In a compelling and thought-provoking discussion, Ugo Biggeri, European Coordinator of the Global Alliance for Banking on Values, and Peru Sasia, President of FEBEA, engaged in a profound conversation with Azul Tejerina, a journalist at La Ser radio station in an event organized by Fiare Banca Etica. The dialogue touched upon crucial aspects of ethical finance and its role in shaping a prosperous and sustainable future. They are co-authors of the recently published book Ethical Finance and Prosperity Beyond Environmental, Social and Governance Investing (Routledge).
Regenerating Society and the Planet
For these leaders, the focus is not merely on sustainability, but on regenerating society and the planet. In the realm of ethical finance, sustainability and justice are intertwined concepts from the very beginning. The emphasis is on building projects rather than designing products, to make a significant political impact.
"Ethical banking isn't about product design; it's about crafting projects to make a political impact."
Money Matters: Questions about Life
Ugo Biggeri pointed out that questions about money are essentially questions about life. The challenge lies in breaking the habit of separating financial thinking from everyday life. However, both leaders underline the fact that people have started to ask questions about what their money is being used for, and that’s already a significant step.
Aiming bigger, it is to demonstrate that true change in finance can be achieved through the proper management of larger banks.
"It's paradoxical that regulators impose more restrictions on sustainable products than on fossil fuels."
Challenges and Ironies in Ethical Finance
The conversation highlighted the ironic challenges faced by ethical and sustainable finance in comparison to traditional banking. Regulators often impose more obstacles on sustainable products than on fossil fuels, requiring rigorous proof for the former but allowing the latter without question.
"Questions about money are questions about life."
The Role of Governance in Ethical Finance
Governance emerges as a key element in ethical finance. Leaving everything to the consumer’s free decisions and market control is seen as unrealistic . Transparency is essential, enabling better practices, but the focus is on the importance of political decisions in determining a bank’s impact and direction. In the words of Professor Sasia: “Deciding what is important for a bank and how it wants to generate impact is a political matter.”
Prosperity Beyond Growth
The leaders discussed the need for a paradigm shift in the economy, emphasizing collective growth as true prosperity. Metaphors used in economics were scrutinized, with an acknowledgment that the planet’s thermodynamic constraints necessitate rethinking the perpetual pursuit of growth. Peru Sasia explains how in their book they launch que following question: “The necessity to stop growing as we do now is a must, a parameter of the system, not a variable – how do we build prosperity when growth is limited?”
Public Intervention and Collective Action
Despite the transformative power of private and ethical finance, there is recognition that not everything can be solved through the private sector alone. A comparison is drawn to historical interventions, such as the abolition of slavery, indicating that public intervention may be necessary to forbid certain investments.
"The transformative power of private and ethical finance is not absolute. There may come a time when the public sector has to step in and prohibit specific investments, just like they did with slavery."
Building a Strong Ethical Finance Community
The discussion concluded with a focus on the growing strength of ethical finance institutions globally. These entities work collaboratively within networks such as GABV and FEBEA, recognizing the importance of collective action. The European Union acknowledges the indispensability of ethical banks in implementing policies crucial to its objectives.
"The institutional strength of ethical finances is now very robust. The European Union knows that ethical banks are essential for implementing its policies."
The dialogue shed light on the multifaceted nature of ethical finance, emphasizing the need for collective action, public intervention, and a fundamental shift in economic paradigms to truly achieve prosperity.
Listen here the full conversation in Spanish:
