This blog was launched nine months ago to track progress in building more sustainable capital markets. Now seems a good time to reflect on this year’s developments. From a UK perspective, which are the most significant signals of future change?
Here is my list of the key trends from 2009:
• Civil society starts to demand a more accountable finance sector
Eg. Anger at remuneration levels, Deepening of NGO research and campaigns
• Politicians, regulators and industry leaders increase support for good governance of asset owners and more responsible ownership of assets
Eg. Lord Myners’ emphasis on “ownerless corporations”, The Pensions Regulator’s governance campaign, the Walker Report’s Stewardship Code recommendations, Personal Accounts Delivery Authority Investment Consultation responses
• Modern green and ethical retail investors and their advisers seek positive ways to make money and make a difference with some of their investments
Eg. YouGov research for National Ethical Investment Week 2009, Conservatives commit to “Green ISAs”
• Stock exchanges deepen their focus on support for sustainability
Eg. World Federation of Stock Exchanges publishes interactive “Exchanges and Sustainable Investment” report, UN hosts sustainable stock exchanges event
• Bonds and other financial instruments for sustainable infrastructure move up the agenda
Eg. HSBC’s Vaccine Bond, second and third issues of World Bank green bonds, the Climate Bonds Initiative
In twelve months time, will these still seem like the key developments in 2009?
Showing posts with label Standards. Show all posts
Showing posts with label Standards. Show all posts
Sunday, December 20, 2009
Friday, July 10, 2009
Game-changing Lessons from Microfinance
The Microfinance Club UK event I attended last night suggested to me a number of lessons and parallels for financing a sustainable recovery in the UK that we can draw from microfinance.
The event was the launch of a new book by Elizabeth Rhyne of Accion, 'Microfinance for Bankers and Investors'. Her key message is that where banks are sluggish and fail to innovate, others move in. She provides a number of case studies of retailers and technology providers who have been such game-changers. For example Vodaphone in Kenya and the Mexican electronic retailer, Grupo Elektra which in five years has attracted 8 million credit clients to its in-store banking business.
The event also discussed the impact of the financial crisis and the new report by CSFI which identifies that the greatest risks to microfinance stem from the current crisis; bad loans, shortage of liquidity etc.
Elizabeth Rhyne argued that microfinance was also suffering because stability preservation had taken precedence over the access agenda in public policy responses, with consumer protection not being taken seriously.
This concern has driven innovation, with a number of microfinance institutions coming together to launch The Campaign for Client Protection, to ensure that financial providers take concrete steps to protect low income customers from harmful products and to ensure they are treated fairly.
The event was the launch of a new book by Elizabeth Rhyne of Accion, 'Microfinance for Bankers and Investors'. Her key message is that where banks are sluggish and fail to innovate, others move in. She provides a number of case studies of retailers and technology providers who have been such game-changers. For example Vodaphone in Kenya and the Mexican electronic retailer, Grupo Elektra which in five years has attracted 8 million credit clients to its in-store banking business.
The event also discussed the impact of the financial crisis and the new report by CSFI which identifies that the greatest risks to microfinance stem from the current crisis; bad loans, shortage of liquidity etc.
Elizabeth Rhyne argued that microfinance was also suffering because stability preservation had taken precedence over the access agenda in public policy responses, with consumer protection not being taken seriously.
This concern has driven innovation, with a number of microfinance institutions coming together to launch The Campaign for Client Protection, to ensure that financial providers take concrete steps to protect low income customers from harmful products and to ensure they are treated fairly.
Friday, March 27, 2009
The Innovator’s Prescription for financial regulators?
The Turner Review criticises “financial innovation of little social value” as a key cause of the financial crisis.
Two newly published books may offer useful insights for financial regulators seeking to support innovation that delivers instead high social and environmental value.
The first is “The Future of Finance: Megatrends beyond the Crisis,” co-authored by futurologist Adjiedj Bakas.
It predicts that the future will be different from the past in ways that go well beyond the current debate.
One of its key megatrends brings together a revival of ethics, an emphasis on health and happiness and new missions for financial services in which “all money is green”. But it goes beyond this.
It thinks that “financial services are going to develop into a creative industry” and mission-critical skills will be those seen today at companies like Google and Apple. And the boundaries of financial services will expand. Banks, insurance companies and pension funds will need to prevent problems from arising and provide solutions rather than only paying out.
Looking at how these trends may interweave provokes intriguing questions. “Who will deliver the most planet-friendly pensions tomorrow – an incumbent or a new entrant?” and “How will the debate on financial regulation affect this?”
Some of the answers may come from the second book – even though it is not about financial services but another “problem industry” – American healthcare provision. The Innovator’s Prescription is by Harvard’s Clayton Christensen. The initial chapter is available online – it is worth a read.
Christensen believes that fundamental change comes from disruptive innovation. This consists of four things - a simplifying technology, a business model innovation, a disruptive value network and finally regulation and/or standards that facilitate change.
He says that regulation needs to facilitate business model innovation in particular. His research shows that, while simplifying technology may come from incumbents, business model innovation is almost always forged by new entrants to the industry.
This suggests to me that future opportunities to deliver financial services in ways that advance sustainable development will depend critically on what emerges from today’s debate on financial regulation.
Two newly published books may offer useful insights for financial regulators seeking to support innovation that delivers instead high social and environmental value.
The first is “The Future of Finance: Megatrends beyond the Crisis,” co-authored by futurologist Adjiedj Bakas.
It predicts that the future will be different from the past in ways that go well beyond the current debate.
One of its key megatrends brings together a revival of ethics, an emphasis on health and happiness and new missions for financial services in which “all money is green”. But it goes beyond this.
It thinks that “financial services are going to develop into a creative industry” and mission-critical skills will be those seen today at companies like Google and Apple. And the boundaries of financial services will expand. Banks, insurance companies and pension funds will need to prevent problems from arising and provide solutions rather than only paying out.
Looking at how these trends may interweave provokes intriguing questions. “Who will deliver the most planet-friendly pensions tomorrow – an incumbent or a new entrant?” and “How will the debate on financial regulation affect this?”
Some of the answers may come from the second book – even though it is not about financial services but another “problem industry” – American healthcare provision. The Innovator’s Prescription is by Harvard’s Clayton Christensen. The initial chapter is available online – it is worth a read.
Christensen believes that fundamental change comes from disruptive innovation. This consists of four things - a simplifying technology, a business model innovation, a disruptive value network and finally regulation and/or standards that facilitate change.
He says that regulation needs to facilitate business model innovation in particular. His research shows that, while simplifying technology may come from incumbents, business model innovation is almost always forged by new entrants to the industry.
This suggests to me that future opportunities to deliver financial services in ways that advance sustainable development will depend critically on what emerges from today’s debate on financial regulation.
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