A modern role for intellectual property in sustainable finance, prudential banking and capital adequacy regulation

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Denoncourt, J. ORCID: 0000-0003-2176-8935, 2021. A modern role for intellectual property in sustainable finance, prudential banking and capital adequacy regulation. In: O.-A. Rognstad and I.B. Ørstavik, eds., Intellectual property and sustainable markets. Elgar intellectual property and global development series . London: Edward Elgar Publishing, pp. 115-157. ISBN 9781789901344

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Abstract

Sustainability is broadly understood to comprise development that meets the needs of the present while safeguarding Earth’s life-support system as set out in the United Nations 2030 Sustainable Development Agenda. With new insights regarding prudential financial regulation and the treatment of intangibles and intellectual property rights (IPRs), this chapter makes an original contribution to the sustainable finance literature. Green finance (climate change mitigation and adaptation and related risks) and blue finance (to support ocean resilience) depend on innovation, so there is arguably a more prominent role for IPRs in sustainable finance initiatives. The activity of the Basel Committee on Banking Supervision (BCBS) and the Basel Accords bank asset classification system as applied to intangible assets as loan security (collateral) is critically evaluated. The interdisciplinary traditional law and qualitative analysis enables us to build a case to support a new approach to the prudential regulation capital adequacy ratios (CARs) when transactions involve registered granted IPRs such as patents as loan security. The original analysis evaluates the way prudential regulation currently applies to intangibles and IP-backed loan transactions. In particular, we study the Basel Accords I-IV, capital adequacy ratio (CAR) requirements and impact on intangible and innovation finance. We also qualitatively analyse published speeches of high-level central bank professionals on the topic on intangibles and innovation. We hypothesize that the security potential of modern registered IPRs such as granted patent monopolies is underestimated. We consider a range of factors within the modern IPR legal framework to build an exploratory case to study to treat certain IPRs more favourably from a banking capital adequacy ratio (CAR) weighting standpoint to buttress sustainable finance initiatives. Such as approach could support a functioning sustainable IP debt finance market to strengthen a country’s ability to unlock private sector inventions, enabling innovating firms to commercialize and tackle urgent global challenges more efficiently.

Item Type:

Chapter in book

Creators:

Denoncourt, J.

Publisher:

Edward Elgar Publishing

Place of Publication:

London

Date:

2021

ISBN:

9781789901344