Sozialalmanach - Caritas Luxembourg

In short, governments are in principle seeking to establish a “level playing field” for all.
The worry is real that national governments will ultimately fall back to no small degree on
the protection of their own national interests and the search for competitive advantages
of their own financial centers.
It is usually recognized that banks and other financial services providers have supported
and promoted much past economic growth that ultimately benefits all. Innovation, excellence
and flexibility in adjusting to rapidly changing circumstances have all played critical
roles in the financial system’s performance.
There is now however real concern that the structural reforms of the financial system,
involving ever heavier regulation and oversight, will stymie the financial sector’s dynamism
and reduce its ability to provide appropriate funds and impetus to non-financial activities
worldwide. In other words, the emerging financial system, straddled by increased regulation
and oversight under the aegis of pronounced international cooperation, will cause further
drag to worldwide economic recovery.
The duties of banks and other financial services providers
The financial system has so far operated on the basis of assuming its legal duty without
concern for the unintended consequences of its actions. The notion of ethical duty and its
underpinning principles of integrity have so far held no sway in financial behavior. In fact,
governments, investors, civil society bodies and the media have had much to say about the
lack of fairness, transparency, responsibility and accountability in the undertakings of the
financial system. Fairness, transparency, responsibility and accountability are in effect the
core principles of integrity.
The global financial sector must restore trust if it is to fully contribute to overcoming
the crisis. Imposing “proper” financial behavior through law and regulation does nothing to
restore banking reputation and the standing of the banks and other financial services providers.
On the contrary, such rules, regulation and oversight simply highlight and emphasize
the perceived willingness of both banks and other financial services providers to pursue
corporate and personal gain at the expense of investors and all those other stakeholders
directly or indirectly affected, if not afflicted, by the goings on of the financial system.
For trust and reputation to be restored, there is need for a profound change in financial
behavior. Business practices can no longer be driven just by legal duties. It requires banks
and other financial services providers to embrace ethical duties based fully on the principles
of integrity. In other words, the financial sector must shift to a mode of operation that
involves the pursuit of social responsibility as captured in the ESG (environmental, social
and governance) principles and promoted in particular in sustainable and responsible
investments.
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