Interview with Paderborn sociologist Dr Lisa Knoll
The climate-friendly and sustainable transformation of the economy is one of the major tasks for the future. PD Dr Lisa Knoll, a sociologist at Paderborn University, is researching climate finance in small and medium-sized enterprises as part of the joint project "Climate Finance Society" (ClimFiSoc). She wants to understand the institutional logic behind this by taking a holistic approach to the various stakeholders. In the interview, the Paderborn researcher also explains the hurdles that companies face in practice and why the East Westphalia-Lippe region is driving the transformation process forward.
Dr Knoll, in your sub-project "Climate financing in medium-sized industry", you are investigating how climate investments can be made possible in medium-sized companies and what potential and challenges exist. What specific incentives already exist to sustainably promote future technologies and how have they been received so far?
In our research project, we identified different institutional logics of climate financing. We found that climate financing in small and medium-sized enterprises is primarily provided through equity, subsidies and conventional bank loans. The financial market plays little to no role for companies in East Westphalia-Lippe. This shows a fundamental discrepancy between the so-called 'Sustainable Finance Strategy' of the European Union and what could be called 'regional climate financing'. In the OWL region, we have observed many industry and network initiatives such as the NRW Efficiency Agency, associations such as InnoZent OWL and owl maschinenbau e.V., as well as the chambers of industry and commerce. These players act as intermediaries between regional banks, which distribute NRW.Bank funding, and companies and help to translate complex regulations into concrete projects and initiatives. For us, these initiatives and networks with their expertise are absolutely central to the issue of climate finance in order to drive forward specific projects and solve problems. One example is the circular economy: companies design their products so that they can be better recycled and develop new business models that are sustainable in the long term. In this sense, climate finance does not necessarily need a 'green financial market', but rather a 'green society' that demands green products and thus makes green business models possible.
Despite broad approval, there are also reservations about investing in future technologies. What is the reason for this scepticism?
Our observations show that there is hardly any scepticism towards photovoltaic systems, fleet electrification or heat pumps on the part of companies when investments make sense. However, one major point of criticism from companies is the bureaucracy surrounding the European Green Deal and the Supply Chain Obligations Act, which is currently leading to its reform - keyword: Omnibus Regulation. We have tried to understand this conflict without reducing it to simplistic EU bashing. It is true that the EU is mainly trying to solve the issue of climate protection via the financial market and therefore believes in transparency obligations and sustainability reporting as a regulatory vehicle. Due to its constitution, it does not have many other options than internal market regulation. Banking regulation is a lever that it has - especially since the financial crisis - and is now utilising. This is quite tragic, because in our research project we found considerable frustration with companies' documentation obligations. Our conclusion is that companies have nothing against climate protection, but they do have something against documentation obligations and a lack of standardised sustainability reporting. The problem was, for example, that documentation obligations were imposed on companies before the Voluntary Sustainability Reporting Standard (VSME), which offers a simplified and practical option for small and medium-sized enterprises (SMEs) to report their sustainability performance, was finalised. This has caused uncertainty among SMEs, which, although they are not obliged to report, have received enquiries from customers and suppliers in the supply chain and from their banks, which in turn are obliged to report. In this respect, the financial market was considered first in terms of what it needs in terms of transparency, and only then the SMEs. In our view, this was a 'policy design error'.
What particular insights can sociology contribute to climate finance that go beyond purely technical or economic approaches?
In our project, we thought of climate financing as a social issue and not in terms of isolated investment projects. We asked which institutional logics correspond to the various forms of climate finance that actually play a role in the field. The logic of a 'financialised' data-based transparency system can be distinguished from the logic of a system that relies on regional development bank infrastructure and one that relies on investment by companies themselves - and argues for tax breaks for companies, for example. The efficiency of bans, regulations and requirements, which is largely kept out of the political discourse, is crucial for us. In this respect, our project is not only sociological, but also has a connection to political economy. The sociological perspective has the advantage that we talk to specific actors and seek to understand their perspectives, conflicts and problems in detail. We start from the practical problems of the actors and draw conclusions about social institutions, tensions and conflict situations. When other research projects try to provide better measurement options and optimised methods of CO2 measurement or reduction, or use behavioural experiments to find out how the demand for sustainable financial products is changing, we ask about the social conditions and consequences of these methods in everyday life: How exactly do the problems present themselves to companies, how do they interpret and solve them and what experiences do they have? Who or what helps them? What holds them back?
Keyword climate-friendly transformation: You work together with regional partners such as "owl Maschinenbau e. V.". Is the East Westphalia-Lippe region a pioneer in this transformation process?
Yes, I would say so. The region is special, although it is probably underestimated by outsiders. There are a lot of initiatives and networks here that support companies. The expansion of wind power, the work of the municipal utilities and the support from institutions such as the NRW Efficiency Agency are exemplary. I previously worked in Hamburg and experienced a lot of pragmatism and a desire for co-operation here in the region. The people in East Westphalia make networking easy and want to actively participate in the transformation process.
This text was translated automatically.
