Banking: The world’s unlikely hero in sustainable finance

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By:
Helen Avery
Published on:

Will we look back in 30 years and say this was truly an amazing time to be in banking? I hope so.

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“It’s an amazing time to be inbanking,” a senior banker told me in late May. He seemed shocked and a bit embarrassed to have said it out loud but continued: “This generation of bankers, and maybe the next, have been given the opportunity to play an enormous role in saving our planet and changing the trajectory of finance.”

It’s a sentiment that bankers, asset managers, people in private equity firms, pension funds and ancillary services, such as technology or accounting, are increasingly expressing – this is an exciting time for the financial industry. There’s a tangible enthusiasm and camaraderie, and a little hesitation – are we allowed to be excited?

I think so – and it’s the first time in two decades of covering banking as a journalist that I can say that.

When Goldman Sachs’ former chief executive Lloyd Blankfein was pilloried for his 2009 comment about doing “God’s work”, his point was one I used to hear from bankers all the time: that they were helping society by financing the economy. They were the creators of jobs, of prosperity and were performing a social purpose.

I would emerge, mouth agape, from countless meetings wondering if bankers really believed this, or if, for whatever reason that day, they felt compelled to justify their career choice.

Banking was important for economic growth, yes. But, let’s be honest, few entered the industry as a vocation. Banking wasn’t saving the world. Indeed, the global financial crisis demonstrated quite the opposite. I liked Blankfein, but his comment was tone deaf and epitomized how the power of finance had bred arrogance rather than humility.

Change

I am hesitant to go on record as saying this, but I think that has changed. During May I sat in awards pitches from banks in every region, listening to their work over the last year in sustainable finance, corporate social responsibility (CSR), diversity and inclusion and inclusive finance – and it’s so much more than I heard just 12 months ago.

Banks with asset management arms are discussing their stewardship strategies. Instead of just hearing about big green bond deals, I’m being told about niche structures that solve rural poverty in China, finance sustainable agriculture in the Middle East, or serve former prisoners in the US.

We have gone from never disclosing pay gaps to disclosing median pay gaps. Nearly every pitch I take has at least one female banker in the room.

Everyone wants to talk about the community work they or their colleagues initiated. Financial institutions are educating corporations and communities on carbon or single-use plastic reduction.


Make no mistake, it is the financial industry as the gatekeeper of the world’s money that will decide the... future of the planet

Bankers are asking me which of their peers they can work with rather than telling me who is worse than they are. The frustrations voiced are about those tarnishing the industry with greenwashing or about the rigid capital requirements that are stopping them from financing more.

Everyone says that while they want to be recognized for their work so that they can do more of it, they also want to support peers who are working hard towards sustainability because they feel they are all working as one.

Now admittedly these are bankers with jobs in sustainable finance or CSR – these aren’t oil and gas traders – and no, it’s not all banks, but it is the majority and it is in every region.

Bank chief executives asking to join these pitches to support their colleagues’ efforts in diversity and inclusion, green mortgages and climate bonds is something I have never witnessed before; and it tells me that this excitement is not isolated to certain business lines.

One banker for example, said that her large regional bank is altering its financing policies company-wide to fund only socially or environmentally responsible clients, or those transitioning.

Gatekeeper

We need an estimated $11.5 trillion to reach the UN’s Sustainable Development Goals by 2030. We need to transition out of fossil fuels as a planet within a decade. We need to support a growing global population, with wealth being created through infrastructure and consumer products that won’t stress the planet’s resources even further. At the same time we need to help those who aren’t benefiting from wealth creation.

In 2050 we may look back at the crises that face us now as nothing more than a blip in human history, or as the beginning of the end of human history. Make no mistake, it is the financial industry as the gatekeeper of the world’s money that will decide that outcome. Like it or loathe it, the future of the planet really is in its hands.

Irony

The irony of course is that it always was. Finance has never not impacted on the planet, families and individuals.

Pre-crisis bankers who claimed banks had a social purpose were not wrong. It’s just that they conveniently ignored the fact that banking wasn’t being used for a social purpose. For many reasons it is now, and that makes it an exciting time for banking.

Will this generation of bankers succeed?

Ask us again in 30 years, when we will be able to say if this really was an amazing time to be in banking.