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Banking as if the Future Matters

Banking as if the Future Matters

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Published by: Green Economy Coalition on Oct 23, 2012
Copyright:Attribution Non-commercial


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Background paper produced by GEC, GABV, ForUM
April 27 2012
As if the future matters
Building a Financial System to Support a Green, Fair and Inclusive Economy
 The Green Economy Coalition working with the Norwegian Forum for Environment and Development and the Global Alliance for Banking on Values will be running an initiative to develop policy recommendations toreform the current financial system so it supports a green, fair and inclusive economy. The results of thisconsultation will be used to raise critical public policy issues requiring changes with influential decision makersat the Earth Summit Rio+20. Commitments for implementation of these changes from key decision makers willbe requested at that meeting.The financial system provides a critical role in the development and functioning of all economies. Therefore tocreate and sustain a green, fair and inclusive economy, it is critical that social and environmentalresponsibilities are embedded in the business models and cultures of participants in the financial system.The positive role that can be provided by financial institutions is proven by the environmental, social andfinancial results over several decades by sustainable financial institutions. At the same time recentexperiences in the financial system highlight the need for fundamental change to ensure that all financialinstitutions proactively take an interest in building a green, fair and inclusive economy.Reforming the current financial system will require a range of enabling policies and cultural changes as wellas additional capital to support the growth of sustainable financial institutions. The consultation is intended todevelop specific ideas for actions that would lead to substantive reform in the current financial servicesenvironment. Ideas of enabling policies that are being sought by this consultation could cover various aspectof the current financial system as they relate to:
1. Ensuring financial institutions focus on products and services that build a green, fair andinclusive real economy while eliminating speculative activities with limited or no underlyingeconomic justification2. Ensuring diversity and limiting concentration in financial services to enhance innovation andreduce systemic risk3. Including social and environmental risks in the assessment of bank assets relative to capitalrequirements4. Developing and encouraging investment vehicles to build a green, fair and inclusive economyand the financial system to support that economy5. Addressing shortcomings in current reporting processes that focus on short term financialaccounting results, inadequately capture environmental and social impacts, and do notinclude long term costs, benefits and risks6. Reforming investment limitations, especially for pension funds, that limit consideration of longterm sustainability and inclusiveness within investment processes as well as create a focus onshort term financial market results7. Ensuring that compensation and incentive systems are transparent, stakeholder driven anddeliver long term green, fair and inclusive investments

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