Environmental finance is a field within finance that employs market-based environmental policy instruments to improve the ecological impact of investment strategies. The primary objective of environmental finance is to regress the negative impacts of climate change through pricing and trading schemes. The field of environmental finance was established in response to the poor management of economic crises by government bodies globally. Environmental finance aims to reallocate a businesses resources to improve the sustainability of investments whilst also retaining profit margins. History In 1992, Richard L. Sandor proposed a new course outlining emission markets at the University of Chicago Booth School of Business, that would later be known as the course, Environmental Finance. Sandor anticipated a social shift in perspectives on the effects of global warming and wanted to be on the frontier of new research. Prior to this in 1990, Sandor had been involved with the passing of the Clean Air Act Amendment for the Chicago Board of Trade, which aimed to reduce high sulfur dioxide levels following WW2. Inspired by the theory of social cost, Sandor focused on cap-and-trade strategies such as emission trading schemes and more flexible mechanisms including taxes and subsidies to manage environmental crisis. The implementation of cap-and-trade mechanisms was a contributing factor to the success of the Clean Air Act Amendment. Following the Clean Air Act in 1990, the United Nations Conference on Trade and Development approached the Chicago Board of Trade in 1991, to enquire about how the market-based instruments used to combat high atmospheric sulfur dioxide concentrations could be applied to the increasing levels of atmospheric carbon dioxide. Sandor created a framework consisting of four characteristics which could be used to describe the carbon market: Standardisation Unit Trading Price Basis Delivery In 1997 the Kyoto Protocol was enacted and later enforced in 2005 by the United Nations Framework Convention on Climate Change. Included nations agreed to focus on reducing global greenhouse gas emissions through the market-based mechanism of emissions trading. Reductions averaged approximately 5% by 2012 which equates to almost 30% in reduction of total emissions. Some nations made significant progress under the Kyoto protocol, however as it only became law in 2005, nations such as the United States and China reported increased emissions, substantially offsetting progress made by other regions. In 1999, the Dow Jones Sustainability Index was introduced to evaluate the ecological and social impact of stocks so shareholders could invest