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Best practices in sustainable finance

A survey of the link betwwen Corporate Social Responsibility (CSR) and the financial service sector in Canada and at the international level

Coro Strandberg, June 2005

To download : PDF (340 KiB)

Summary :

Corporate Social Responsibility (CSR) is emerging as a significant international business trend, becoming a preoccupation of many business executives worldwide.In an effort to understand how this trend is playing out in the financial services sector, 10 Canadian financial co-operatives

funded a study to assess international best practices, standards and trends in CSR or sustainable finance. They hired Strandberg Consulting to conduct the study, which looked at best practices of 21 financial institutions from the banking, insurance and asset management sectors, and 10 international sustainable finance sets of standards, principles and guidelines. Fifty thought leaders in sustainable finance around the world were also interviewed for their views on the future of sustainable finance by 2015. This paper reports on the first part of this research: international

best practices and innovations in sustainable finance. “Best Practices in Sustainable Finance” looks at 11 best practice institutions that are

internationally or nationally renowned for their social and environmental leadership. It also profiles best practice initiatives of an additional 10 financial institutions to provide further information on the breadth and scope of sustainable finance as it is currently practiced.

The results reveal that leading financial institutions (FIs) are setting up governance and management systems to embed CSR into their operations, are reporting on their CSR performance with independent validation, are developing a CSR product array that integrates social and environmental considerations, are integrating CSR into their risk management systems

and are developing methods for screening their investments against CSR criteria. They are developing strategic CSR policies and programs across a range of social and environmental areas to reduce or offset their negative, and boost their positive, direct and indirect impacts.

CSRoriented FIs have robust stakeholder engagement programs to solve complex sustainability challenges, provide input into business strategy, and keep abreast of stakeholder concerns. While the debate starts to gather steam over the degree to which FIs have a responsibility to advance sustainability, best practice CSR financial institutions are playing a lead role to promote sustainable practices within their operations, to their consumers and the public at large.

Best practice CSR FIs are treating sustainability as a business strategy and opportunity – not as an add-on, feel-good charitable endeavour, but how can we create longterm value for our company through a strategic approach to CSR? Given this trend, CSR is moving into the boardroom of financial institutions where targets are being set for overall CSR performance.

CSR FIs can be distinguished in part on the basis of whether they perceive CSR to contribute to longterm shareholder value (mostly public companies) or whether their mission and business model are built upon sustainability values (mostly non-public companies). Still other FIs present themselves as neither mission-driven, nor shareholder valuedriven, but as fundamentally

committed to using their resources to contribute to social and environmental progress.