By Karen Wendt
In this article, Karen Wendt, the editor of Responsible Investment Banking: Risk Management Frameworks, Sustainable Financial Innovation and Softlaw Standards, gives our readers an introduction to her latest body of work which is a collection of authoritative essays on the role of investment and finance in the creation of climate – friendly markets, positive social impact and fundamental ethical values in business. The essays give structured overview of the main investment banking initiatives, softlaw standards, risk management and impact investing strategies.
The major resource in investment and banking besides efficient IT systems and competent staff is trust. Trust is the fuel investment companies run on – and if the source runs dry, the vital role of this otherwise invisible source of fuel becomes very apparent. The banking market message has been: “Give me your money, I will care for it, keep it in good custody for you and invest it in a profitable way”. Now with negative interest rates in many countries and banks shifting business models the question is: Does society still believe this message to be true?
There is no doubt about what has prompted this anthology on “Responsible Investment Banking”: the international financial and economic crisis since 2008. The crisis has fundamentally changed the perception of banks and the role of the financial industry and the crisis has prompted harsh austerity programmes in many countries. The contributors to this e anthology ‘Responsible Investment Banking’ recognise the need to face the consequences of failures in investment banking, dig deep to understand the root causes and go beyond the current mainstream concepts of investment and banking. They advocate that another future is feasible, a future that is sustainable, innovative, ethical and profitable while supported by sound governance and by communities. They show that investment and banking can be constructive in creating solutions to the global challenges ahead. The flow of money can be incentivised to flow to investment and finance transactions that create positive impacts, while negative impacts can be minimised or mitigated. A lot of experts in the field have recognise that the current business model is on the cards. Future oriented leaders in the field of investment and banking are figuring out how trust can be re-established and overcome crisis.