The progress of a country in terms of economic, social, and environmental dimensions is so diverse the GDP is sometimes not enough to gauge its well-being. On the other hand, ethical finance in form of responsible investments and ethical banks, which state clearly their lending policies in accordance with their mission, which in turn is related to values that extend beyond their profit goals, can be a new tool to determine the well-being of a country. Since the values promoted by a bank is associated with the growth of the well-being of society, the social, economic, cultural and environmental aspects are all taken into account in a very transparent manner. The role of ethical finance can be therefore viewed as one that seeks to improve and promote the local well-being by making finance available to local entrepreneurs who can develop businesses that has a positive social and environmental impact.
The 21st Century Well-Being
A country’s well-being has often been linked to the wealth that such nation has managed to generate. Such wealth include its cash reserves, resources, and other forms of affluence which, in turn, is shown as its Gross National Product (GNP) or Gross Domestic Product (GDP). Then again, GDP is now being viewed by many as inadequate when it comes to showing the real picture about the true well-being of the general population. Many economists and analysts now see the need to broaden the context of wealth which should include social, human, and environmental or natural wealth. In fact, the European Commission, United Nations and respected economists the world over recognize that economic models and financial policies should include other aspects of wealth than just capital and labor stocks. They state that the GDP was never intended to become a complete barometer of wealth and well-being. Resource depletion, climate change, health, poverty and quality of life should also be included in such measurement. Today, the European Commission is leading the way in improving economic indicators which will result in a GDP that includes the social and environmental aspects of progress.
Public Impact of Ethical Finance
The flow of money has always been linked to the movement of finished goods, labor, raw materials and eventually the quality of the environment. In this regard, steps must be taken to realize sustainable development. This is where ethical finance comes in, helping achieve a sustainable economy that can be handed down to the next generation the natural, physical, financial, social and human capital. To realize this goal, bankers and investors have developed financial mechanisms that will allow this type of all-inclusive economy to flourish.
Bankers and investors alike have come to realize how important ethical finance is in modern times. In the past, while it is true that they may have gained maximum profits as a result of the movement of commerce, they failed to recognize the importance of sustainability of aspects like the environment from which most of the raw materials come from. With its degradation, getting the needed raw materials becomes very difficult to almost impossible. Because of the scarcity of raw materials, it becomes expensive, and so the cycle goes. With the inclusion of all other aspects like the environment, however, the road to recovery becomes clearer. As more investors and bankers move to support ethical finance, businesses would now be able to realign their objectives to include all other aspects which were not included before. In all, this helps everyone achieve sustainable development which will carry the world through the next and future generation.