Menu

Introduction: In this interview, Arshad Rab, CEO, European Organisation for Sustainable Development (EOSD), traces the evolution of its annual conference, the Global Sustainable Finance Conference (GSFC), and how it inspires financial institutions to become truly sustainable. He spoke with Jide Akintunde, Managing Editor of Financial Nigeria publications. 

Jide Akintunde (JA): I first attended the GSFC in 2015. In that conference and about two subsequent ones, the disruption of incumbent banks by emergent fintechs and the rise of impact investing were major themes discussed. How did your vision and thoughts on the changing landscape of banking and finance help the financial ecosystem that is now much changed compared to the beginning of this century.   

Arshad Rab (AR): Back in 2015, there were many fintech startups who were challenging the traditional financial institutions. But now, fintech has become the business of big tech. Google Pay, Apple Pay, Alibaba, Amazon, and Samsung are just few examples of how the financial technology space has evolved. 

And ten years ago, isolated projects and stand-alone initiatives to demonstrate commitment to sustainability were on the rise. Unfortunately, the impact of such undertakings in the society and environment is often short-lived and very limited – at best. I was convinced this was not the right path and inspired financial institutions to embrace true sustainability. 

True sustainability is the real game changer. In this regard, we now have a thriving and growing community of financial institutions practicing sustainability as profit enabler rather than a voluntary undertaking with very limited benefit (if any) to the financial institutions. 

Through embracing what I call “true and holistic sustainability”, the financial institutions actually modernise themselves – modernise their governance, business model, and financial and non-financial products. They also undergo comprehensive digitalisation. So, sustainability is not a buzzword but a business for our financial institutions, and this is a monumental change in the way sustainability is perceived and practiced.

JA: The GSFC has always been useful in generating new ideas. What is the approach of the EOSD to converting those ideas to solutions for the benefit of financial institutions?

AR: In its initial years, the GSFC started as an open forum inviting literally everyone interested in the subject of greening the financial sector and presenting what are generally called the “best practices”. But those best practices were not best for the financial institutions themselves and certainly not for their customers and the wider society. 

So, the annual conference has transformed and emerged as a platform for critical analysis. Instead of praising each other for achievements, the GSFC started offering space for generating practical solutions and addressing the challenges that hinder financial institutions from becoming truly sustainable. 

Our hard work, round the year, for innovative solutions, which are then discussed at the conference, subsequently go live. This means the solutions are implemented. This, again, is a paradigm shift.

JA: The theme of this year’s conference, “From Financial Technology to Technology Finance”, hints at another major shift in banking and finance -- and the role they will play in the next transformation of industries and economies. Why do you think it is important to understand this shift?

AR: By and enlarge, big breakthroughs have happened in the fintech space. I don’t think there is any financial institution left that is relying solely on bricks and mortar banking. E-banking and digital financial solutions have become a must for any licensed financial institution, and digitalisation will continue, especially as artificial intelligence and machine learning enter the financial technology space.

The conference this year is the first of its kind to discuss the theme “From Financial Technology to Technology Finance”. There is huge business out there for financial institutions, particularly in the developing countries and emerging economies, to fund new technologies. And from the sustainability perspective, technology finance is also the need of the hour. 

Green, clean, affordable, and sustainable technologies raise living standards, make funded businesses and projects competitive, and are necessary for environmental protection and climate neutrality. There is lots of money in the market that is ready to be mobilised for this purpose, and this presents a huge business opportunity for financial institutions. 

JA: One of the ideas that have come from EOSD is that sustainability is an enabler of long-term profitability of banks and not a cost orientation for doing corporate good. Why is this difference important, and how is the EOSD supporting financial institutions to achieve profitability and impact through sustainability?

AR: You asked earlier about how we convert ideas to solutions to benefit our financial institutions. Let me share an example: during our close and serious interactions with hundreds of financial institutions in over 80 countries, we realised why they were unable to integrate true sustainability in their institutions and instead go for isolated or stand-alone initiatives. This ‘sustainability’ didn’t make business sense. But if financial institutions wished to become sustainability-centric, there was no framework for it. 

However, we have focused and invested years of R&D in developing what is called the Sustainability Standards and Certification Initiative (SSCI). The Standards are designed to make sustainability the business of financial institutions and not just a nice-to-have. This means that all the revenue and income streams are from the institution’s financial and non-financial services that benefit – and not harm – the customers, society, economy, and environment. This is groundbreaking. 

JA: Why do you think that financial institutions should not lower their interest in ‘true’ sustainability despite the attempt to undermine commitment to global goals for a sustainable future as may be perceived from policy shifts in Washington D.C.?

AR: If sustainability is practiced in letter and spirit as per the Standards developed under the SSCI, the policy shifts in the US would be irrelevant. Financial institutions are businesses, and they wish to report profits. If by practicing true and holistic sustainability they create loyal customers, grow their balance sheets, reduce non-performing loan portfolio and, among others, enhance market share, they will continue to practice sustainability. Sustainability Certified Financial Institutions are more innovative, better equipped, and as a result more competitive through serving their customers with excellence and delivering high value to society, economy, and the environment. Sustainability is their business and why would any financial institution disturb the running horse?

JA: What is your outlook for the global economy as we move closer to 2030?

AR: The academic community and researchers are likely to say the current events do not offer us a very bright immediate outlook. But I would like to focus on the demands of my work, which is to be innovative and committed to creating the outlook we wish to see. Through our strong, growing, and above all sustainability-driven partner financial institutions that are led by passionate professionals and in cooperation with other stakeholders, we will remain ambitious and focused on significantly improving the economic outlook in the territories where we have a footprint. 

I take this opportunity to invite all those who are interested in the mission of creating high-income economies that are socially inclusive, environmentally sustainable, and resilient to shocks to join us and be part of an exciting journey. This is important because big shocks in the global economy are likely to remain a part of our lives. Let us join forces to make the financial sector a powerful driver of delivering prosperity to all and preserving nature. And those in the financial industry and related organisations, whether public or private, are invited to become Global Impact Leaders – those who wish to be the champions of genuine sustainability and equipped to deliver impact that matters.