Responsible Finance, Real Impact

• Banks and financial institutions have the power to drive positive societal change by supporting sustainable ventures and expanding financial inclusion.
• By offering specialized coursework in sustainable finance and incorporating ethical reflection into assessments, business schools can equip students to lead with purpose and accountability.
• Robust risk management practices are essential to maintain trust in the financial system, as the failure of one bank can have widespread repercussions on the entire banking sector.

Transcript

Claudia Girardone: [00:11] There are many ways in which the finance industry can have an impact on society that is really positive. If we take banks, for example.

[00:21] Banks have a huge role in the financial sector. Because every time they decide whether to lend or not to a business or a project, they can decide whether or not to lend to sustainable or unsustainable businesses.

[00:38] In other words, what I'm trying to say is that banks have a huge responsibility and the potential to change the world in a way.

[00:48] Every time they invest in activities that support, for example, financial inclusion or financial literacy. These are all activities that are really important because it might sound surprising, but even in the developed world, there are millions of people who are unbanked and underserved.

Small and medium enterprises are like little engines of the local economy.

[01:12] So banks and the finance sector, in general, should do more to ensure that there are greater opportunities to access the financial sector for people, even when they come from lower-level communities with lower income or communities that are underdeveloped.

[01:34] These are certainly important channels through which the finance sector can make a difference. Other ways could be to get closer to the local communities.

[01:45] I think this is also very important, and trying to really understand the need, perhaps support more and better the small and medium enterprises that operate in those areas.

[02:00] Small and medium enterprises are like little engines of the local economy, and they can really make a difference because they provide employment.

[02:09] There are many ways in which business schools can do more to encourage the managers and leaders of the future to become responsible. And they are not just embedding, perhaps, the principles of responsible business in all the courses and modules that we offer.

The way we assess our students, could incorporate some questions or case studies that allow them to reflect on the importance of ethical practices.

[02:33] There's a lot more that can be done. There could be specialized courses and modules on business ethics, sustainable finance, and sustainable banking.

[02:45] But also the assessment, the way we assess our students, could incorporate some questions or case studies that allow them to reflect on the importance of ethical practices in business. I think responsible banking is associated with many different aspects.

[03:10] So, in addition to responsible lending and investment, risk management must be robust and responsible because, at the end of the day, when banks fail, the whole financial system is in danger.

[03:29] What is really special about banks is that when the trust of one bank is in danger, it can potentially affect other banks. This is one of the reasons why banks are so regulated.

[03:47] And the fact that the banks comply with the regulations is also part of being responsible, in my view. Consumers, stakeholders, and everyone would benefit from banks being more compliant.