By becoming Sustainability Certified, financial institutions will not have to make a choice between making a profit or serving the society, becoming financially viable or environmentally sustainable, and making short-term profit or aiming for long-term benefits.
Introduction
THIS being the text of the speech by Arshad Rab, Chairman, International Sustainability Council; and CEO, European Organisation for Sustainable Development, while presenting the Sustainability Standards and Certification Initiative (SSCI) at the World Development Finance Forum 2020, on September 3o, 2020. Access Bank Plc was among the first four banks from around the world to be certified under the initiative. Further banks were newly accepted into the certification programme, which Mr. Rab said admits only value-driven financial institutions.
Greetings.
SSCI was developed based on the conviction that financial institutions are uniquely positioned to lead the process of sustainable economic transformation in their countries.
But to make financial institutions a powerful force in shaping the future requires new thinking, new mind-sets, and new rules. In short, new standards are required. SSCI, therefore, delivers cutting-edge sustainability standards for creating strong, value-driven and profitable financial institutions.
Allow me to briefly share five compelling reasons for financial institutions to embrace sustainability holistically, which is the requirement for becoming a sustainability-certified institution.
First and foremost is institutional sustainability, which is the prerequisite for becoming the driver and enabler of social and environmental sustainability. It is when a financial institution is strong, when it is resilient, only then will it be able to contribute in making the country strong and protecting the natural environment.
The sustainability standards make social sustainability a part of the innovation strategy and provides the certified financial institutions a competitive advantage in the increasingly unpredictable market environment.
By becoming Sustainability Certified, financial institutions will not have to make a choice between making a profit or serving the society, becoming financially viable or environmentally sustainable, and making short-term profit or aiming for long-term benefits.
Sustainability standards put an end to the debate of either-or, thereby enabling the certified financial institutions to meaningfully align economic development and society’s well-being with a powerful business case. It enables certified institutions to make protection of environmental assets one of their key responsibilities and key businesses.
The environmental criteria currently widely used focus on documenting, reporting or disclosing the results of past performance. But, let me clarify that to become a sustainable organization, it is by no means sufficient to document, report or disclose the past performance in terms of social and environmental sustainability.
Merely using reporting tools to celebrate reduction of few grammes of CO2 emissions will not make an organization sustainable, nor will it lead to creating a more sustainable world. Actionable and forward-looking parameters are needed, those that deliver a comprehensive framework to value-driven financial institutions.
Therefore, SSCI serves the mounting need for setting standards that are specifically tailored for value-driven financial institutions: those who are committed to become drivers of green and resource-efficient economies and by doing so make their own institutions future-proof. The financial institutions that will survive and thrive in the 21st century will be the institutions which are good and not harmful for the people and the planet.
This brings me to the second compelling reason for financial institutions to become sustainability-certified, which is about investing in the ‘World We Want’. This is to be achieved by implementing the 17 Sustainable Development Goals (SDGs).
Impact investing has been experiencing momentous growth over the past years. Currently, there are over US$3 o trillion impact investment assets under management worldwide. But there remains a missing link between impact investors worldwide and the bankable projects for social, environmental and economic sustainability.
To that end, SSCI is a major enabler for accelerating impact investments and moving sustainability-centric investments from niche to mainstream and closing the funding gap for achieving the SDGs.
Sustainability Standards also provides an alternative to green, social or SDG washing, and they put an end to what we can call, ‘sustainability laundries’, which are flourishing in the absence of genuine initiatives.
The third reason for creating SSCI is that being sustainable in the 21st century also requires adapting to the changing times in which technology plays a critical role. This compels financial institutions to become sustainability-certified.
Technologies for sustainability are today considered critically important for addressing social, environmental and economic challenges. SSCI enables financial institutions to seize the market opportunities arising from disruptive technologies. It makes the technological transformation a major source of success and makes certified institutions some of the most relevant players in the market.
Fourth, becoming a meaningful partner in times of crisis such as the current coronavirus crisis requires targeted response. SSCI is designed to be highly responsive and adaptable, and it promotes organizational agility and resilience to crises.
Unlike the common crisis management procedures, systems or mechanisms, SSCI deals with crisis management holistically, in line with its core philosophy. This lays the very foundation for creating robust institutions, which are crisis-resilient and crisis-ready.
The fifth important reason for creating SSCI is that the Sustainability Standards also establish emotional bond between institutions and their customers and the society at large.
However, Sustainability Standards are more than about financial and economic viability, environmental health and being responsive to technological disruption and mega crisis.