of England issued a document stating that:

“…the relationship between reserves and loans typically operates in the reverse way to that described in some economics textbooks. Banks first decide how much to lend depending on the profitable lending opportunities available to them…It is these lending decisions that determine how many bank deposits are created by the banking system. The amount of bank deposits in turn influences how much central bank money banks want to hold in reserve (to meet withdrawals by the public, make payments to other banks, or meet regulatory liquidity requirements), which is then, in normal times, supplied on demand by the Bank of England.”

If banks wanted to cause hyperinflation, they could do so without “excess reserves.” Moreover, as Paul Sheard, chief economist at Standard & Poor’s, argues, reserves cannot cause inflation because they do not leave the banking system. In a 2013 paper titled Repeat After Me: Banks Cannot And Do Not ”Lend Out” Reserves, he states that “the reserves that leave one bank’s balance sheet just pop up on another, remaining on the central bank’s balance sheet all the while.” If his view is correct, Koo’s (and Turner’s) fears of helicopter money would be unfounded.

Koo began the debate by stating that we are currently “not living in a textbook world.” But he seems to believe that we did live in that world once, and that we will do so again. This view, while possibly having short term tactical advantages, seems to undermine the argument for the fiscally expansive policies that both speakers favor. It amounts to the “make me chaste but not yet”-argument that I believe is quite confusing to the public.

Ultimately, the issue of helicopter money versus debt finance is probably a moot point. Paul Krugman and others (e.g. Kelton, Kocherlakota) have argued that they are essentially the same thing as long as the central bank engages in quantitative easing (purchasing financial assets from the private sector). The only difference is that in one case no bonds are issued while in the other “banks briefly hold some government bonds, before selling them back to the government via the central bank. Why should this matter for, well, anything?” The real issue, which both Koo and Turner have raised repeatedly, is political and ideological opposition. As Turner acknowledged with, apt wording, in another session, expansive fiscal policy in the advanced world is still verboten.

When it comes to ecological sustainability, resistance to public spending makes the prospects for meeting the Paris Agreement through increased public investment in low carbon industry and infrastructure look bleak. Things may change after the next crisis, but if central banks continue to be the only game in town, policies to meet the Paris Agreement might need to be pursued through their asset purchasing programs. This is an issue worth considering and exploring in a different post.


Written by: Max Jerneck, researcher at Misum

Bokrecension: ”Modeslavar: Den globala jakten på billigare kläder”

omslag_modeslavarnyEgentligen kan en recension om en bok som Modeslavar nästan skriva sig själv – de flesta av oss vet (eller anar) att de kläder som hänger på galgen många gånger gömmer en djupt tragisk historia i sina sömmar. Men precis som när det gäller matindustrin väljer vi oftast att blunda för det, och konsumtionshjulen snurrar vidare. Moa Kärnstrand och Tobias Andersson Åkerblom har gjort ett gediget och imponerande arbete i sin bok att reda ut hur produktionsvillkor ser ut inom textilindustrin. Redan i första kapitlet, som också är det mest högprofilerade, lyfts H&M:s brist på kontroll i den växande textilindustrin i Burma och hur det medfört att det förekommit barnarbete. Just att det är H&M som pekas ut har nog bidragit till att boken har fått stor medial uppmärksamhet  – också utanför landets gränser.

Samtidigt som det nog inte finns någon annan aktör inom den svenska textilindustrin som fått mer negativ uppmärksamhet gällande hållbarhetsfrågor än H&M, så gör de betydligt mer än många andra aktörer, framförallt om man jämför med aktörer utanför Norden (som exempelvis Zara). Det finns en teori inom hållbarhetsforskning att CSR ej ska kommuniceras överhuvudtaget, då detta medför att man faller desto hårdare om det visar sig att man sen inte kan leva upp till de förväntningar som byggs upp. Däremot finns det företag som inte engagerar sig överhuvudtaget, men som slår på stora trumman med glansiga glättiga rapporter gällande hållbarhet, då kallas det greenwashing. Länge kommunicerades inte hållbarhet överhuvudtaget  på grund av just den förstnämnda principen, trots stort engagemang hos vissa företag. Dessa dagar är nu över, då det  förväntas av flertalet intressenter att det kommuniceras. Att kommunicera medför dock en risk att anklagas för greenwashing, speciellt om man väjer för att berätta att allt inte är perfekt.

Alla har dock en relation till de kläder man bär och i de flestas garderob hänger nog ett plagg från H&M. Det bidrar till att frågor om textilindustrins arbetsvillkor och miljöpåverkan får långt större uppmärksamhet, än industrier som IT, mat, elektronikkomponenter, gruvnäring osv. Där är ofta transparensen också ännu mindre, vilket tåls att tänka på. Vill du veta under vilka förhållanden din mobiltelefon, din billiga eller för den delen dyra kamera/dator/smartwatch är producerad? Ett antal skönlitterära  böcker, fackböcker och filmer på detta tema har utkommit på senare år, vilket inte förringar denna insats på något vis. Men jag efterlyser också ett större intresse och engagemang att ta tag och belysa också andra industrier.

Det finns också många fler spännande historier i denna bok som förtjänar att lyftas fram och debatteras än fallet med H&M och barnarbetet, så som Blåkläders bristande kontroll i Burma, den ljusskygga ägarstrukturen bakom JC, gripande livsöden i Burma och Kambodja osv. Frågor om ansvar i leverantörskedjan är tätt sammanlänkat med flera stora ansvarsfrågor så som skatteplanering och landgrabbing. I vissa fall är detta ej en lagfråga, utan endast en fråga om moral som företagen själva måste välja att förhålla sig till – eller riskera att få allmänhetens dom över sig.

Även parallellerna till de arbetsvillkor i Sydostasien jämfört med de som rådde i Sveriges tekoindustri under 1930-40-tal, är intressanta att fördjupa sig i. Det kan också sägas vara denna tekoindustri som lagt grunden för Sverige som modenation eller modeunder, och de problematiska avvägningar som därmed ibland görs mellan ansvar och lönsamhet i dessa dagar. Strukturen i boken är stundtals lite rörig, men fältet som sådant och marknadens agerande är också de svåra att överskåda.

Jag vill slå ett slag för att det inte är lätt att göra rätt inom de här frågorna, men det passiva agerande som H&M visat lämnar självklart mycket att önska. Precis som Swedwatch påpekar i boken, skulle en riskanalys i en kontext som Burma snabbt klargöra just det som Kärnstrand och Andersson Åkerbloms bok påvisat. Under en forskningsresa till Kina jag deltog i under förra året där vi besökte fabriker i textilindustrin uppmärksammades bl.a. att villkor som gäller i Kina är strängare och noggrannare än i många av grannländerna. På grund av dessa krav samt tillbakagång i tillväxten, är många fabriker på väg att flytta till länder med mindre kontrollerade regelverk såsom Burma, Vietnam och Kambodja, vilket medför ytterligare risker i termer av bristande arbetsförhållanden och miljöproblem.

Det finns mycket gott – och dåligt – att säga om textilindustrin. Ytterligare en anledning till varför vi som människor gillar att fokusera på avslöjanden om stora aktörer som H&M och IKEA är att vi förutsätter en enkel dikotomi: den mellan pris och brist på ansvar. Bokens enda svaghet i mina ögon är att den bygger på att billigt per definition betyder sämre arbetsförhållanden, än dyra plagg. Plaggets vinstmarginal står inte nödvändigtvis i korrelation med dåliga arbetsförhållanden. Det är inte bara det billiga modet som måste stävjas och omstöpas i nya modeller. Konflikten mellan korta ledtider och brist på övertid (övertid är något många fabriker tävlar om då arbetare i Kina eftersöker för att spara så mycket som möjligt på kort tid) är självklart bidragande till usla arbetsvillkor. Däremot kan du tyvärr inte lita på att din dyra tröja har producerats under bättre villkor än din H&M-tröja, enligt vissa snarare tvärtom.

20 år av fokus på konsumenter och konsumtion har inte bidragit till omstöpning av några affärsmodeller, förutom nischade produkter på marginalen, och därför är det inte heller du som konsument som ska stå till svars för denna situation. Men som enskild privatperson är en av få saker du kan göra att reflektera om du verkligen måste ha en tröja som du använder någon enstaka gång; det blir dyrt per användning och för miljön, samt driver på hetsen att producera fort, billigt och ohållbart.


Skrivet av Clara My Lernborg, PHD student på Misum.


Sustainable Reads from Misum: This is what we read this summer

Summer is almost over, but there is still time and need for reading and learning. Voilà! Here are some sustainable book recommendations from the Misum team. This is what we read this summer:

Sustainable Read #1 from Professor Ranjula Bali Swain


”Sharing the work. What My Family and Career Taught Me about Breaking Through (and Holding the Door Open for Others)” by Stanford professor and feminist economist Myra Strober. Ranjula Bali Swain was recently part of a panel discussion on the book on the 25th IAFFE Annual Conference.


Sustainable Read #2 from Professor Örjan Sjöberg


”The Great Acceleration: An Environmental History of the Anthropocene since 1945” by J.R. McNeill and Peter Engelke.

Örjan about the book: The Great Acceleration refers to the quickening pace in which resources are used, indeed used up, in the process speeding up the impact of human society on the environment. The post-war period clearly qualifies, or so historians McNeill and Engelke argue, as Anthropocene – the era when humankind is the main agent of change also in geological terms. After all, the past half a century or so is, or so the publisher’s blurb proclaims, the “most anomalous period in the history of humanity’s relationship with the biosphere”, one when (in the perhaps more measured words of respected journal Science, 8 Jan. 2016) “human activity is leaving a pervasive and persistent signature on Earth”.


Sustainable Read #3 from PhD Student Clara My Lernborg


“Bomull : en solkig historia” by Gunilla Ander.

Clara My about the book:
 An easy and engaging read that allows for a further understanding of the complex supply chains involved in our daily consumption. Hopefully, it can inspire to more sustainable consumption!” (unfortunately only available in Swedish).


Sustainable read #4 from Lin Lerpold, acting professor and executive director, Misum


”The Age of Sustainable development” by Jeffrey Sachs, a world-renowned professor of economics, leader in sustainable development and a senior UN advisor.


Sustainable reads #5 and 6 from PhD Student Serafim Agrogiannis


1. ”Adventures in the Anthropocene: A Journey into the Heart of the Planet We Made” by Gaia Vince.

Serafim about the book: A lucid and lively environmental travelogue, which introduces readers to a plethora of ecological concerns and extraordinary people working on innovative solutions.


2. “This Changes Everything: Capitalism vs. the Climate” by Naomi Klein.

Serafim about the book: It documents with precision and verve the social and environmental decimation wrought by unchecked free-market capitalism, corporate greed, and political corruption.


Sustainable read #7 from Cecilia Repinski, Program Manager, Mistra Financial Systems


”Swimming with sharks. My journey into the world of bankers” by Joris Luyendijk.


Sustainable reads #8 and 9 from researcher Max Jerneck


1. ”Planetary Economics. Energy, climate change and the three domains of sustainable development” by Michael Grubb


2. “Can Green Sustain Growth?” by John Zysman & Mark Huberty


Sustainable read #10 from PhD Student Tina Sendlhofer

Todschick von Gisela Burckhardt

“Todschick: Edle Labels, billige Mode – unmenschlich produziert” by Gisela Burckhardt

Tina about the book: Fashion and moral – why does expensive not necessarily equals fair? This book builds on assumptions that reflects on our disastrous fallacies: When we purchase branded labels, we believe that a higher price justifies automatically for better quality – including better quality in production conditions. We like to believe that the workers of luxury brands, do not need to suffer or die in Bangladesh for our fashion products, do they? Even expensive luxury brands let their fashion products produce in disgraceful conditions. Low production prices are trump; shockingly at the cost of worker’s lives. This is a book about the deep dark secrets of (luxury) fashion brands. The author gives the reader hope for change, but also aims at forcing fashion brands to take responsibility for their fatal business practices. It is an emotional and tough read, but absolutely necessary when trying to understand more about what we wear on our body almost every second of the day.