International Finance
Islamic Banking

GEFF to highlight the massive potential Sustainable Capitalism harbours

The 2nd edition of GEFF will spearhead a panel session focusing on the vast opportunities that come with embracing a long-term sustainable approach

Middle East Global Advisors, a leading financial intelligence platform spearheading the agenda of sustainable and inclusive finance, will convene the second edition of the much-coveted Global Ethical Finance Forum (GEFF) in Edinburgh, Scotland. Based on a strategic partnership with Islamic Finance Council UK (UKIFC), the Forum will be held under the patronage of the Scottish Government, and will be hosted by the Royal Bank of Scotland (RBS), building upon the legacy of the inaugural Forum held in September 2015.

The theme for GEFF 2017 – “Ethical Finance: Merging Profit & Purpose”, is in line with the Forum’s aspiration to serve as a platform of convergence and collaboration across the responsible finance universe, and to forge a vision for a more inclusive and sustainable financial system.

The Global Financial Crisis (GFC), also considered as the apex of “unsustainable capitalism”, and the subsequent bail-out of too-big-to-fail organizations sent ripples of shock and instability throughout the world. Following the GFC, there was a call greater than ever to focus on a sustainable approach that took long-term profits into account versus the obsession with short-term profits and numbers that culminated in the crisis in the first place. Presently, the financial sector is exhibiting signs of a return to precisely the same risky behavior that led to the GFC, a finding that was echoed in the latest IMF Global Finance Stability Report.

Corporate short-termism, an obsession with short-term profits owing to frequent reporting cycles, has shown to deteriorate firms’ competitiveness, increase systematic risk and reduce the long-term potential of the entire economy. Interestingly as per a recent survey, 65% of executives and directors believed that the short-term pressure had increased over the last 5 years while 55% who worked at companies lacking a strong long-term culture also believed that their company would delay new projects in the race to hit quarterly targets even if it involved sacrificing some value (FCLT Global, 2016). To combat the short-termism in business, Sustainable Capitalism, a conceptual form of capitalism that focuses on long-term financial gains via sustainable means, gained prominence. The manifesto for Sustainable Capitalism, many believe, has been coined by noted American Nobel Peace Prize winner and environmentalist Al Gore.

A recent study by McKinsey Global Institute revealed that from 2001-2014, the revenue of long-term firms cumulatively grew on average 47% more than the revenue of other firms, and with less volatility with long-term firms also showcasing a stronger financial performance over time.

In the light of the numerous disruptive threats the financial world is facing, GEFF 2017 will spearhead an exclusive panel session focusing on the massive potential Sustainable Capitalism harbours. The session aims to assess the social and environmental implications of rehauling the current economic model, the key challenges to mainstreaming sustainable capitalism, and most importantly the key measures that would place the economy on a sustainable path. Some of these measures involve mandatory integrated reporting, ending the quarterly reporting cycle that incentivizes employees to focus on a short-term outlook and aligning compensation structures with long-term sustainable performance. Discussions at GEFF 2017 are premised on the notion that sustainability is a fiduciary issue.

The session will also delve deeper into the strong link between sustainable capitalism and responsible finance, and aim to assess how the latter can tackle growing inequality and social strife.

Across two power-packed days, GEFF 2017 will spearhead a series of sessions focusing on the massive opportunity that lies in mainstreaming ethical finance, one that requires concerted efforts to build meaningful dialogue across its three segments: Environmental, Social and Governance (ESG), Socially Responsible Investing (SRI) and Islamic/faith-based finance. The forum aims to drive thought leadership across a wide range of topics including green bonds, financial inclusion, ethical banking, amongst others, with the vision of bringing ethics to the forefront of business.

The forum will take place on 13th and 14th of September at the Royal Bank of Scotland (RBS)’s prestigious Conference Centre in Edinburgh, Scotland.


Also Read: GEFF 2017: Key focus is merging profit and purpose

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