Bangladesh Country Report

Policy Lever: Transforming Culture

Financial culture is the body of shared values, norms and biases that guide behaviour and decision-making at individual and organisational levels in financial institutions. Failures of this culture – in terms inappropriate risk-taking, ethical failures, and disregard for client obligations – were central to the global financial crisis. Encouraging a financial culture that supports sustainability is an essential complement to more specific policy, regulatory and fiscal measures.  In the wake of the financial crisis significant changes were made to market, sector,and firm-level systems and controls on behaviour, stemming from macro-level reform packages, actions on markets infrastructure, regulation and supervisory guidance. In general however sustainability has not been a core focus.

Examples

Key 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).

Impacts

To 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.  

Inquiry Publications

  • Financing the Future

    Date: 06-Feb-2017

    Italy’s Ministry of Environment, Land and Sea, in partnership with UN Environment, launched the National Dialogue on Sustainable Finance in February 2016 to identify practical market and policy options to mobilize Italy’s financial system for sustainable development and climate action. The conclusions of the paper are: Italy faces a strategic opportunity to harness its financial

  • 3rd Update Report: Pathways to Scale

    Date: 07-Jan-2015

    This is the 3rd Update Report of the UNEP Inquiry, it is focused on the challenge of financing the low-carbon transition. It explores how innovative ideas and practices can be made more effective, adopted more widely, and taken to scale—and as a result move the trillions that are required. Scaling-up proven but limited innovations, is a common

  • Human Rights and Sustainable Finance: Exploring the Relationship

    Date: 03-Feb-2016

    Designing and building a sustainable financial system requires a broad focus on what sustainability requires in all its aspects and how finance can help deliver on that important objective. This task includes not only delivering financing for sustainable environmental outcomes and addressing climate change, but it also includes attention to the needs of a sustainable

  • Greening the Financial System: Enhancing Competitiveness Through Economic Development

    Date: 16-May-2017

    This briefing summarises the discussions held during a roundtable for market and policy leaders in Washington, D.C. on 20 April 2017. The goal of the event was to explore pathways to scale and speed up green finance and to harness its benefits for long-term sustainable growth and competitiveness. The key messages are: Green finance made

  • Values Based Banking

    Date: 21-Aug-2015

    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

  • Indonesia Country Report

    Date: 30-Apr-2015

    Placing Indonesia’s economy onto a green and sustainable development pathway, as envisaged in the National Long Term Development Plan, will require a large mobilization of investment. Estimates of the annual investment needed are in the order of US$300‐530 billion, with a large portion of this investment needed in critical infrastructure, as well as environmentally sensitive

  • Experience and Lessons from South Africa: An Initial Review

    Date: 17-Jun-2016

    This paper provides an outline of South Africa’s financial sector, the environmental and social issues it faces, the response of government and financial regulators and the extent to which has resulted in measurable sustainable investment flows. In South Africa environmental, social and governance (ESG) considerations appear on the agenda of strategic discussions and are part of the

  • 4th Update Report: The Coming Financial Climate

    Date: 07-May-2015

    This is the 4th Update Report of the UNEP Inquiry, it is focused on the challenge of financing the low-carbon transition. Many approaches and instruments will be needed to deliver the financing needed. Public finance, funded by tax revenues and international transfers, will provide part of the solution.  However such finance will be inadequate. Private

  • China Green Finance Task Force Report: Green Investor Networks

    Date: 02-Apr-2015

    This paper set out the case for financial institutes and associations in China to establish  a green investor network, to monitor investees’ performance of their environmental obligations, foster green investment capabilities, and hold educational programs. Internationally, green investor networks such as the UNEP Finance Initiative and the UN Principles for Responsible Investment have played a

  • China Green Finance Task Force Report: International Experience

    Date: 02-Apr-2015

    The Green Finance Taskforce was convened in 2014 by the People’s Bank of China and the UNEP Inquiry. The Taskforce brought together leading Chinese experts on financial markets, policy and regulation from government, academia and from the private sector together with international experts and practitioners. One of the inputs to the deliberations of the Taskforce

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