Putting sustainability at the heart of finance
BeyondMe’s Alice Gray interviews Madeleine Evans of Finance Matters
‘Social Finance’ is a term that most people will have heard of but not many understand what it really means. Sure the words ‘social’ and ‘finance’ are pretty self-explanatory. Even when you put them together the words create a vague understanding and assumption of what it could encompass. However that vague understanding is where most people stop.
To shed more light on the subject I spoke to Madeleine Evans, Co-founder of Finance Matters , a London based social enterprise working to put sustainability at the heart of finance. “Social Finance is providing capital to suit the needs of the real economy, but with a specific and explicit social impact objective”.
This isn’t just some idealistic hope of what finance would look like in a perfect world. Madeleine believes there is “an obvious need to transition from this current financial model which is siphoning value from the real economy to a financial system that actively adds value to the community”.
Social Finance is an idea that has been around for some time but as Madeleine explained, the recent economic downturn helped breathe new life into it. “Out of the financial crisis some of the major financial institutions saw significant reputation damage, had public risk to their licence to operate and need to prove their relevance to the local community”.
That is not to say that Social Finance is just a publicity stunt for financial institutions. In its best sense it is a way for these institutions to directly engage with the issues of the communities that they serve. And with some reputable, global financial institutions now operating a Social Finance division, it is clear that this is something that the finance world considers to have real benefits and long-term potential.
Of course that doesn’t mean that Social Finance as the financial model for the future is a done deal. Madeleine makes it very clear that there is a long journey between a dedicated division within a company, and conceptualising and orienting the entire business around sustainable practices.
What will these companies need to successfully introduce institution-wide sustainability? For Madeleine the crucial element is the person leading this change. ‘I think it takes visionary leadership and there are still far too few high quality visionary CEOs whose vision encompasses both profit and purpose”.
With the current generation of young professionals placing increasing importance on having a positive impact on society through their work, this is something that CEOs are going to have to take seriously. (Want to know more about this? Read our Generosity-Profit Logic Report .)
So is Social Finance and sustainability in business the way of the future? Madeleine concedes, “we don’t really have any other choice. Climate change is creating a tremendous imperative globally for differentiating between what is and what is not sustainable. From the perspective of resource, delivering value for communities is critical. From a business perspective, we have to also think about how employees are treated and if their work-life is sustainable”.
Social Finance and sustainability are not just buzzwords soon to be forgotten. They are key ideas that are going to feature more and more in the way our businesses work.
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