Repurposing the financial system for the common good
On the edges of Lausanne in Switzerland in September a private seminar convened hoping “to share innovative ideas and exchange concrete proposals on the topic of equitable and environmentally sustainable outcomes derived from the financial markets.”
The 25 participants came from academia, philanthropy, financial management and civil society to converse and consider how they might respectively bring their experiences and ideas on finances to bear on the numerous challenges that societies confront. The vision of a financial industry that would “embrace more ethical and sustainable practices” informed the mission of the organizers who wanted to use the seminar to “catalyze cooperation amongst large investors” and thereby “push concrete proposals in the financial sector.”
Development and climate change framed the broad array of questions and challenges that were considered. The recent hurricanes, typhoons and earthquakes that have inflicted enormous suffering and damage in different parts of the world were often the point of reference for the powerful force and unpredictable path of nature’s journey. The scientific data on the contribution of human activity to the dark clouds that climate change presents and the numerous efforts that have been undertaken to respond were examined and debated.
The development conversation has a much longer history and continues to evolve. While there may be some agreement about the guiding general principles and standards for measuring a meaningful and humane level of existence, there are multiple proposals about the most successful ways that these objectives can be achieved. Governments, multilateral institutions, religious and secular institutions and organizations have participated in this conversation and explored numerous avenues and vehicles to advance their projects for decades.
In the Catholic tradition, the encyclical by Pope Paul VI, “On the Development of Peoples” set a very high standard when it introduced the concept of “integral human development” into the conversation. This intervention was a clear marker, from the faith perspective, that insisted on an understanding of the human person that was much more than could be measured by the size of their bank account, the neighborhood in which they lived or their achievements in education or other pursuits. In the recent encyclical Laudato Sí, Pope Francis returns to this teaching and extends it when he speaks about “integral ecology”.
Across a stretch of nearly 50 years, major international institutions like the United Nations, the World Bank and the International Monetary Fund have participated in the conversation about “development” and “progress” alongside the numerous official, private and religiously inspired development organizations. They have been informed in this effort by the experience of numerous practitioners and the data and ideas that researchers across several disciplines have contributed.
The seminar also focused directly on the kinds of financial institutions and practices that are needed to redirect “bank lending and investment capital” to support the common good and build “the livable future we want.” Recognizing that the pace of change and the size of the trillions of dollars that are needed to turn away from pathways that are destructive and into sustainable solutions, participants discussed the types of interventions that can and will help mainstream capital markets and repurpose our banking system and institutions for 21st century challenges.
Improving the alignment of mission with asset management by foundations, investors and philanthropists was identified as a key driver for this kind of change. Instead of focusing only on avoiding the products and services and companies that investors and grant makers want to avoid the seminar described some of the many tools that are available and already in use to help those responsible to deploy their assets towards the kinds of future they want. They also discussed the innovative funds and research that is coming on line to facilitate the integration of sustainable development priorities into their financial planning.
Finally, the seminar explored the role of businesses in supporting, through a collaborative multi stakeholder process, the achievement of the Sustainable Development Goals that were adopted by the UN General Assembly in 2015. Examples such as “circular economy,” “social impact bonds” and local currency projects from different regions in the world were examined and the possibility of their deployment and scalability was discussed.
The core issues raised by this seminar, encouraging “the financial industry to embrace more ethical and sustainable practices”, must remain a top priority in protecting the planet and building a sustainable future. The centrality of a financial system that fosters the common good - one that provides equitable access to capital across all sectors of the world and respects the planet in the process - is critical. Many current practices and policies have failed miserably to achieve these objectives.
This priority, by no means, ignores the numerous efforts and projects to alleviate poverty, end hunger and provide access to healthcare that are being undertaken by innumerable institutions, organizations and individuals across the world. It does however point to the necessary structural and policy reforms that must be made to the financial system and the practices of the financial industry if the scale of the challenge is to be addressed and if the changes needed are to introduce reliable platforms for sustainable solutions.
Séamus P. Finn OMI
Rev. Séamus Finn, OMI is Chair of the Interfaith Center on Corporate Responsibility, a coalition of faith and values-driven organizations who view the management of their investments as a powerful catalyst for social change. The ICCR membership comprises nearly 300 organizations including faith-based institutions, socially responsible asset management companies, unions, pension funds and colleges and universities that collectively represent over $200 billion in invested capital. ICCR members and staff engage hundreds of multinational corporations annually to promote more sustainable and just practices because we believe in doing so they will secure a better future for their employees, their customers and their shareholders.
Séamus represents the Missionary Oblates on the boards of directors of a number of organizations supported by the Oblates both in the U.S. and internationally. He served in parish ministry in Brattleboro VT, Puerto Rico, Miami Fl and Lowell MA. He completed his doctorate at Boston University School of Theology in 1991. He has also directed the US Oblate JPIC (Justice, Peace and Integrity of Creation Commission) Office since its inception and has been active in JPIC ministry at various levels for over 25 years.