A new report highlights how Australia's banking and finance industry could make major contributions to Australia's sustainability by incorporating new thinking into their financing decisions.
While the bond between banking and sustainability may not be obvious, scientists from CSIRO and University of Sydney have made the link through a detailed analysis of Australia's triple bottom line in a revolutionary report on sustainability that looks at how Australia functions sector by sector.
Balancing Act, a world first, looks across 135 industry sectors of the Australian economy and quantifies the impacts and contributions across ten social, environmental, and financial indicators.
Report co-author CSIRO scientist, Barney Foran, says that sustainability for Australia is a balancing act as we try to make decisions and trade offs in the face of often-competing economic, social and environmental attributes.
"Generally service sectors like banking are regarded as having very little impact on the environment," says Foran.
"Our work shows that banking, like most private service sectors, has little primary impact on the environment with low requirements for water, energy, land and low greenhouse gas emissions. It also generates moderate direct employment opportunities with plenty of indirect employment though housing and wholesale and retail trade. It also has positive effects on the economy in terms of profits – with one exception: its export contribution.
"In facing the challenge to increase exports, banks and other private service sectors need to locate effectively offshore and send home plenty of services dollars. Otherwise our children's children will have to rely entirely on the farm, the mine and remnant manufacturing to balance our trade account, with growing implications for our national environmental accounts, already the focus of recurring concerns," says Foran.
In addition, banks occupy a pivotal position in decision-making in business operations, national affairs and lifestyles of people. Banks could use this central influence to the advantage of the environment if they assessed a broader set of risk issues when they lent money – for example, by giving concessional interest rates to businesses that perform well across the triple bottom line, or domestic houses that had ten star energy and water ratings.
Balancing Act uses ten social, environmental and financial indicators. The social indicators are employment, income and government revenue. The environmental indicators are water use, land disturbance, greenhouse gas emission and energy use. The financial indicators are profits, exports and imports.
This work will help government, industries, and even individual consumers to look at the sustainability of different goods and services in a whole new light. Different to other studies because of its detailed scrutiny of the full production chain, this report is able to show the full effects – both direct and indirect – of the production of an individual commodity or service.
All effects are referenced back to a consumption dollar – roughly the dollar spent by a consumer in everyday life. It also shows that each consumption dollar is quite different – some dollars are positive and create employment, or send out exports or generate government revenue. Other dollars are less positive through their high use of water or production of greenhouse gas emissions.
This relatively simply presentation of highly complex issues make this a powerful tool for people in industry, government and the community who are interested in sustainability to move beyond decisions based merely on dollars and cents and enable them to make decisions based on a contribution to society, environment, and economy.
Source: Eurekalert & othersLast reviewed: By John M. Grohol, Psy.D. on 21 Feb 2009
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Do not be too moral. You may cheat yourself out of much life. Aim above morality. Be not simply good; be good for something.
-- Henry David Thorea