An Assessment of Voluntary Codes of Conduct in the Financial Sector – A case study of the GABV, UNEP-FI and UNPRI
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As a result of the key roles financial institutions play in the world today, they are pivotal in addressing arguably the biggest challenge the world faces today – sustainable development. Several pioneering financial institutions, some with the collaboration of non-governmental organisations, have developed key initiatives to act as roadmap towards ensuring intra and intergenerational equity. These initiatives are referred to as codes of conduct, and take on the name voluntary, because organizations are not mandated to adopt them. Nonetheless, these self-regulatory codes inadvertently act as soft laws to which adopters must abide by. This research describes the more prevalent codes in the financial sector – the Equator Principles, Global Alliance on Banking Values, United Nations Environmental Programme Finance Incentive, United Nations Principles for Responsible Investment – with the latter three used as a case study to determine if significant differences exist between signatories and non-signatories. Via quantitative techniques, results indicate that there is indeed a noteworthy difference between both groups of banks, suggesting that signatories address sustainability concerns in their reports more often than their non-signatory counterparts. The research concludes by noting that even though more reporting does not necessarily translate to enhanced performance, it is a step in the right direction, and exudes the qualities of the codes that may have been responsible for this development.