institutions (FIs) such as banks and asset managers can and must play
a positive role in advancing environmental and social sustainability.
This declaration calls on FIs to embrace six
commitments that reflect civil society’s expectations of the role
and responsibilities of the financial services sector in fostering
sustainability . . . and take immediate steps to implement them as a
way for FIs to retain their social license to operate.
Acknowledging that FIs, like all corporations, exist as creations of civil
society to act in the public interest, FIs should promote the restoration
and protection of the environment, and promote universal human rights and
social justice. These principles should be inherent in the way that they
offer financial products and services, and conduct their businesses.
Finance and commerce have been at the center of a historic detachment
between the world’s natural resource base, production and consumption.
As we reach the boundaries of the ecological limits upon which all
commerce relies, the financial sector should take its share of responsibility
for reversing the effects this detachment has produced. Thus, an appropriate
goal of FIs should be the advancement of environmental protection and
social justice rather than solely the maximization of financial return.
this goal, FIs should embrace the following six commitments:
1. Commitment to Sustainability
FIs must expand their missions from ones that prioritize profit
maximization to a vision of social and environmental sustainability. A
commitment to sustainability would require FIs to fully integrate the consideration
of ecological limits, social equity and economic justice into corporate
strategies and core business areas (including credit, investing, underwriting
and advising), to put sustainability objectives on an equal footing to
shareholder maximization and client satisfaction, and to actively strive
to finance transactions that promote sustainability.
2. Commitment to “Do No Harm”
FIs should commit to do no harm by preventing and minimizing the environmentally
and/or socially detrimental impacts of their portfolios and their operations.
FIs should create policies, procedures and
standards based on the Precautionary Principle to minimize
environmental and social harm, improve social and environmental
conditions where they and their clients operate, and avoid involvement
in transactions that undermine sustainability.
3. Commitment to Responsibility
FIs should bear full responsibility for the environmental and social impacts
of their transactions. FIs must also pay their full and fair share of the
risks they accept and create. This includes financial risks, as well as
social and environmental costs that are borne by communities.
4. Commitment to Accountability
FIs must be accountable to their stakeholders, particularly those that
are affected by the companies and activities they finance. Accountability
means that stakeholders must have an influential voice in financial
decisions that affect the quality of their environments and their lives—both
through ensuring that stakeholders’ rights are protected by law,
and through practices and procedures adopted by FIs themselves.
5. Commitment to Transparency
FIs must be transparent to stakeholders, not only through robust, regular
and standardized disclosure, but also by being responsive
to stakeholder needs for specialized information on FIs’ policies,
procedures and transactions. Commercial confidentiality should not
be used as an excuse deny stakeholders information.
6. Commitment to Sustainable Markets and Governance
FIs should ensure that markets are more capable of fostering
sustainability by actively supporting public policy, regulatory and/or
market mechanisms that facilitate sustainability and that foster the
full cost accounting of social and environmental externalities.
Source: www. financeadvocacy.org
Practices and Progress