Answer to Question #204532 in Economics for IBRAHIM

Question

1.    Define what sustainable and ethical banking means?

 

    Explain the importance of the concept in the financial industry.

Answer 1

Sustainable banking integrates environmental, social and governance (ESG) criteria into traditional banking, and sets ESG benefits as a key objective. Capital market decisions used to be based on a two dimensional risk and return analysis.

Ethical banking is an awareness of the effect that banking practices have on society and the environment. Financial institutions that practice ethical banking pursue profit while following socially and environmentally conscious principles.

An efficient financial sector reduces the cost and risk of producing and trading goods and services and thus makes an important contribution to raising the standard of living.