Banking responsibly after COVID-19

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John Elkington looking at the camera

John Elkington, Founder and Chief Pollinator, Volans, on how the retail banking sector must use its considerable influence to shape an economy that delivers for both people and the planet.

At a time when resilience is a priority in many (virtual) boardrooms around the world and regenerative is the new buzzword being attached to everything from fashion and food and travel, plain old responsibility can feel tired and neglected. And yet, the responsibility agenda remains foundational. Failure to act responsibly – as the banking sector knows only too well – erodes trust. Without trust, it is difficult for any business to be resilient, let alone regenerative.

Beyond COVID-19, the unfolding climate emergency is also changing what it means to be a responsible bank.

John Elkington, Founder and Chief Pollinator, Volans

The potential business impact has been underscored recently by the forced resignations of Rio Tinto’s chief executive officer and two of his senior colleagues. But most businesses are unlikely to be involved in the destruction of caves used by Aboriginals for 46,000 years. So, what does it really mean to act responsibly, particularly in pandemic times?

Whether or not they are equipped to do so, COVID-19 is forcing most businesses to confront existentially challenging questions about how to balance their responsibilities to different stakeholders – employees, customers, suppliers, shareholders and communities. And because of the way they are stitched into the fabric of our economy, retail banks have a particularly important role to play in helping society weather the economic storm and build back responsibly.

Today, Business in the Community (BITC), in partnership with Santander UK and Volans, is launching a report exploring that role in detail. It marks the first anniversary of the launch of the UN Principles for Responsible Banking, looking at how those principles are being – and can be – put into practice by the UK retail banking industry.

The fallout from COVID-19 inevitably looms large. Even before the pandemic, an estimated 11.5 million people in Britain had less than £100 in savings to fall back on. As banks (for sound business reasons) look to minimise their risk exposure, there is a danger that they will unintentionally exacerbate the social and economic crisis.

Tightening access to credit may be the right thing to do from the perspective of shoring up balance sheets, but banks must be acutely aware of the effect this will have on individuals and businesses needing finance – and on the communities that depend on them.

Beyond COVID-19, the unfolding climate emergency is also changing what it means to be a responsible bank. Campaigns such as Make My Money Matter are encouraging more of us to take an interest in how our money – whether in a bank account, pension fund or ISA – is being put to use. Products such as “green” loans and “green” mortgages are starting to take off, with the potential to help channel finance towards a lower carbon, more inclusive recovery.

Banks of all sizes must also now grapple with the implications of rapid technological change. Topics such as cyber-fraud and algorithmic bias that still appear peripheral to many customers today can only grow in importance.

These challenges are too big for any one institution to grapple with alone, which is why collaboration within and between sectors is vital. We very much hope that this report, and the responsible banking initiative it feeds into, can play a part in helping the retail banking sector to wield its considerable influence to shape an economy that delivers for both people and planet.

John Elkington is Co-Founder and Chief Pollinator at Volans, a research and advisory firm focused on sustainability, innovation and market transformation. John is one of the founders of the global sustainability movement, an experienced advisor to business and a highly regarded speaker and writer. His latest book, Green Swans: The Coming Boom In Regenerative Capitalism, was published in April by Fast Company Press.