In Part 1 of this series, I focused on tackling Environmental, Social and Governance (ESG), as this is an appropriate place to start when considering how to build back better. Encouragingly, this past week also saw several announcements on ESG by financial services companies – Tandem Bank acquired green lender Allium, HSBC set up a new venture with Pollination Group creating a group of funds, investing in activities that preserve, protect, and enhance nature, and address climate change; and former Governor of the Bank of England, Mark Carney joined Brookfield Asset Management to lead their expansion into environmental and social investing.
All great initiatives and all on the right path to building back better.
But if seeking conscious capitalism, it’s not enough to just look at ESG. Additional focus is needed in other areas too.
Aligning to global responsibilities – and if they are to sincerely put the customer at the heart of why they do everything they do – banks and FinTech companies need to review and renew their purpose and values.”
Build because you mean it
“You can build value as well as having values” according to Sonali De Rycker, a partner at venture capital firm Accel.
Taking a stand for values that you believe in has in the past focused on preventive measures rather than enabling purpose. Companies can point to their Corporate Social Responsibility (CSR) Programs and Socially Responsible Investment (SRI), but employees—both young and old—are becoming more aware of the limited impact these efforts are having and are calling for a system change.
Could this put us on a path towards mandatory corporate responsibility enforced by pressures from future generations? The World Economic Forum (WEF) published a white paper of suggested core metrics to track based around Planet, People and Prosperity. The draft metrics (awaiting final publication post consultation) provide a framework around how to start thinking about what to track. These could even become mandatory measures enforced by regulation. But it goes beyond simply tracking these areas.
A framework without action is like building a house by painting the outside and making the garden look pretty—there’s too much focus on vanity when the house really needs to be as functional on the inside to fulfil it’s true potential.
Over 100 global companies have also recently taken a different stand and signed up to the #StopHateforProfit campaign. Set up by a coalition of civil rights organisations in the US, it has organised for global corporations to stand in solidarity against the spread of hate online by boycotting ads on social media platforms.
Steven Loerke, CEO of the World Federation of Advertisers (WFA), believes that this is a turning point in advertising. WFA members make up 90% of global marketing communication spending ($900 billion annually). In an interview with CNBC, Loerke said, “The way you allocate your media spend, where you put your ads, talks about your company. We moved from brand safety to—I think—societal safety.”
Societal safety efforts and positive social change will be recognised across multiple generations, particularly amongst the socially conscious—but only if you have the right intentions. This is not the time to be taking a stand for the positive PR spin cycle. Consumers will be watching closely for when you stand down and start advertising again. It doesn’t need to be a public statement of intent. Do it because you mean it. Do it because it aligns with your values. Do it because it’s the next right thing.
This is especially true for the financial services industry.
Build because it can be done
There are some great examples of banks already making strides for social good causes. In the US, Aspiration is a financial services firm building a socially conscious community of consumers who want to make a difference. Aspiration picked up over 200,000 customers from Wells Fargo by taking a stand over fossil fuels and actively positioning themselves against it.
Bank of the West also recently announced a new account to help combat climate change, tracking the carbon footprints of every purchase, offering biodegradable cards and donating one percent of net revenues generated from the account to environmental non-profit organisations focused on creating a healthier planet.
In Europe, Triodos Bank focuses all its activities across three overarching themes: Environmental, Cultural and Social. Triodos is building “Europe’s Sustainable Bank”, to deliver positive social and environmental change to improve people’s quality of life. Its purpose is transparent and it publishes the details of every business that it finances. Customers can see on a map where their savings and investments are creating positive change for people and the planet. Within a few miles of my home, they are helping a charity that provides short-term accommodation to vulnerable people, a health food shop, and a parental support group for mentally handicapped children. This is really powerful, particularly for consumers with shared values.
Triodos are also part of the Global Alliance for Banking on Values, an independent network of over 60 banks using finance to deliver sustainable economic, social and environmental development, with a focus on helping individuals fulfil their potential and build stronger communities.
Build because it’s not easy
President Clinton said in 2006, “As we have learned in other parts of the world in the wake of massive disasters…rebuilding the physical, social, and human capital of shattered communities takes years.” The research concluded that “build back better” is an attractive and desirable goal, but whilst technology changes and progress will undoubtedly have helped us learn and advance over the past two decades, numerous experiences have proved that it is easier said than done.
Marc Andreessen of venture capital firm, Andreessen Horowitz, recognised this also in his It’s Time to Build essay: “Building isn’t easy, or we’d already be doing all this. We need to demand more of our political leaders, of our CEOs, our entrepreneurs, our investors. We need to demand more of our culture, of our society. And we need to demand more from one another. We’re all necessary, and we can all contribute to building.”
Whether a banker, a FinTech entrepreneur, a venture capital investor, a small business owner, or an individual consumer, now is your opportunity to reset—to make a difference—to build value not only for yourselves and your companies, but for your communities and society as a whole.
Change is always going to feel uncomfortable and problematic.
This time, it will feel more contentious than ever.
There is no quick fix to build back better, but we must do it anyways because society is shifting and financial services need to shift with society.
We are in the midst of the darkness between the old and the new.
We have the opportunity for something better.
We need to find new sources of light, a new purpose for the heart.
We can—and we must—Build Banking Back Better.
Paul Loberman is a frequent contributer to FinTECHTalents and a noted FinTech expert.