On May 10th, 2023, the Club of Rome and the Centre for Finance and Development (CFD) offered the second session of their joint series, with an event on “Socially Responsible Banking: Money as Vehicle for Social Change”.
On May 10th, 2023, the Club of Rome and the Centre for Finance and Development (CFD) offered the second session of their joint series, with an event on “Socially Responsible Banking: Money as Vehicle for Social Change”.
The panel discussion revolved around the potential that socially responsible finance has to contribute for sustainable development, highlighting the main differences when compared with traditional banking.
As traditional banking was associated with large crises, such as the one of 2008, responsible and alternative banking became very fashionable and has been widely used by institutions purely for marketing purposes. However the expert explained that what counts is the practice at the core of the organization's moral ethics and corporate culture.
The event had the presence of high-level panelists: Peter Blom, co-founder of Triodos Bank; Isabelle Delécraz Regad, Client Advisor at Banque Alternative Suisse; and Anna-Riikka Kauppinen, Assistant Professor of Anthropology and Sociology and Pictet Chair in Finance and Development at the Geneva Graduate Institute.
The discussion emphasised that taxonomies emerged as a fascinating tool for establishing and expanding responsible banking practices. However, they should maintain flexibility to accommodate evolving standards and requirements. While regulations play a vital role in incentivising responsible behavior and enforcing quotas to hold financial institutions accountable, they can also impose significant costs and hinder small-scale investments. Striking a balance between regulatory measures and practicality is crucial to ensure that responsible banking practices are accessible and feasible for all stakeholders.
One notable point raised during the discussion was the prevalence of seemingly sustainable financial products that solely focus on investing in the stock market, such as Environmental, Social, and Governance (ESG) funds. Participants acknowledged that while these products may appear sustainable on the surface, deeper scrutiny is necessary to ensure they truly align with responsible banking principles. It was emphasised that responsible investing should encompass a holistic approach, considering various factors beyond financial returns, such as environmental impact, social considerations, and corporate governance practices, to truly promote sustainability and accountability in the financial sector.