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Exploring the Role of Banks in Sustainable Development

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Sustainable Banking

Abstract

This chapter highlights the contribution of financial systems to sustainable development and provides an excursus of the major changes that have occurred at the international level and that are a result of the increased attention banks have given to sustainability issues. The chapter also introduces the role of corporate social responsibility (CSR) practices in sustainability, focusing on the role of the credit risk management process and describing how sustainability issues might create value for banks.

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Notes

  1. 1.

    The principles are detailed as follows: Principle 1—Definition: Positive Impact Finance is that which serves to finance a positive impact. Business is that which serves to deliver a positive contribution to one or more of the three pillars of sustainable development (economic, environmental, and social), once any potential negative impacts on any of the pillars have been duly identified and mitigated. By virtue of this holistic appraisal of sustainability issues, Positive Impact Finance constitutes a direct response to the challenge of financing the Sustainable Development Goals (SDGs); Principle 2—Frameworks: to promote the delivery of Positive Impact Finance, entities (financial or nonfinancial) need adequate processes, methodologies, and tools to identify and monitor the positive impact of the activities, projects, programmers, and/or entities to be financed or invested in; Principle 3—Transparency: entities (financial or nonfinancial) providing Positive Impact Finance should provide transparency and disclosure on the following: (1) the activities, projects, programs, and/or entities financed that are considered positive impact and the intended positive impacts thereof (as per Principle 1); (2) the processes they have in place to determine eligibility and to monitor and to verify impacts (as per Principle 2); (3) the impacts achieved by the activities, projects, programs, and/or entities financed (as per Principle 4); Principle 4—Assessment: the assessment of Positive Impact Finance delivered by entities (financial or nonfinancial) should be based on the actual impacts achieved. For further details, see UNEP FI (2017).

  2. 2.

    On the concept of risk culture in banks with an overview on the role of regulation, see Carretta et al. 2017.

  3. 3.

    On the subjects of banking reputation and reputational risk, see, among others, Fiordelisi et al. (2013, 2014), Dell’Atti and Trotta (2016), and Miklaszewska and Kil (2017). On the relationship between CSR and reputation in the banking industry, see Dell’Atti et al. (2017).

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    Rosella Carè

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Carè, R. (2018). Exploring the Role of Banks in Sustainable Development. In: Sustainable Banking. Palgrave Pivot, Cham. https://doi.org/10.1007/978-3-319-73389-0_3

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