Sustainable banking in Europe : a counter-narrative

Abstract

The dominant narrative surrounding sustainable finance shapes how banks understand what they owe to others; what objectives to pursue; whose and what risks to prevent and mitigate; and for what and towards whom they are accountable. The economic rationale underlying much of the sustainable finance discourse distorts the European perspective on what it means to pursue a sustainable economy thereby reducing its potential to achieve harmony between the social, environmental and economic domains. Based on qualitative empirical research in the banking sectors of the Netherlands, Germany and the United Kingdom, this study investigates both the potential and the limitations of Europe’s market-based approach to aligning the banking sector with the goal of creating a sustainable economy. It sets out how bank employees seek to integrate concerns for the social and environmental impacts of corporate lending into their bank’s policies, systems and practices. In doing so, this analysis brings to the fore the assumptions underlying Europe’s pursuit of sustainable banking. Europe employs the market to achieve sustainability, which simultaneously enables and obstructs the development of an economy that is socially just, environmentally sustainable and economically viable. This study presents a counter-narrative of what ‘sustainable banking’ in Europe could look like. Telling the story of sustainable banking from a different point of view brings into view what is left out of the conventional narrative. The counter-narrative presented here highlights the role of banks in society – based on their special relationship with the public – and requires that the EU legal framework takes seriously the obligations banks owe to others. This dissertation aims to lay the foundations for the shift in banking regulation, and the regulation of banks more broadly, needed to create a sustainable economy. The narrative that Europe adopts in its pursuit of a sustainable economy, shapes the society we become.