Financial markets are the backbone of the global economy, directing capital flows and resources to where they are needed. However, climate change and demands for greater environmental and social responsibility are presenting challenges to monetary policy. To pave the way for a sustainable future, businesses and regulators must find smart ways to channel capital effectively into the transformation of our economy.   This edition of our ZEW Monthly on “Sustainable Financial Markets” focuses on three key aspects that shape the future of financial markets. First, we examine the potential of European securitisations within the framework of the capital markets union. A ZEW analysis shows that their current market potential is still significantly smaller than expected. We also look at the EU Green Bond Standard, where action is needed to improve its credibility in order to further strengthen the market for sustainable bonds. Finally, ZEW has developed a new standard for time-consistent CO2 reporting, ensuring company data is unambiguous and comparable within each industry. RESEARCH ON SUSTAINABLE FINANCIAL MARKETS ↗ REALISTIC VIEW OF EUROPEAN SECURITIZATIONS NECESSARY    In the face of pressing global challenges, especially climate change, companies need to invest more in transformational projects. Against this background, a better integration of the banking system and capital markets in Europe is crucial. The mobilisation of private financial resources, for example through securitization, is essential for this economic transition. Securitization is the bundling of financial claims or assets into tradable securities.   More about the study ↗ DIFFICULT POSITION FOR THE NEW EU GREEN BOND STANDARD    In order to enhance transparency in green bonds and create reliable frameworks for evaluating their “greenness”, standards are in place such as the CBI Climate Bond Standard or the ICMA Green Bond Principles. Recently, the EU introduced its own EU Green Bond Standard (EU GBS). However, a ZEW analysis suggests that this EU standard is unlikely to be widely accepted by market participants for the time being given the prevalence of well-established alternatives.   More about the study ↗ NET ZERO: ENHANCING COMPANIES' CO2 REPORTING    Over the past few years, many companies have committed to achieving net-zero CO2 emissions by 2050. This commitment requires reducing avoidable emissions and offsetting unavoidable ones by removing carbon from the atmosphere. However, there is currently no standardised approach to measure and report progress towards net-zero targets. Consequently, it is unclear how sincerely companies are fulfilling their self-imposed CO2 reduction pledges or if some are merely engaging in greenwashing.   More about the study AT A GLANCE ↗ INTERNATIONAL KNOWLEDGE BOOSTS FIRM INNOVATION    The share of knowledge imports to Germany from EU Member States is increasing. In 2010, around 35 per cent of knowledge imports came from the EU; by 2019, this figure had risen to 44 per cent. This trend is in line with a 2021 recommendation from the German Federal Ministry of Education and Research (BMBF), which advised focusing international cooperation on selected countries for the development of key technologies. This strategy aims to strengthen technological sovereignty and resilience against global challenges. How to read the chart: Knowledge services import shares are calculated from the WTO Stats Dashboard by dividing Germany’s commercial service imports related to “research and development” and “charges for the use of intellectual property” from a specific country by Germany’s total commercial service imports related to “research and development” and “charges for the use of intellectual property”. More about the study CURRENT ZEW TOPICS ↗ AI ADOPTION STAGNATES IN GERMAN COMPANIES    German companies use artificial intelligence (AI) more frequently than the EU average. However, this usage has stagnated since 2021, according to a recent study by ZEW for the German Federal Ministry for Economic Affairs and Climate Action.   More about the study ↗ HANDSOME PEERS: POORER GRADES    Beauty is seen as a success driver – both at work and at school. Contrary to expectations, however, it is adolescent boys in particular who are subject to peer pressure and comparison in terms of physical attractiveness in the school environment.   More about the study ↗ MORE INNOVATION THROUGH CLUSTERS OF EXCELLENCE    How can Germany’s competitive position in the international landscape of science and technology be strengthened? The concentrated promotion of research clusters could be a good starting point. A recently published ZEW study shows that companies are more innovative if there are at least four university clusters of excellence being funded in their region.   More about the study ↗ BRUSSELS’ OVERREACTION: THE CONSEQUENCES OF COUNTER-TARIFFS AGAINST CHINA The EU responds to China’s state subsidies with punitive tariffs – but is this really the right approach? In their guest article, Professor Klaus Schmidt of LMU Munich and ZEW President Professor Achim Wambach argue that counter-tariffs not only burden trade but also jeopardise important global goals such as climate protection and security of supply. Instead, they call for a nuanced industrial policy that uses subsidies wisely to strengthen European interests without escalating international conflicts.   Read the full article EVENTS ↗ WEBINAR ON THE DRAGHI REPORT HOW THE DRAGHI REPORT CAN STRENGTHEN THE ECONOMY    The report presented by Mario Draghi at the beginning of September analyses the current economic situation and points out urgent areas for action. Four ZEW Mannheim researchers scrutinised the report from their respective specialist perspectives. They assessed which aspects of the report could be implemented or improved. The discussion posed the following questions: Is Draghi's analysis accurate and are his recommendations for action a step in the right direction?   Read the full event report ↗ ANNUAL CONFERENCE VFS ANNUAL CONFERENCE 2024 AT TU BERLIN: ZEW SETS FOCUS ON HEALTH DATA    With 14 presentations, two panel participations, and its own panel discussion, ZEW played an active role in this year’s Annual Conference of the Verein für Socialpolitik (VfS, “German Economic Association”). Under the core topic of “Upcoming Labour Market Challenges”, around 800 participants gathered at the Technical University of Berlin from 15 to 18 September. The VfS Annual Conference is one of the largest and most prestigious economic conferences in the German-speaking world.   Read the full event report ↗ YES! COMPETITION YES! NATIONAL FINAL IN HAMBURG: ZEW COMPETES WITH TWO TEAMS    The school teams from the Albert-Magnus-Gymnasium Stuttgart and the Carl-Benz-Gymnasium Ladenburg, mentored by ZEW, presented impressive concepts and presentations at the YES! – Young Economic Solutions 2024 student competition. The national final took place in Hamburg from 17 to 19 September.   Read the full event report UPCOMING ↗ CONFERENCE EVALUATION AND MONITORING OF FINANCIAL EDUCATION: MIFE ANNUAL CONFERENCE AND EARLY CAREER WORKSHOP 2024    On 18 November 2024, the MIFE Annual Conference 2024 on “Evaluation and Monitoring of Financial Education” will take place at ZEW. With the global rise of financial education, evaluating its impact and effectiveness is crucial. In Germany, as in other countries, numerous financial education programmes are offered by various stakeholders, yet there is little knowledge about whether, how, and why these programmes achieve their intended effects. Innovative evaluation concepts and a reliable database are needed to address these questions, as well as to assess the effectiveness of the national financial education strategy.   The research unit is also pleased to host the interdisciplinary MIFE Early Career Workshop on 19 and 20 November 2024. This workshop invites early career researchers to present their papers and engage with peers from fields such as economics, household finance, business education, psychology, and related disciplines.   More about the event → CONTACT FOR QUESTIONS OR SUGGESTIONS ON THE CONTENT Dr. Daniela Heimberger | daniela.heimberger@zew.de EDITORIAL TEAM   Yvonne Bräutigam // CvD   Simone Mann // Design   Pascal Ausäderer // Press Officer   Corinna Mayer // Online Communications Officer     Funded by:     ZEW – Leibniz Centre for European Economic Research L7, 1 · 68161 Mannheim Phone: +49 (0)621/1235-01 E-mail: zewmonthly@zew.de Website: www.zew.de   Executive Directors: Professor Achim Wambach, PhD; Claudia von Schuttenbach Chair of the ZEW Supervisory Board: Ministerial Director Dr. Hans Reiter Registered Office: Mannheim Local Court Mannheim HRB 6554 USt-IdNr.: DE188318292   Commitment to Data Protection   Detailed Legal Note   Notification on the General Data Protection Regulation (GDPR)   Unsubscribe from ZEW Monthly