Changing Finance to Finance Change: Reflections from our CEO
We are in a time of crisis, the symptoms of which can be found the world over. Rampant environmental destruction suffers no financial repercussions. Significant wealth disparities result in the rich becoming richer, while the poor become poorer. Exacerbating these is a common belief that our financial system, defined by raw capitalism and ruled by an omnipotent invisible hand, provides opportunities for those who work hard—a clear falsehood. Hundreds of years ago, the banking system was founded on a basic premise of trust and public service. Fast forward to the present, and the urgent social and environmental issues facing our planet and its societies reflect the reality that our economy does not put people and planet first. As Francis Bacon said, “Money is a good servant, but a bad master.” The time has come to reexamine the role of banks and reinvoke their true purpose: to be in service to people and planet. At New Resource Bank, that’s just the type of financial system we envision and—together with partner institutions in the Global Alliance for Banking on Values—are working toward.
In times past, the role of banks was to instill trust and faith in the financial system and to support the local community. Today, however, that link is broken: money is no longer viewed primarily as a practical economic tool that supports businesses in the real economy, but as a resource intended merely to regenerate itself. Wall Street Banks commit the lion’s share of their balance sheets—over 50%–to the financial economy, comprised of speculative and intangible assets like securities, hedges, and derivatives. Exacerbating this practice are insufficient regulations and financial penalties for banks financing high-risk, destructive activities. Banks must return to being stewards of social, natural, and economic capital. They need to adjust their perspective on capital, lending to the real economy and managing by integrated returns rather than pure profit. The role of the financial industry must be to foster environmental regeneration and social equity on a foundation of trust, with a vision of true prosperity for all. In short, we must change finance to finance change.
We’re proud to be working toward a world in service to people and the planet with every loan we make to a mission-aligned business, non-profit, or fellow B Corp. We’ll continue to advocate for transformational change in banking, and are honored to have allies in our clients, supporters, and a growing network of values-aligned financial institutions worldwide.