on The Sustainable Development Goals 2020 and the importance of Strengthening Partnerships and SDG 17
The idea of the capital becoming a force for good is a powerful one. This report examines the ways and extent to which some of the world’s leading financial institutions are seeking to shift what and how they finance to create a better world. The report shows that the common ground among the industry leaders is becoming a bar for would be leaders to cross, that the leaders are pushing beyond the common ground and ‘doing good’ leads to superior performance. As a result, a definition is emerging of what it means to be a `force for good’.
This report has found that the leaders of the finance industry have made important foundational changes, are making even greater changes and the strongest and boldest among them are becoming leaders, not just leaders of finance.
The emerging trends, ideas and themes arising from this work point to profound changes in the system of capital and capitalism. They are indicative of a finance industry that, from the top of the industry, while continuing to run its current markets driven businesses, is also maturing and adapting to reinvent itself. While the initiatives to date, as bold and ambitious as they are, are at an early stage of the industry’s evolution, the industry has set in motion changes that that will change its self-conception. Given the world is in the throes of a disruptive series of challenges, there is much further to go in what will ultimately be a transformation to enable capital to play its essential role in the biggest changes in the world at large.
Of strategic importance is the idea that the experience of making a difference in society is one that teaches invaluable skills to an organization and emboldens it to develop its business in ways that previously seemed impossible. The journey itself is transformative ultimately creating an insurmountable gap between those that learn to change the world at large for good and those that choose a narrow definition of their purpose.
The report looks quantitively and qualitatively at the role that over 60 leading institutions in the global finance industry, representing over US$100 trillion, and nearly 30% of the world’s financial assets, across geographies and asset classes, are playing in addressing key issues facing the world, including climate change, financial inclusion and inequality. The report analyzes the industry’s activity in terms of its adoption of ESG, sustainability and stakeholder policies and programs.
In recognition of the importance of the extreme nature of the challenges facing the world and the need for capital to be deployed in unprecedented volume, speed and effectiveness, the report defines the idea of how a financial institution can be a “force for good” through its actions and values, specifically in terms of “Mindful Conduct” in the form of effective ESG programs; “Caring for the Planet”, by promoting environmental sustainability; and “Compassion for All”, measured by how leaders are moving from a belief in shareholder primacy to embracing multiple stakeholders. Taken together these provide for the achievement of the SDGs and for changes in the way capital is deployed. The analysis in the report shows, among other things:
- Over 60 leading global financial institutions, representing over US$100 trillion of assets and c.30% of the total global assets, with over 3 million employees, across major continents were examined, and c.30 were ‘active participants’
- US$12.5 trillion of AuM (12% of total assets) have consciously incorporated ESG factors into their investment decisions to promote activities for good
- 100% have adopted ESG and sustainable investing targets, representing US$102 trillion.
- 98% apply a series of ESG screening metrics to proactively promote the funding of what they see as sustainable projects and enterprises
- 97% of the leading finance industry participants in this study have committed to actively reducing their own carbon footprint
- 90% have publicly affirmed their commitment to serve the broader stakeholder community
- 84% have prioritized climate action as an urgent organizational priority
- 73% offer or invest in ESG or sustainable products (e.g. green bonds, sustainable loans, etc).
A number of these financial institutions are taking the lead in addressing global challenges and reorganizing their businesses to achieve this, including working with multiple stakeholders to address national challenges and creating new global institutions to solve international ones.
The cumulative and collective initiatives of the leading financial institutions provide insights into a series of trends and themes, with the potential to reshape not just the finance industry, but the wider financial system, and the shape of the world over the coming decades. They point to aligning the world to fund the UN SDGs, fight climate change, drive mass inclusion and fund the future, potentially using radically different models of finance that will empower individuals to make conscious, informed and effective choices that have a positive impact on the world. While there will undoubtedly be setbacks, with some institutions lagging and others faltering along the way, the positive long-term direction of travel is becoming increasingly clear. The report outlines the mega trends, big ideas and themes with the potential to reshape the financial system, the wider system of capitalism, and the shape of the world over the coming decades at a historic time that sees the world in a transition of civilizations.
“We are at the early stages of the war on climate change and the need to renew our war on poverty, inequity and injustice. The next decade will need to see structural changes towards renewable sources of energy, climate-friendly technologies, low-carbon equipment and more sustainable modes of consumption as well as the empowerment of women and the next generation of participants in the global economy from the developing and developed world. Capital has a big role to play in the delivery of that better world and we wish it every success in accelerating its impact to become a great “force for good”.
Chantal Line Carpentier, United Nations Conference on Trade and Development (UNCTAD) New York office of the Secretary-General, Will Kennedy, UN Senior Programme Officer, United Nations Office for Partnerships
“This report takes all that data and events and turns it into an analysis of how the leading organizations in the finance industry are changing the way, and for what, capital is deployed and as a result changing the system of capital, and the flow of funds across the world. Their efforts also set the bar for what the industry as a whole will need to rise to. And this in turn will catalyze further changes across the industries they finance. Stepping back from the flow of information, it is clear that a movement of quite dramatic change is underway and the trajectory and momentum of it holds the promise of making finance a force for good, for the common good.”
Ketan Patel, Project Lead and Chair of the Steering Group, ‘Force for Good Project’ on the Future of Capital and Lead Author, Lawrence Ford, Senior Representative from and Founder of FutureCapital
Capturing Hearts and Minds to Change the Flow of Capital
The world needs to find US$4 trillion every year for the next 10 years to meet the SDG goals to 2030. The pandemic has dramatically slowed and even reversed progress on the SDGs, disproportionately impacting the most vulnerable segments of societies, with 115 million people back into extreme poverty and the equivalent of 225 million full-time jobs lost. Many of the world's leading financial institutions, including the participants in the Force for Good initiative, have prioritised the SDGs focusing on climate change, affordable and clean energy and decent work and economic growth. Goal 14, Life Under Water, on the other hand has ranked near the bottom of the finance industry's list of stated development priorities. Credit Suisse talks about how their SDG impact strategy and its focus on both climate change and the sustainability of the world's oceans.
Committing Capital at Scale Trillion Dollar Committments
Net Zero Asset Managers Initiative Grows to US$37 trillion