Banks Fund More Social Responsibility Projects

By Siegelbaum, Debbie | PM Network, February 2013 | Go to article overview

Banks Fund More Social Responsibility Projects


Siegelbaum, Debbie, PM Network


Hammered by a recession and a disgruntled public, global financial institutions are pumping money into social and environmental projects. Done right, so-called "sustainable investing" not only helps banks boost their bottom line, but also polishes their tarnished reputations.

"There's no question about it: There is a growing pressure as people realize that businesses can have a very, very significant adverse effect on the planet," says William Bulmer, director of the environment, social and governance department, International Finance Corporation, Washington, DC, USA.

"Banks were facing a huge amount of criticism about their support for projects that were having bad environmental and social impacts," he says. "We're now seeing that banks recognize that they can run significant reputational risks if they're not seen addressing these issues systematically in their own lending policies."

Of course, it would be understandable for financial institutions to focus on fixing the bottom line instead of the world's ills. After all, it was just four years ago that several of the biggest U.S. banks- and automakers and insurersreceived a combined US$700 billion bailout from the government to keep them afloat.

But as more banks emerge from the brink, sustainable projects - such as retrofitting buildings with green elements - are at the forefront of their investment strategies.

Working in partnership with the United Nations Environment Programme Finance Initiative, CEOs of more than three dozen banks, insurance companies and investment funds signed an agreement last year highlighting their commitment to integrate environmental, social and governance considerations into global business.

"[The agreement] has just been a great sort of addition to this new wave of sustainable investing that we're seeing at the moment," says David McMillan, co-founder of Caledonia Wealth Management Ltd., Boulder, Colorado, USA.

Investment banks in the United States seem to be backing up their talk as they continue to see a bigger financial boost from sustainable investment. Last year, these organizations boasted sustainable and responsible assets of US$3.74 trillion, a 22 percent increase over 2009, according to a 2012 report from the US SIF Foundation, an association advocating sustainable investing. …

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