The systemic centrality of finance

The report Due diligence essentials for responsible banking and capital markets, by OCSE starts from a now hardly disputable premise: banks, funds, insurance companies and capital markets are actors that, through their investment and financing decisions, may contribute either to the generation or to the prevention of wide-ranging environmental, social and governance impacts.

The OECD’s approach forms part of the broader transformation of sustainable finance that has taken place in recent years, driven by the combined influence of European regulation, pressure from institutional investors, growing demand for ESG products and stronger transparency requirements. Yet the document avoids celebratory tones and offers a particularly realistic analysis of the difficulties that still hinder the effective integration of ESG due diligence into the decision-making processes of banks and investors.

One of the report’s most interesting passages concerns the structural role played by the financial system in the global economy. The OECD recalls that banks, asset managers, pension funds and institutional investors direct capital flows towards companies, governments and infrastructure projects, thereby indirectly influencing almost every economic sector.

This interconnection potentially links th...