Abstract
The debate about sustainable finance focuses mostly on responsible investment. Considerably less attention tends to be paid to the direct relationships between banks and their corporate clients. Some of these clients are associated with controversial business practices, sectors, projects, and/or countries that, in turn, are associated with detrimental environmental and social impacts. In the context of this article, environmental and social (E&S) risks are those risks that occur when investment banks engage with such clients. This article discusses five factors that put pressure on banks to address E&S risks more systematically. It makes the case that E&S issues harbour considerable potential for damage in the here and now and that investment banks take a risk if they underestimate them.
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Notes
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Financial Times Lexicon: lexicon.ft.com
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ECOFACT AG, http://www.ecofact.com
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MSCI Inc., http://www.msci.com
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Marsh & McLennan Companies, Swiss Re, Zurich Insurance Group, National University of Singapore, the University of Oxford, and the Wharton School of the University of Pennsylvania.
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Report of the Special Representative of the Secretary General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie—Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework, 21 March 2011.
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International Review of the Red Cross, Volume 94, Number 887, Fall 2012.
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The Thun Group of Banks, “UN Guiding Principles on Business and Human Rights/Discussion Paper for Banks on Implications of Principles 16–21”, October 2013.
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OHCHR, “Subject: Request from the Chair of the OECD Working Party on Responsible Business Conduct”, 27 November 2013.
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RepRisk AG, http://www.reprisk.com
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Originally: the Carbon Disclosure Project. Now, as the abbreviation has become a widely known brand and the CDP has broadened the scope of their work, “CDP” is used in abbreviated form only: http://www.cdp.net
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MIT Sloan Management Review and The Boston Consulting Group: “Sustainability’s Next Frontier: Walking the talk on the sustainability issues that matter most”, MIT Sloan Management Review, Research Report, December 2013.
References
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Jaeggi, O., Kruschwitz, N., Manjarin, R. (2015). The Case for Environmental and Social Risk Management in Investment Banking. In: Wendt, K. (eds) Responsible Investment Banking. CSR, Sustainability, Ethics & Governance. Springer, Cham. https://doi.org/10.1007/978-3-319-10311-2_36
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DOI: https://doi.org/10.1007/978-3-319-10311-2_36
Publisher Name: Springer, Cham
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Online ISBN: 978-3-319-10311-2
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