Tokyo Round Table on Post-WSSD Developments in Sustainable Development Governance: With Particular Attention to Industry-Society Relationships

UN University, Tokyo 15th May, 2003

Summary of Presentation by Tessa Tennant to Morning Panel Session

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Thank you for inviting me to address the role of Financial Institutions in fostering Sustainable Development. In the discourse about sustainable development, the term business is often used for anything profit-making and most people usually think of this as manufacturing. We must learn to distinguish between Industry and Financial Services because the latter has such a huge influence on all other areas of business, and we should start talking about Investor Governance as distinct from Corporate Governance.

Financial Institutions were latecomers to the global effort for sustainable development. At the time of the first summit in Stockholm in 1972 there were no financiers present, only governments, NGOs and a few resource industry representatives attended. By the Earth Summit in Rio in 1992 the first finance initiatives were being taken, notably the UNEP Banking Initiative and the Rio Resolution from the international social investment community. By the time of Johannesburg the role of finance was being recognised by many groups such as APFED mentioned earlier this morning. The UNEP Finance Initiative had more momentum but interestingly SRI was not well represented.

The key point is this: Cash is King... wherever the money goes is what you get, this is why financial institutions are so important. If they do not embrace the requirement for sustainable development it will never happen.

How then do we mobilise the financial services industry and fund flows in Asia?

1. Create the institutions to facilitate understanding and action. This is why ASrIA was established in 2001 to promote sustainable investment practice in the region, working through a network of partners and in collaboration with its members. Please visit the website for full details of the research and activities underway to achieve our objectives. Suggestions to improve our programme are always welcome. ASrIA already has 100 members ranging from financial institutions and financial service providers to universities and other NGOs. Already the website asria.org attracts over 1400 page hits each day. ASrIA signed a memorandum of understanding, to formalise co-operation with the UNEP Finance Initiative at the annual conference here at the UNU last October.


2. Encourage the Asian Development Bank and other regional and national finance agencies to focus on education and training to build competencies and capacity in sustainable finance. For example financial professionals are needed to a) analyse corporations from an environmental and social, as well as financial perspective; b) practice community finance; c) provide social venture capital.


3. Focus on main Market Players. The largest financial institutions with the greatest influence, such as Nomura, Citigroup, State Street and Deutsche Bank should be centrally driven to find real solutions to sustainability. The recent adoption of the Equator Principles by some of them is a very encouraging signal that this issue is taking hold.

I've often noticed that participants in the global discourse on sustainable development lack confidence to discuss the role of financial institutions. Often it is nothing more than a lack of knowledge of the language of the financial services industry. Anyone serious about sustainable development must overcome this problem and start engaging the key financial players on their patch.

Thank you.

Tokyo_RT_Prog1.doc

APFED.pdf