Embedded Files
Helpful prior knowledge and learning objectives
Helpful prior knowledge and learning objectives
Helpful prior learning:
Section 1.1.1 The economy and you, which explains what an economy is and how it is relevant to students’ lives
Section 1.1.2 The embedded economy, which explains the relationship between the economy and society and Earth’s systems
Section 1.3.4 Doughnut Economics model, which explains a model for considering meeting human needs within planetary boundaries
Section 6.1.1 Money systems, which describes the parts, relationships and functions of money systems
Section 6.1.3 Modern money creation, which explains how forms of money are created in modern money systems
Section 6.1.4 Social relationships of money, which explains how money systems can both strengthen and weaken human relationships
Section 6.1.5 Ecological relationships of money, which explains how money is connected to Earth systems, often invisibly, and creates unequal access to resources
Section 6.1.6 Political money narratives, which outlines narratives that reinforce current money systems including: money is scarce, money is neutral, and we can’t change the money system
Section 6.2.1 What is finance?, which defines finance and describes the main tools of finance
Section 6.2.2 Purpose of finance, which distinguishes between regenerative and extractive finance, and between values and financial valuation; and discusses the extent to which profit-oriented finance can support regeneration
Section 6.2.3 Financial power and inequality, which defines financial power and identify key actors and factors that influence where money flows
Section 6.2.5 Financialisation, which discusses how financialisation impacts everyday life and is a barrier to regenerative economies
Section S.1 What are systems?, which explains what a system is, the importance of systems boundaries, the difference between open and closed systems and the importance of systems thinking
Section S.8 Leverage points, which describes various leverage points for systems change
Section S.9 System traps, which explains how system structures, like reinforcing feedback, too weak or late balancing feedback, and/or pursuing flawed goals, can create persistent problems.
Learning objectives:
outline why finance needs redesigning, addressing the questions of who has access to finance, what goals are being financed and what rules shape financing
In 2007, banks and other financial institutions across the world began to collapse. For years, they had made risky loans, especially for housing, and bundled together and sold the loans as complex financial products that even experts did not fully understand.
When too many borrowers could not repay their loans, the whole financial system was at risk. Stock markets crashed. Big financial firms failed. Millions of people lost jobs, homes, or savings. States spent enormous amounts of public money to rescue banks, while households received little help. The 2007–8 crisis exposed deep flaws in the design of financial systems.
Figure 1. Too many risk loans in the housing sector in the United States undermined the stability of the global financial system.
(Credit: Vitaliy, licensed from Adobe Stock)
Money and finance affect how resources flow through the economy. They shape who benefits, who is left out, the health of nature, and society’s ability to deal with change. This section builds on earlier sections of Topic 6 to summarise why we need regenerative finance to support the long term health and resilience of people and planet.
What questions should we ask to design more regenerative financial systems?
What questions should we ask to design more regenerative financial systems?
Three central questions can help us understand the problems with current financial systems and how they can become more regenerative:
Who has access to finance?
What goals are being financed?
What rules shape financial relationships?
Who has access to finance?
Who has access to finance?
Access to finance means being able to borrow, receive and make investments, or manage risk through savings or insurance. Many people lack such access. Section 6.2.3 explained that financial exclusion may be based on race, gender, income, or geography. Low-income families may not get loans to start businesses. Farmers in the Global South may not qualify for insurance. Young people often face financial barriers to renting or buying homes.
By contrast, those with existing wealth such as large banks, investment funds, or wealthy individuals, can access finance cheaply and easily. This creates a reinforcing feedback loop: the wealthy grow richer while others fall behind or sink into debt. As Section S.9 explained, this is a classic ‘success-to-the-successful’ system trap.
A regenerative financial system would work differently. It would support all people and communities to meet their needs and invest in shared goals. That means making finance more inclusive. People would be able to access different forms of finance more easily and at lower cost.
A regenerative system would work differently. Finance would be more inclusive, giving people affordable access to tools that support their needs and shared goals. It would also respond to local conditions, since communities and ecosystems differ. Decisions would be shaped by the people affected. For example, in Brazil, community banks such as Banco Palmas issue local currencies and give small loans to neighbourhood businesses (Section 4.4.4). These tools are designed with residents and strengthen the local economy instead of draining it.
Figure 2. On the question of Who receives finance? Regenerative finance is inclusive, locally responsive, and democratic
What goals are being financed?
What goals are being financed?
After the 2007 financial crisis, many financial firms went back to chasing short-term profits, often by extracting value from society and nature. Financialisation (Section 6.2.5) has turned housing, forests, and even care work into investment opportunities. The overriding goal is profit, even when social wellbeing or ecological health suffers.
At the same time, vital areas like public health, clean energy, and nature restoration often face a finance gap. Even when funds exist, tools like cost–benefit analysis may undervalue the value of public goods and nature. For example, a state might approve a shopping centre built on an ecologically important wetland because it measures value in terms of tax revenues and jobs rather than in flood protection, biodiversity, and livelihoods connected to the ecosystem (Section 6.2.2).
Regenerative finance sets different goals. The Doughnut Economics model (Figure 2, and Section 1.3.4) shows that money should help meet human needs within ecological limits. That means investing in housing, education, renewable energy, local food, public transport, and care work to strengthen the social foundation. At the same time finance must avoid overshoot through fossil fuel expansion, deforestation and other extraction. It should also support the restoration of ecosystems. Mariana Mazzucato’s work on mission-led investment highlights how states can drive these shifts.
Figure 3. On the question of goals, regenerative finance aims to meet human needs within planetary boundaries. The Doughnut Economics model captures this.
What rules shape financial relationships?
What rules shape financial relationships?
Finance follows rules about who creates money, what purposes it serves, and how success is measured. These are not natural laws; people made them, and they can be changed.
One rule concerns money creation. Section 6.1.3, explained that most new money in the economy comes from banks making loans. But banks lend only to those most likely to repay with interest. These rules continue to direct money into speculative property markets and fossil fuel expansion, while regenerative projects that earn little or no profit struggle to get financial support. Spending rules often prevent states from using their power to spend money into existence through their budgets (Section 6.3.6). These rules too can be changed.
Another rule is fiduciary duty. In many countries, company law is interpreted as requiring managers to maximise profits for shareholders (Section 6.2.3). This focus on short-term returns discourages investment in public goods or ecological regeneration. Some countries are now debating how to rewrite fiduciary duty so it includes responsibility for social and environmental wellbeing.
Rules also shape how money circulates. At present, tax and financial regulations often encourage wealth to pile up in the hands of a few. When money is hoarded rather than circulated, there is less available for wages, public investment or community projects.
A regenerative financial system would have different rules. Public banks could be required to lend with a social mission. Financial institutions could have rules focused on meeting human needs within planetary boundaries. Stronger rules, such as fairer taxation or limits on speculation, could keep money moving and support wider prosperity.
Figure 4. On the question of the rules, regenerative finance has fair conditions, prevents extraction, and promotes circulation.
What could regenerative finance look like at different scales?
What could regenerative finance look like at different scales?
Financial systems are being redesigned to be more regenerative, expanding financial access, focused on social and ecological goals, with fair and supportive rules. We’ll explore what this looks like in the rest of Subtopic 6.3. Here’s a glimpse:
Institutional investors: broader fiduciary duty, new measures of value and risk, sharing value, democratic decisions;
Local: community currencies, time banks, mutual credit, savings groups that build trust and meet local needs;
National: public banks, mission-led investment, credit guidance, and monetary policies that serve people and planet;
International: debt justice, climate and biodiversity finance, and cooperation between countries for a fairer future.
Figure 5. The seeds of regenerative finance can be planted in institutions and at the local, national and global scales.
(Credit: licensed from Adobe Stock)
These scales interact. Local finance often depends on national support and global rules. National tools can be strengthened or weakened by global trade and financial flows. International institutions are also shaped by choices of states, movements, and financial actors.
In regenerative finance, this interdependence is both a challenge and an opportunity. Systems must be designed across levels so that each scale reinforces the others. Regenerative finance works best when institutional, local, national, and global rules pull in the same direction.
6.3.1 Activity
6.3.1 Activity
Concept: Systems, Regeneration
Skills: Thinking skills (transfer)
Time: varies, depending on option
Type: Individuals, pairs or small groups
Option 1: Mini-case studies on changing finance
Time: 30 minutes
Visit the Global Alliance for Banking on Values “Transforming Lives” page: gabv.org/transforming-lives.
In groups, choose two short case studies and read them carefully.
Discuss these questions:Who has access to finance? Who benefits, and who might still be excluded?
What goals are being financed? How do they connect to meeting human needs within planetary boundaries (the Doughnut Economics model)?
What rules and relationships might be shaping finance here? If the case does not say, make a reasoned guess (e.g. about ownership, decision-making, or lending practices).
Write a short comparison (5–6 sentences) showing how the two examples link back to the idea of regenerative finance as a system.
Share your comparison with another group or the whole class.
Extension (optional): Groups imagine one new rule that could strengthen the regenerative impact of their chosen examples.
Option 2: Leverage points for systems change
Time: 25 minutes, or more depending on whether students continue to brainstorm some concrete actions related to the leverage points
Look at the diagram of Donella Meadows’ 12 leverage points (Section S.8), Figure 6.
As a class, review the three guiding questions that guide our thinking about regenerative finance:
Who has access to finance?
What goals are being financed?
What rules shape financial relationships?
In small groups, discuss:
How do these three questions link to Meadows’ leverage points?
Do you think asking these questions already gives us ideas for where to intervene in the system?
What does this connection tell us about the kind of changes needed for regenerative finance?
Share your reflections briefly with the class.
Extension (optional): Students choose one guiding question and suggest which single action they think might have the biggest impact if changed.
Ideas for longer activities and projects are listed in Subtopic 6.5
Checking for understanding
Checking for understanding
Coming soon!
Further exploration
Further exploration
From financing change to changing finance - a report from the Club of Rome outlining the changes needed in financial systems to support regenerative economies. Here is a ca. 35 minute podcast about the report and its recommendations. Difficulty level: medium/high
Acumen Fund - the website of a global impact investment firm that works to support entrepreneurs working on meeting human needs within planetary boundaries. The website has profiles of the projects that Acumen supports and case studies where it synthesises learnings from its impact investing activities. Its Acumen Academy has a great course catalogue of courses related to social entrepreneurship and impact investing, many of them free. One of the courses teaches about its approach to patient capital. Difficulty level: easy-medium
Interview with Bernard Lietaer - towards the start of this ca. 65 minute interview with money system expert Bernard Lietaer explores what money is, and discusses the neutrality and scarcity narratives of money. Difficulty level: medium
Positive Money - the website of a non-profit organisation that works to reform money systems to support human and wider ecological wellbeing. Difficulty level: medium
Sources
Sources
Fullerton, J. (2015). Regenerative Capitalism: How Universal Patterns and Principles Will Shape the New Economy. Capital Institute. https://capitalinstitute.org/regenerative-capitalism/
Global Alliance of Banking on Values. (n.d.). https://www.gabv.org/transforming-lives/
Jess, T., Blom, P. and Dixson-Declève, S. (2023). From financing change to changing finance. The Club of Rome. https://www.clubofrome.org/wp-content/uploads/2023/10/Changing_Finance_2023-3.pdf
Meadows, D. H. (1999). Leverage points: Places to intervene in a system. Donella Meadows Institute. https://donellameadows.org/archives/leverage-points-places-to-intervene-in-a-system/
Raworth, K. (2017). Doughnut economics: seven ways to think like a 21st century economist. London: Penguin Random House.
Walker, O. (2024, September 8). European banks set for slowest mortgage lending growth in a decade. Financial Times. https://www.ft.com/content/b9b1facf-64f4-4304-9554-7027a59cfbe7
Terminology
Terminology
Coming soon!
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