How to Apply Sustainable Finance? The Smart Law Approach

In the field of financial engineering, performance has traditionally been measured exclusively on financial criteria. This form of reporting is no longer fully adapted to the complexity of climate change in which companies operate. The objective of this chapter is to demonstrate that the approach must, to be relevant, be enriched by an extra-financial approach, in particular social, and environmental data provided voluntarily and proactively by companies, thus allowing a more accurate valuation of these organizations. This approach is based on a soft and integrated initiative (Smart Law). It could also avoid imposing mandatory rules (Hard Law) on companies that are too often unsuitable for their requirements in a very competitive globalized international context. We consider that smart regulation—a complementary mix of government and voluntary private-sector policies—makes our organizations more sustainable.