Brendan Dixon considers the changing face of finance and why now is the time to create a finance industry that does more good than harm.
It’s often said that “money rules the world”. Well, if COVID-19 has shown us anything it’s that the rules can change, and change quickly. For some industries, it’s been a major blow. For others, it’s helping to usher in change that is long overdue and much needed. One of those industries is finance, making the pandemic a portal to a better future, as Arundhati Roy so eloquently puts it.
With hundreds of thousands of employees, and millions of customers, it’s hard to think of an industry more desperately in need of more progressive voices, sustainable practices, and ethical champions than finance. Seemingly intent on doing business by forever looking for more profit, more customers, more power, the Hayne Royal Commission exposed the shady underbelly of the financial services industry in 2019 and laid it bare for all to see.
Now our trust in the ability of financial services to do the right thing is at an all-time low, and 50 per cent of the Australian people are questioning whether our capitalist system does more harm than good. Then, the pandemic hit and “business as usual” ground to a halt. We pivoted, we planned, we panicked, we postured, and we were provided a chance to think long and hard about the kind of systems we have, and the kind of systems we want.
Following a study by the Harvard Business Review that found a 50 per cent growth from 2013-18 in “sustainability-marketed” products, and a Nielson study in 2019 that found four out of five people felt strongly that companies should help improve the environment, Deloitte has just completed its Global Millennial Survey and found that the COVID-19 pandemic has reinforced consumer’s desires to support businesses putting people and planet ahead of profits.
It is clear to see that people not only want ethical and responsible practices from their financial service providers, but they expect them and they want proof beyond a greenwashed services brochure and diverse stock imagery library. So, what does a more equal and ethical financial system look like and how can we ensure an ongoing commitment to accountability and radical transparency for finance in 2020 and beyond?
As with all meaningful change, it starts with intention, it takes a prolonged commitment to action, and it ends with impact.
From superannuation to banking to mortgage broking, progressive voices, who have been outliers in the finance industry for decades, are now starting to reach a critical mass. The tides of change are turning with the likes of Bank Australia and Beyond Bank putting ethical finance squarely on the agenda in the banking sector (and having the B Corp report card to prove it); Future Super, Verve Super and Australian Ethical transforming the superannuation landscape; and Pure Finance, Liberty Financial and RBK Advisory in the mortgage broking space – ethically certified finance companies both big and small across the industry are making waves like never before.
For many, this shift to a more holistic vision of what is measured and what defines “success” in an industry long-known for putting its bottom line before anything else is not only welcome but necessary for business thrivability. The old school way of doing business is unsustainable, extractive, and incapable of creating the kind of equitable and just world we need right now, or into the future.
If we want a new normal (and we do), then we have to create it. We need to think about the cultural and attitudinal change we need, design for it, measure it, and be held accountable for it. But talk is cheap, and the time to walk is now. So what does change in the finance industry look like?
Among other things it looks like radical transparency, making facts and figures publicly available and putting your hand up when you do something wrong. It looks like seeing people as more than dollar signs, and measuring impact by triple or quadruple bottom lines. It looks like seeing the planet as more than something you can extract resources from and use for your own benefit. It looks like working with communities and customers that are “more complex” or underserved. It looks like a meaningful Reconciliation Action Plan, and identifying and banishing racism from your policies and practices. For some, it looks like becoming a certified B Corp, and voluntarily jumping through the hoops of social, environmental responsibility and accountability.
If the pandemic has reminded us of anything, it’s that our social, economic, cultural and spiritual health is all connected. Therefore there can be no meaningful “success” without sustainability, and when implemented ethically and responsibly, finance has an immense capacity to be a force for good in people’s lives. Furthermore, if your business is operating for the gain of some but at the exploitation of others, then it’s only a matter of time before it becomes a relic of a bygone era.
We all know the oft-cited quote attributed to Einstein that defines insanity as doing the same thing over and over and expecting different results. Well, now is our chance to do finance differently, and we cannot afford to let it slip. It’s time to make finance the force for good it needs to be by putting people and the planet before profits, and creating a more equal and ethical financial system where no one is left behind.