The report “New Pathways: Building Blocks for a Sustainable Finance Future for Europe” is a collaborative effort of the Global Alliance for Banking on Values, Finance Watch and Mission 2020. The report elaborates on a number of proposals geared towards the repurposing of finance and maintaining the right balance between economic, social and environmental needs. These proposals are the following:
Recalibrate the regulatory instruments used to ensure financial stability – in particular capital requirements – so that we take into account a more holistic view of the economy, society and environment upon which financial stability is predicated.
Resolve the paradox of mismatches between finance and sustainable projects by cultivating a more diverse ecology of values-based, sustainable financial partners at a city, regional or national level, with a broad spectrum of risk appetites and sector specialities.
Remove the diversions and boundaries that block individual citizens from investing in what they see as the best long term interests of the society where they live by opening up and enabling a healthy, regulated market in citizen impact investing.
Reframe sustainability as the core leadership and value-creation opportunity for financial institutions of the future by encouraging training and competence in managing sustainability at every level.
Reframe the goal of transparency as one which genuinely invites and enables stakeholders to understand finance, encouraging a focus on managing what matters most.
Over the last two years, Capital Institute has been working with many thought leaders and entrepreneurs in a quest to understand what a theoretical framework for regenerative economies would look like, and what conditions and processes contribute to their long-term systemic health. We also explored how a Regenerative Economy would differ from today’s flawed theory of capitalism, and how it would compare to other New Economy ideas such as natural capitalism, sustainable capitalism, conscious capitalism, doughnut economics, circular economies, sharing economies, steady-state economies, etc.
Our modern system of capitalism is no longer fit for purpose. Faced with a growing series of economic, social and environmental challenges the time has come to reboot the way capitalism is conducted and to recalibrate the way we value resources, people and the services they provide. Traditional capitalism proved itself incredibly successful at delivering growth in an age of abundant land, natural resources and biodiversity. That age is over.
We need to shift the debate from traditional change approaches, which risk leaving problematic system dynamics untouched, to bold and innovative strategies. Such strategies would significantly shift our capitalist model towards a more resilient, equitable and sustainable economic order.
What will be the driver of this bold, innovative form of capitalism? The answer lies with our financial system. Here is how financial system change will deliver capitalism fit for this century and beyond.