Sustainable Development in the Banking Sector
Primary Faculty Mentor’s Name
Stacey Rowland
Proposal Track
Student
Session Format
Poster
Abstract
In recent years, many companies have expressed increasing interest in the concept of sustainability. In fact, the very existence of many companies will be determined by either the continued availability of certain natural resources or their ability to adapt and reinvent themselves. Organizations that are socially responsible gain a competitive advantage over their competitors. The scope of responsibility for the banking sector is expanding: from environmental protection to consideration of social issues and social inclusion of underprivileged groups by providing access to financing. While banks play a critical role in promoting sustainable development, the industry had a late start in acknowledging sustainability as significant. In the 1990s, however, banks started to play a more active role in being socially responsible. This major shift was due to bankers realizing that poor environmental performance decisions their clients make, represents a threat to the success of their business. Because of their intermediary role in the economy, banks hold a unique position with regard to sustainable development. Today, however, banks bear significant responsibility for the environmental and social impacts of the companies they finance. This paper examines recent trends in banking and sustainable development, innovative banking practices, and events that have shaped the role of the banking sector in sustainable development; also, unique factors that encourage banks to become more socially responsible. Banks are moving away from defensive banking—where social and environmental innovation is seen as an additional cost— to sustainable banking—where sustainable development is seen as a competitive advantage and an opportunity for progress. The inter-dependency between a bank's profitability and the environmental record of its clients has influenced the business plan of both banks and their clients. To decrease their exposure to environmental liability and limit their risks, bankers are beginning to consider sustainability in their lending decisions, on the assumption that the companies with a bad environmental performance record cause a high financial risk. Banks are seeking new creative ideas for ways and opportunities to provide financial products and services that promote sustainability. Strategic goals involving sustainability are becoming more genuine and long-term, as creating long-term value for banks and their stakeholders are most important. In conclusion, the paper will examine the possible future role of banks in the direction of sustainability.
Keywords
Sustainability in the Banking Sector
Award Consideration
1
Location
Concourse and Atrium
Presentation Year
2015
Start Date
11-7-2015 2:10 PM
End Date
11-7-2015 3:20 PM
Publication Type and Release Option
Presentation (Open Access)
Recommended Citation
Johnson, Jovan, "Sustainable Development in the Banking Sector" (2015). Georgia Undergraduate Research Conference (2014-2015). 59.
https://digitalcommons.georgiasouthern.edu/gurc/2015/2015/59
Sustainable Development in the Banking Sector
Concourse and Atrium
In recent years, many companies have expressed increasing interest in the concept of sustainability. In fact, the very existence of many companies will be determined by either the continued availability of certain natural resources or their ability to adapt and reinvent themselves. Organizations that are socially responsible gain a competitive advantage over their competitors. The scope of responsibility for the banking sector is expanding: from environmental protection to consideration of social issues and social inclusion of underprivileged groups by providing access to financing. While banks play a critical role in promoting sustainable development, the industry had a late start in acknowledging sustainability as significant. In the 1990s, however, banks started to play a more active role in being socially responsible. This major shift was due to bankers realizing that poor environmental performance decisions their clients make, represents a threat to the success of their business. Because of their intermediary role in the economy, banks hold a unique position with regard to sustainable development. Today, however, banks bear significant responsibility for the environmental and social impacts of the companies they finance. This paper examines recent trends in banking and sustainable development, innovative banking practices, and events that have shaped the role of the banking sector in sustainable development; also, unique factors that encourage banks to become more socially responsible. Banks are moving away from defensive banking—where social and environmental innovation is seen as an additional cost— to sustainable banking—where sustainable development is seen as a competitive advantage and an opportunity for progress. The inter-dependency between a bank's profitability and the environmental record of its clients has influenced the business plan of both banks and their clients. To decrease their exposure to environmental liability and limit their risks, bankers are beginning to consider sustainability in their lending decisions, on the assumption that the companies with a bad environmental performance record cause a high financial risk. Banks are seeking new creative ideas for ways and opportunities to provide financial products and services that promote sustainability. Strategic goals involving sustainability are becoming more genuine and long-term, as creating long-term value for banks and their stakeholders are most important. In conclusion, the paper will examine the possible future role of banks in the direction of sustainability.
