Financial institutions' role in the sustainable development process
A new study on the role of the financial sector in achieving sustainable development shows both the (relatively limited) direct impact that financial institutions have on the environment, as well as the substantial indirect impacts through lending and insurance activities. The study, carried out for the European Commission, DG XI, concludes by outlining options to help optimise environmental performance in the financial sector. The study examines the potential for action in both the commercial banking sector and the investment sector, and the advantages and disadvantages of the options outlined. The policy options outlined for consideration by the Commission include: - Standardising and improving information currently collected and made available by environmental regulators; - Developing environmental reporting standards targeted at the financial markets; - Requiring financial institutions to ask investors about their concerns on how their money is invested; - Developing an Eco-label for environmentally responsible investments; - Supporting information dissemination on best practice for financial institutions; - Extending the European Environmental Management and Audit Scheme (EMAS) to include financial institutions; - Supporting awards for innovation in finance; - Improving existing support to the environmental business sector.