Towards Sustainable Finance: Conceptualizing Future Generations as Stakeholders

The paper aims to address a difficult yet important issue of the modern world, which is related to a lack of consideration, from investors’ point of view, for the sustainable future of our socioeconomic system. Many investors think in terms of MSV (maximization of the shareholder value) and fail to consider other important stakeholders. Future generations will “inherit” the results of the actions of current generations. Investing money in some lucrative ideas is definitely a very important financial activity, but it must be done responsibly. The Sustainable Development Goals (SDGs) postulated by the UN; the Environmental, Social, and Governance (ESG) criteria; and the Equator Principles are some notions proposed to be considered to make investors’ actions more responsible. Future generations deserve a better, safer, and unwasted place to live in, so it is the right time to start thinking of them as major stakeholders. The paper reviews some of the important research related to this issue and brings its contribution to the stakeholder theory by proposing a new vision, one that is future oriented. The proposal to conceptualize future generations as stakeholders is an important contribution of the paper. Methodologically, we relied on relevant literature and recent initiatives and approaches. Further research is needed to identify the means to operationalize our proposal.

Equator Principles 4-Revised Climate Change Risk: What Does This Mean For Project Financing in Africa Amidst The Ongoing Energy Transition?

Since its inception, the Equator Principles Association introduced a risk management framework in response to the ever-changing environmental and social risk in projects. The Equator Principles (EPs) result from minimum standards for risk management to stop the race to the bottom. In June 2013, EP3 was introduced, and climate change requirements were added to address the 'transition towards an ethical and low-carbon economy.' This eventually led to the newly revised Equator Principles 4 (EP4s), 'Climate Change Risk Assessment' (transition risk), in July 2020. This article analyses the effect of the transition risk of EP4 to determine whether this new addition will support or inhibit oil and gas project financing in Africa amidst the ongoing energy transition by questioning the underlying assumptions upon which the policy design was developed. The article concluded that consideration for project financing in Africa could be expected to address the energy needs in Africa while at the same time essentially pushing governments to take into consideration climate change by putting in place processes, policies, and systems to manage these risks.' Furthermore, the transition risks definition and implementing standards of EP4 are broadly worded, allowing adapting the principles to a wide range of regimes that positively contribute to these domains. This essentially enables consideration of ethical transition and provides for coordination and coherence across different policy domains.

Interpreting banks’ sustainability initiatives as reputational risk management and mechanisms for coping, re-embedding and rebuilding societal trust

Purpose This paper aims to contribute to a growing literature in sustainable and green banking by exploring the views of senior banking representatives towards the implementation of sustainability initiatives through extensive interview research. The authors explore the extent to which such initiatives are embedded within the banking industry, whether they represent risk management mechanisms and whether they are imbued with reputational risk management rather than a genuine response to ethical societal concerns. Design/methodology/approach Qualitative semi-structured interviews were conducted with UK bank managers. The interviewees’ utterances are interpreted through a sociological theoretical lens derived from the study of Giddens and Beck, allowing us to conclude that external initiatives such as the Equator Principles seem to be adopted as re-embedding mechanisms that can rebuild societal trust, as well as representing mechanisms of reputational risk management. Findings The analysis suggested that internal sustainability initiatives were interpreted as coping mechanisms whereby bank employees can recreate their protective cocoon, reinstating their ontological security in response to the high consequence risks of climate change and other related systemic factors that create overwhelming feelings of engulfment. Originality/value Using Beck’s risk society theory as a theoretical lens through which to interpret the interview data allows a number of concluding comments and suggestions to be made. The findings resonate with earlier research into institutional investors’ attitudes towards climate change that found their engagement and dialogue with companies around climate change issues to be imbued with a risk discourse: their initiatives and actions were dominated by risk management motivations.

"Green into Gold": The Sustainable Development of Commercial Banks from the Perspective of the Equator Principles

The Equator Principle is the goal of promoting the harmonious development of my country's economy and society. It promotes the green transformation and upgrading of the industrial structure by strictly controlling the flow of commercial bank funds, so as to achieve the goal of environmental protection and the coordinated development of the national economy. This paper uses factor analysis to reduce the dimensions of 10 financial indicators and non-financial indicators that measure the operating performance and development potential of joint-stock commercial banks, and then compares the comprehensive operating performance, liquidity, and safety of Industrial Bank and comparable banks. And the level of profitability, analyze the difference in comprehensive operating performance of joint-stock commercial banks joining the Equator Principles compared with commercial banks that have not joined the Equator Principles. The results of the study found that joining the Equator Principles of joint-stock commercial banks can improve comprehensive operating performance in the short term. In the long run, the development trend of Industrial Bank will be similar to that of comparable banks in the same category. Joining the Equator Principles of Industrial Bank can improve its liquidity and profitability, but it will not in the long run. Conducive to the improvement of the asset quality of joint-stock commercial banks. In this regard, the government, enterprises and financial institutions should work together to help commercial banks achieve an effective balance between operating performance and social responsibility, so as to achieve the goals of "carbon peak" and "carbon neutral".

ADOPTION OF VOLUNTARY GLOBAL GOVERNANCE INITIATIVES: EQUATOR PRINCIPLES AND BANKS IN NIGERIA

Due to the growing level of dissatisfaction with the traditional models of governance established by the state, international governance initiatives have attracted more attention. This exploratory study is aimed at finding out the level of awareness and adoption of one such initiative, the Equator Principles (EPs), by banks in Nigeria. These principles were said to represent a good standard where environmental and social risks inherent in development projects can be identified, assessed and managed. The study was anchored on two theories: The club theory and the theory of institutional isomorphism. The survey data were gathered from 124 managers of the leading 10 deposit money banks in Nigeria. Data were analyzed using descriptive statistics presented in frequency tables and percentages. The findings show a high level of awareness of the EPs among the banks in Nigeria, but a low level of adoption. Although the study is limited by a small sample, it offers evidence that difficulties in measurability of benefits of adopting Equator Principles and lack of enforcements of sanctions for noncompliance seriously limit the number of financial institutions adopting the regime in Nigeria.

Integrating the Notion of Sustainable Development in Banking: Analysing Historical and Conceptual Framework

In the past three decades, ustainable development has emerged as a new paradigm for development. Contemporary s development discourse puts the onus on every governmental and non-governmental organisation to contribute towards sustainable development. Banks play a critical role in the achievement of sustainable development goals due to its intermediary role in the economy. Recently, various international guidelines and roadmap were developed to promote the notion of sustainable development such as Equator principles, PRI, UNEP FI, and Global reporting initiatives (GRI). The purpose of this paper was to discuss the evolution of the notion of sustainable development vis-à-vis the role of banking institutions in sustainable development and also examined contemporary national and international initiatives that propagate the role of banks towards sustainable development and finally suggested a framework to achieve sustainable development through sustainable banking practices.

Performance Evaluation and Application of Banking Industry Based on Equator Principles

With the deterioration of the global natural and social environment, people have begun to pay attention to the fulfillment of corporate social responsibility, and banks as special financial institutions are no exception. In 2003, the emergence of the Equator Principle became the basic criterion for the banking industry to fulfill its social responsibility. Under such a social trend, China’s banking industry proposed a “green credit” policy in 2007, but it is still far from the equatorial principles introduced internationally. Therefore, how to accelerate the pace of China’s banking industry entering the Equator Bank is a question worth considering. We need to set up a bank performance evaluation system based on the equator principle to promote the development of the equator principle in China’s banking industry, which is also the focus of this article. In this paper, through the study of the practice of the Equator Principles at home and abroad, a set of performance evaluation systems for the banking industry based on the Equator Principles is established. The Industrial Bank is used as an example to apply this evaluation system.