Aligning Financial Culture with Sustainable Development
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 of inappropriate risk-taking, a lack of ethics, and disregard for client obligations – were central to the global financial crisis.
A robust financial culture focused on the needs of the real economy is a critical precondition for other efforts to align the financial system with sustainable development. Actions across multiple fronts – from targeted sustainability interventions to systemic changes in values and purpose – will be necessary to align financial culture with sustainable development. Our research suggests that “greening” a broken system will not be enough. Now, there is a major opportunity to capitalize on the building momentum among regulators and standard setters at national and international levels. This paper identifies multiple emerging innovations in three key areas: Ethics & Conduct, Incentives, and Skills & Capabilities. Following this, we discuss the emerging landscape of values-based financial institutions and compacts.