“Financial markets must be more strongly aligned with sustainability goals”

IOER: What are the main areas of focus in your work?

Sabine Dörry: My research primarily deals with the financial industry and its complex spatialities. This includes questions concerning the development of sustainable financial centres such as Luxembourg, London and Frankfurt, as well as the digitalisation of financial economies. I am also particularly interested in the growing power of the financial industry at the intersection with Big Law and Big Tech – that is, with the world’s major law firms and tech giants. In such an environment, how can global finance succeed not merely in trading, speculating and engaging in arbitrage for its own sake, but also in meaningfully supporting sustainable economies and societies through the necessary investments?

These observations essentially build a bridge to the global architecture of networks of financial centres, which can reconfigure themselves in a division of labour depending on their objectives and regulatory frameworks, either to better exploit legal provisions or to circumvent them. One example was the reaction to an EU regulation aimed at tackling tax optimisation: certain fund products, previously set up mainly in Luxembourg, were suddenly channelled through Jersey almost overnight – thereby circumventing this new regulation.

The geographies of finance and financial centres are thus closely intertwined with regulation and innovation. From this perspective, I explore how sustainable a structurally non-sustainable global financial economy can actually be.

If I understand you correctly, you are saying that sustainable development is not possible without the financial sector. Could you explain exactly what you mean by this, and what implications it has for research at an institute like the IOER?

In fact, achieving climate-neutral and sustainable development in our societies and economies requires enormous investments that cannot be borne by the state alone. We are talking about billions of euros each year, for example to implement the energy transition – that is, the shift from fossil and nuclear energy sources (such as coal, gas and nuclear power) to renewable energies (such as solar, wind, hydro and biomass), often involving the use of new green technologies. Financing these energy sources and the increasingly digitalised infrastructures needed to support them will require major investment from the private financial sector.

At the same time, the global financial industry – and I am deliberately not only referring to the German banking system, but also, and in particular, to the fund industry and bond markets – is still often driven by a logic that prioritises profit over climate benefits. This is where a major challenge lies: financial markets must be more strongly aligned with sustainability goals in order to act as real levers for socio-ecological transformation.

For research – including work at an institute such as the IOER – this means that the economic, regulatory and spatial aspects of sustainable transformation cannot be considered in isolation. A deeper understanding is needed of how financial flows, investment decisions and spatial developments are interwoven – and how sustainable governance instruments must be designed to achieve real transformative effects in different local contexts.

What inspired you to pursue the IOER Fellowship opportunity?

As part of our AltFin research project, which I co-led with Professor Christian Schulz from the University of Luxembourg, we examined Saxony as one of several case studies. In this context, we got into conversation with Dr Markus Egermann from the IOER – and from there we quickly moved on to the big questions surrounding financing, financial investors and the role of the financial sector in transformation processes. In transformation research, financing is often taken for granted, but rarely really considered as a separate industry with its own goals, means and a lot of power. The financial sector – whether in the banking sector or in the fund industry – often follows its own logic and incentives: it is less about financing sustainable projects in the real economy and more about the closed circulation of capital, such as trading with itself. Profits are generated primarily through capital absorption, not through long-term, sustainable investments.

This is precisely where the critical question begins: how ‘sustainable’ can a project be if its financing is based on economic structures that were themselves anything but sustainable or fair? This ambivalence represents a central challenge for transformation research – especially when it claims to be socially just.

This question was also the point of friction that Markus Egermann and I addressed in our initial discussions – and ultimately the starting point for my stay at the IOER. I wanted to learn more about specific sustainable initiatives ‘on the ground’ in and around Saxony – and, in return, contribute my knowledge of the global dynamics of the financial sector, for example in the highly hyped private equity sector for financing the ‘Green Deal’. This has resulted in exciting and productive discussions.

What opportunities did the IOER Fellowship open up for you?

Two aspects were particularly enriching for me during this time: firstly, the great openness of my colleagues at the IOER – both towards me personally and towards the relatively complex and still comparatively new field of sustainable finance. Secondly, I had the opportunity to engage with many different people and gain deep insights into a wide range of research areas.

I learnt an incredible amount – for example, about communication strategies and practices within the local sustainability context of real-world laboratories (or: living labs), about the analysis of large and complex datasets from social media in relation to climate and sustainability topics and behaviour, and about transformative approaches in the Global South, particularly in India. The diversity of research topics and the academic depth of the research teams not only impressed me, but also inspired me profoundly.

I would also like to take this opportunity to warmly thank everyone at the IOER for the wonderful welcome and the inspiring collaboration. My time here has not only opened up new perspectives for me, but, in my view, has also laid the foundation for future cooperation.

Did you also have the opportunity to get to know Dresden a little? What did you particularly like?

I certainly made the most of that opportunity! I was born in Dresden but have not lived here for more than 20 years – so it was all the more exciting to see the city with fresh eyes. Much has changed. The visit to the collapsed Carolabrücke (Carola Bridge) was particularly impressive for me. I photographed it and was – in the truest sense of the word – a bit “geknickt” [a German word meaning that something is physically broken or crumbled, or, figuratively, that someone feels emotionally crushed – editor’s note]. At the same time, however, I see the bridge as a symbol and a place full of potential: it offers an opportunity to reflect on new and sustainable mobility concepts – and to actively engage in these debates here in Dresden. It’s an exciting topic that I will certainly continue to follow from afar.

A very personal bonus of my stay was the time I was able to spend with my family – I thoroughly enjoyed it. And I also discovered a new favourite spot: the small café in Beutlerpark. It’s a wonderful place to meet with colleagues, to exchange ideas – or simply to take a short break and enjoy a moment of calm in the greenery.

What are you taking away from your – albeit rather short – time at the IOER and in Dresden? 

We are definitely planning to continue working together in the future. The five weeks I was able to spend here as a fellow unfortunately passed far too quickly. In numerous conversations, we began to relate the complexity of global sustainability research in the field of finance more closely to the sustainability practices being lived locally – particularly in Saxony – and to draw initial connections between the two. Building on this, we started to sketch out a joint paper, to develop ideas for potential projects – and, most importantly, we managed to engage in real dialogue despite our sometimes very different disciplinary perspectives within sustainability research, and to find a common language. From my point of view, this is an excellent foundation for future collaboration.

I am taking with me a great deal of enthusiasm for these new initiatives – as well as many ideas and inspirations that I would like to bring into the daily work of my own research group in Luxembourg. What I particularly appreciated at the IOER was the open and respectful exchange – embedded in an East German mentality characterised by openness, down-to-earthness and warmth, which I value highly and have only ever experienced in this way here.

Interview: Heike Hensel

Scientific contact at the IOER
Dr Markus Egermann, e-mail: M.Egermannioer@ioer.de

Notice:
The current call for application in the IOER fellowship programme is open until 12 May 2025.
Further information on the application process