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Socially Responsible Investment and Sustainable Banking - Principles for reorienting a regional/local bank’s business towards sustainability

Hörnlein, Tobias LU (2015) In IIIEE Master thesis IMEN41 20151
The International Institute for Industrial Environmental Economics
Abstract
This thesis is constructed on an examination of the global principles and operational methods of Socially Responsible Investment (SRI) and their linkage to Corporate Social Responsibility (CSR). These phenomena have implications for the sustainable banking business, which aims to deliver banking products and services aligned with a triple-bottom-line corporate approach contributing to sustainable development in the financial sector. In detail, this research looks at how a regular banking business can be transformed into a sustainable bank, focussing on products, lending and investment standards, business drivers and barriers, as well as public value creation. The research builds on the theoretical context of CSR and financial performance... (More)
This thesis is constructed on an examination of the global principles and operational methods of Socially Responsible Investment (SRI) and their linkage to Corporate Social Responsibility (CSR). These phenomena have implications for the sustainable banking business, which aims to deliver banking products and services aligned with a triple-bottom-line corporate approach contributing to sustainable development in the financial sector. In detail, this research looks at how a regular banking business can be transformed into a sustainable bank, focussing on products, lending and investment standards, business drivers and barriers, as well as public value creation. The research builds on the theoretical context of CSR and financial performance (FP), as well as SRI techniques (exclusion and engagement) and, to a minor extent, the public value literature. The research was conducted through extensive literature research and in-depth case studies on both sustainability-focussed banks (SFBs) and international financial institutions (FIs), including a number of interviews with senior personnel. This study relies on a positive relation between CSR and FP, and finds that extending banking business into the sustainability niche does result in positive financial returns and even better performance than regular banks. This is linked to reputation and credibility, especially in the face of economic crises. Also, a large number of similar international methods and principles, such as transparency, pro-active risk management, active engagement and collaboration, and building of integrity filter down to the level of local sustainable banking and are vital ingredients for a stable operation within this market niche. Furthermore, the realities of bank-client interaction are not as clearly established as the theory and principles - trade-offs and imperfect solutions are the norm. This, however, enables SFBs to positively influence development on the local or even international level as financial facilitators and project stimulators, as opposed to merely excluding businesses based on their ethically insufficient performance. Through free advisory service, engagement of clients, as well as niche products, SFBs and screening companies can add public value that eventually might yield positive tangible and immaterial dividend for them. (Less)
Please use this url to cite or link to this publication:
author
Hörnlein, Tobias LU
supervisor
organization
course
IMEN41 20151
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Socially Responsible Investment, Sustainable Banking, Business Strategy, Corporate Social Responsibility, Sustainable Development, Financial Institutions
publication/series
IIIEE Master thesis
report number
2015:34
ISSN
1401-9191
language
English
id
8055510
date added to LUP
2015-10-13 13:08:18
date last changed
2015-10-13 13:08:18
@misc{8055510,
  abstract     = {This thesis is constructed on an examination of the global principles and operational methods of Socially Responsible Investment (SRI) and their linkage to Corporate Social Responsibility (CSR). These phenomena have implications for the sustainable banking business, which aims to deliver banking products and services aligned with a triple-bottom-line corporate approach contributing to sustainable development in the financial sector. In detail, this research looks at how a regular banking business can be transformed into a sustainable bank, focussing on products, lending and investment standards, business drivers and barriers, as well as public value creation. The research builds on the theoretical context of CSR and financial performance (FP), as well as SRI techniques (exclusion and engagement) and, to a minor extent, the public value literature. The research was conducted through extensive literature research and in-depth case studies on both sustainability-focussed banks (SFBs) and international financial institutions (FIs), including a number of interviews with senior personnel. This study relies on a positive relation between CSR and FP, and finds that extending banking business into the sustainability niche does result in positive financial returns and even better performance than regular banks. This is linked to reputation and credibility, especially in the face of economic crises. Also, a large number of similar international methods and principles, such as transparency, pro-active risk management, active engagement and collaboration, and building of integrity filter down to the level of local sustainable banking and are vital ingredients for a stable operation within this market niche. Furthermore, the realities of bank-client interaction are not as clearly established as the theory and principles - trade-offs and imperfect solutions are the norm. This, however, enables SFBs to positively influence development on the local or even international level as financial facilitators and project stimulators, as opposed to merely excluding businesses based on their ethically insufficient performance. Through free advisory service, engagement of clients, as well as niche products, SFBs and screening companies can add public value that eventually might yield positive tangible and immaterial dividend for them.},
  author       = {Hörnlein, Tobias},
  issn         = {1401-9191},
  keyword      = {Socially Responsible Investment,Sustainable Banking,Business Strategy,Corporate Social Responsibility,Sustainable Development,Financial Institutions},
  language     = {eng},
  note         = {Student Paper},
  series       = {IIIEE Master thesis},
  title        = {Socially Responsible Investment and Sustainable Banking - Principles for reorienting a regional/local bank’s business towards sustainability},
  year         = {2015},
}