Banking…Whose #1? This is a four part blog analyzing which of the various sectors within banking are sustainable. So many companies publish CSR reports and submit them to the Global Reporting Initiative status but not all product lines are actually applying the concepts. The Banking sector wins lots of awards for Corporate Social Responsibility. Over the next two weeks, I will be publishing a blog series to illustrate how the banking product lines can take Corporate Social Responsibility one step closer and in so doing, take our world exponentially closer to a greener, more respectful and inclusive world which we all share…
The banking sector will be key in the foundational building of an environmentally sustainable economy. The purpose of this paper is to assess the contribution of the banking and financial sector to promote sustainability. The current status, contribution and the challenges that are faced by banking will be analysed. The opportunity that banking has to make a bigger impact in our world will be discussed. The banking sector includes commercial banks, investment banks, mutual funds, pension funds, contents/property/casualty insurance, life insurance, venture capital and foundations.
Commercial banks “institutions that primarily accept deposits and extend credit to serve consumer and corporate needs for capital” (Ganzi et al., 1998). The focus of commercial banking is debt provision. As many private sector commercial banking firms have a traditional lending model, collateral is required for loans. The developed countries are more likely to lend to traditional industries that are not yet committed to sustainability. This is because current due diligence processes cannot yet quantify biodiversity and carbon. The commercial banking sector can improve its contribution to sustainability by demanding environmental and social justice assessments be included in the business plans and loan requests.
Research is ongoing to determine how we can create a due diligence that accounts for all RISKS…..we need more strategy and innovation in commercial banking to address the lack of businesses’ commitment to corporate social responsibility.
…..part2 will be published on Sunday
Yours In Corporate Social Responsibility