7 - Sustainable Governance and Leadership

Summary

For the financial sector to play its necessary, supportive role in a more sustainable economy, with less resource-intensive and more resilient growth, enduring change is needed in the sector’s system of values, beliefs and behaviours. This represents an opportunity for all players in the financial industry to reinstill a positive purpose in their role in society at large. The rules of engagement of any system are based on implicit or explicit governance principles and driven by leadership actions. This chapter explores three aspects of governance principles. First, the requirements of education, training and qualifications in respect of sustainability issues for leaders and finance professionals, to enable them to take into account the relevant and material environmental, social and governance risks and opportunities affecting their business. Second, the changes needed in the governance framework of financial institutions, with a particular focus on the concept of stewardship. Third, the necessary modifications to director duties in general, so that the intended stewardship action can be effective in rendering the real economy more sustainable over time.