“For an ADI to be sustainable, it must take into account the social and environmental impacts of its investments and loans ”.
- Gen Advisory Pty Ltd, September 2019.
“Every company must not only deliver financial performance, but also show how it makes a positive contribution to society”.
- Larry Fink, Chairman and CEO Blackrock, 2018.
Sustainable Banking – At a Glance
Sustainable Banking has been described as some as an alternative to “traditional” banking. It takes into consideration non-financial factors such as environmental, social and governance (ESG) criteria.
According to Gen Advisory’s research, Sustainable Banking encompasses:
- Sustainable funds;
- Green bonds;
- Microfinance; and
- Impact investing (refer below).
As concerns regarding scarcity and inequality exacerbate, many investors – including financial institutions – are becoming increasingly interested in achieving not just economic profits, but also social good. One mechanism for this is Impact Investing.
There is, however, a significant obstacle. Although the business world already has universally-accepted metrics (such as ROI, IRR etc) for measuring a potential investment’s financial yields, there is yet to be a standardised tool for evaluating hoped-for social and environmental returns in dollar terms. As a result, forecasting gains from Impact Investments is too often a matter of “guesstimates”.
Sources: Havard Business Review (2019), Gen Advisory analysis.
Gen Advisory’s research to date on “Sustainable Banking” and “Impact Investing” is displayed below.
We will issue further research over time as our thinking on these topics evolves.
How Gen Advisory can assist ADIs on Social Impact Investing (SII)
Drawing from our toolkit of services, ways in which Gen Advisory can assist Australian ADIs on SII include the following:
- • Ascertaining the ADI’s current understanding of, and receptiveness to, SII.
- • Delivering bespoke training on SII.
- • Delivering bespoke research on a specific SII-related area of interest.
- • Designing an ADI-specific technical assistance programme on SII.
- • Managing and executing, on the ADI’s behalf, a project on SII.
- • Conducting due diligence on prospective SII partners.