Ethics and Sustainable Finance

By Fr. Séamus P. Finn, OMI

The private seminar convened on the edges of Lausanne in Switzerland in September hoped “to share innovative ideas and exchange concrete proposals on the topic of equitable and environmentally sustainable outcomes derived from the financial markets.”

The 25 participants came from academia, philanthropy, financial management and civil society to converse and consider how they might respectively bring their experiences and ideas on finances to bear on the numerous challenges that societies confront. The vision of a financial industry that would “embrace more ethical and sustainable practices” informed the mission of the organizers who wanted to use the seminar to “catalyze cooperation amongst large investors” and thereby “push concrete proposals in the financial sector.”

Development and climate change framed the broad array of questions and challenges that were considered. The recent hurricanes, typhoons and earthquakes that have inflicted enormous suffering and damage in different parts of the world were often the point of reference for the powerful force and unpredictable path of nature’s journey. The scientific data on the contribution of human activity to dark clouds that climate change presents and the numerous efforts that have been undertaken to respond were examined and debated.

The development conversation has a much longer history and continues to be the subject of debate and evolve. While there may be some agreement about the guiding general principles and standards for measuring a meaningful and humane level of existence, there are multiple proposals about the most successful ways that these objectives can be achieved. Governments, multilateral institutions, religious and secular institutions and organizations have participated in this conversation and explored numerous avenues and vehicles to advance their projects for decades.

In the Catholic tradition, the encyclical by Pope Paul VI, “On the Development of Peoples” set a very high standard when it introduced the concept of “integral human development” into the conversation. This intervention was a clear marker, from the faith perspective, that insisted on an understanding of the human person that was much more than could be measured by the size of their bank account, the neighborhood in which they lived or their achievements in education or other pursuits. In the recent encyclical Laudato Sí, Pope Francis returns to this teaching and extends it when he speaks about “integral ecology”.

Across a stretch of nearly 50 years, major international institutions like the United Nations, the World Bank and the International Monetary Fund have participated in the conversation about “development” and “progress” alongside the numerous official, private and religiously inspired development organizations. They have been informed in this effort by the experience of numerous practitioners and the data and ideas that researchers across several disciplines have contributed.

A second set of questions that the seminar explored focused directly on the kinds of financial institutions and practices that are needed to redirect “bank lending and investment capital” to build “the livable future we want.” Recognizing that the pace of change and the size of the trillions of dollars that are needed to turn away from pathways that are destructive and into sustainable solutions, participants discussed the types of interventions that can will help mainstream capital markets and repurpose our banking system and institutions for 21^st centuries challenges.

Improving the alignment of mission with asset management by foundations, investors and philanthropists was identified as a key driver for this kind of change. Instead of focusing only on avoiding the products and services and companies that investors and grant makers want to avoid the seminar described some of the many tools that are available and already in use to help those responsible to deploy their assets towards the kinds of future they want. They also discussed the innovative funds and research that is coming on line to facilitate the integration of sustainable development priorities into their financial planning.

The Sustainable Development Goals: 17 Goals to Transform Our World

Finally, the seminar explored the role of businesses in supporting through a collaborative multi stakeholder process the achievement of the Sustainable Development Goals that were adopted by the UN General Assembly in 2015. Examples such as “circular economy,” “social impact bonds” and local currency projects from different regions in the world were examined and the possibility of their deployment and scalability was discussed.

Conclusion

The core issues raised by this seminar, encouraging “the financial industry to embrace more ethical and sustainable practices”, must remain a top priority in protecting the planet and building a sustainable future. The centrality of a financial system that provides equitable access to capital across all sectors of the world and respects the planet in the process is critical. Many current practices and policies have failed miserably to achieve these objectives.

This priority, by no means, ignores the numerous efforts and projects to alleviate poverty, end hunger and provide access to healthcare that are being undertaken by innumerable institutions, organizations and individuals across the world. It does however point to the necessary structural and policy reforms that must be made to the financial system and the practices of the financial industry if the scale of the challenge is to be addressed and the needed changes are to introduce reliable platforms for sustainable solutions.