Policy Lever: Transforming Culture
ExamplesKey steps that could be taken to integrate sustainability into the culture of the financial sector include:
- Consumer education: Extending financial literacy programmes to include sustainability.
- Professional education: Building the skills and capabilities to assess sustainability risks and issues among financial professionals.
- Regulator capacity building: Improving the sustainability capabilities of financial regulators and policymakers.
- Remuneration regulation: Including sustainability in remuneration regulations – so that individual compensation relates to performance in terms of long-term sustainability.
- Codes of conduct: Incorporating environmental and sustainability in policies to promote integrity in financial markets and the upholding of core values.
- Non-financial guidance: Encouraging financial institutions to respect global standards of responsible conduct (such as Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises
- Value-based financial institutions: Ensuring a level-playing field for values-based financial institutions (including cooperatives, impact investment etc.)
- Market diversity: Promoting diversity of financial institutions in terms of size, geographical focus, ownership and business model.
- Right sizing financial institutions: Taking action to “right size” financial institutions to deliver sustainability outcomes (e.g. consolidation and unbundling).
ImpactsTo date most reforms focused on the culture of the financial sector have not explicitly focused on sustainability, but there is potential for wide application. A robust financial culture focused on the needs of the real economy is a criticalprecondition for other efforts to align the financial system with sustainable development.
This paper explores whether the extent to which Regulation 28, CRISA and JSE Integrated Reporting Standards (referred to as governance policy innovations) have influenced the level of investment that integrates Environmental, Social and Governance (ESG) in its decision making process. It finds that while governance innovations have increased actors’ awareness about interrelationship between ESG factors and financial performance it
Values based banking is a diverse movement drawing in community banks, ethical, green and socially oriented banks and including cooperatives, credit unions, privately owned banks, B Corporations and public companies that is purposively oriented towards the development of a sustainable economy. The paper identifies four values that need to be at the heart of a
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- Real Economy – Real Returns: The Business Case for Sustainability Focused Banking
Global Alliance for Banking on Values (2014). Zeist: GABV.
- The Interconnections Between Islamic Finance and Sustainable Finance
Myers, T.A. and Hassanzadeh, E. (2015). IISD also see SC (2014)
- Enhancing Financial Stability by Improving Culture in the Financial Services Industry
Dudley, W. (2014). Speech. October 2014. New York: Federal Reserve Bank of New York.
- Sustainability Metrics In Executive Pay: Short-term Focus For A Long-term Issue
GMI Ratings (2014). April 2014.
- Banking Conduct and Culture: A Call for Sustained and Comprehensive Reform
G30 Consultative Group on International Economic and Monetary Affairs (2015).
- Greening the Green: Linking Executive Compensation to Sustainability
Glass, L. (2014).
- Transforming Finance, A Charter for a New Financial System
The Finance Lab (2013).