Leaders and executives from the big four banks, Bank Australia, and a number of financial, civic and educational institutions have recently come together to help steer the finance sector down a more socially responsible path.
The Australian Sustainable Finance Initiative - which will be taking cues from similar bodies across Europe - hopes to influence policy and align business goals with the country’s ongoing commitments to sustainability.
And it couldn't have come at a more opportune time. While many banks have adopted a more ethical approach in recent years, the financial sector as a whole still has a lot of work to do. At the moment, profit is still priority number one, while the long-term interests of Australia come in a distant second.
Climate change a central issue
Addressing climate change will be at the top of the agenda, with the group acknowledging the need to bring Australia on par with other nations in its efforts to transition to a sustainable economy.
IAG Group Executive Jacki Johnson, who is co-Chair of the Initiative, said “The roadmap we create will include pathways, policy signals and frameworks that will better enable the financial services sector to contribute to delivering on international commitments, such as the Paris Agreement on Climate Change and the UN Sustainable Development Goals, while underpinning economic stability and prosperity for Australia.”
“Achieving these goals extends beyond social or environmental objectives – it’s an economic and financial necessity. Our economy simply cannot prosper in an environment of ever-increasing severe weather events and the subsequent broader impacts these will have.”
At the moment, public perception of financial institutions isn’t too high. Post-Royal Commission, many banks have been scrambling to regain Australians’ trust, and a growing number of customers are ready to make the switch if their expectations aren’t being met.
The formation of the Initiative acknowledges the enormous role the finance sector plays in the economy, and its ability to affect positive change. At a time when more and more Australians are recognising the need to commit to sustainable practices, it makes sense that we’d expect our institutions to do the same.
As Simon O’Connor, Initiative Co-Chair and CEO of the Responsible Investment Association Australasia (RIAA), put it: “Through a greater alignment between the financial services sector and these sustainability goals, the sector can both deliver for Australians while building a better, more stable and sustainable financial system.”
If news of the Initiative has you itching to make some changes of your own, be sure to check out our savings account comparison page for an overview of what's available.