As the 190 investors, banks, insurers and investment organisations making up the UN Environment Programme Finance Initiative (UNEP FI) look ahead to the May 2012 UN Rio+20 Summit, the challenges for the financial services and investment community are manifold.

Rio+20, a global gathering marking the 20th anniversary of the landmark 1992 Rio Earth Summit, comes in the same month as UNEP FI’s own 20th anniversary. I believe the planned UN summit in Brazil presents a once-in-a-generation opportunity for our global industry to re-represent itself as a sector that can deliver economic, social and environmental value. Since the crash of 2008, the need for all aspects of financial services and investment to recast themselves, reaffirm their legitimacy and renegotiate the very foundations of the sector’s social licence to operate has never been greater.

Within this context, the financial crisis has also been the largest ever ‘advertorial’ to reconfirm the value inherent in sustainable finance and responsible investing. We must demonstrate that the qualities embedded in sustainable finance should sit at the heart of the broader finance and investment community – namely, integrity, accountability, transparency, responsibility and, of course, trust.

There have been some encouraging developments in the responsible investment sector in which my own company, Calvert Inv­estments, has been active since 1982. While the responsible investment community could not sidestep all of the damage caused by the financial services sector during the meltdown, we seem to be in a position to benefit longer term. Responsible investment products have seen an influx of flows in 2009–10 as prudent investors search for secure, long-term harbours.

According to EIRIS, retail investors in the UK have topped previous figures for investments in green and ethical funds with £9.5 billion ($13.7 billion) invested by end 2009, while assets devoted to socially responsible investment (SRI) grew by 70% in France in 2009 and topped €50.7 billion, up from €16.8 billion in 2006, according to Novethic. In the US, we await the findings of the US Social Investment Forum’s Trends Report this fall that tracks the growth of SRI assets in this country – which at last count, in 2007, stood at $2.7 trillion. We expect to find that, despite the downturn, flows continue to be strong into responsible investment and green-themed portfolios. I believe this demonstrates that there is a competitive advantage for individual companies to work towards sustainable finance. But, ultimately, we must work to shift the entire financial industry in this direction.

The financial crisis has also been the largest ever ‘advertorial’ to reconfirm the value inherent in ­sustainable finance and responsible investing

To appear credible, effective and honest at Rio+20, and essentially to rebuild trust with the entire spectrum of clients and investors, the finance and investment sectors have a Herculean task to show that they can deliver real contributions to sustainable development over both the next two years and for the challenging decades to come. A proactive and positive role by the financial services sector at the UN’s climate change summits scheduled for Mexico in late 2010 and South Africa in 2011, as well as gathering at UNEP FI’s next Global Roundtable in Washington DC (in October 2011), will facilitate tentative steps to rebuild a battered reputation. Two years spent in defensive lobbying to block the post-crash regulatory overhaul, rather than working positively to reshape a regulatory environment that builds a stable and resilient financial system, will only debase the sector’s reputation ever further.

Since 1992, UNEP FI’s member companies have worked collectively to redefine aspects of finance and investment to engineer a closer alignment with the goals of sustainable development. This unique partnership between the UN and the world’s private finance and investment organisations has made remarkable progress in delivering among others these notable achievements:

• The Financial Services Sector supplement to the Global Reporting Initiative (GRI), representing more than six years of work from 2002–08. The supplement covers the environmental, social and corporate responsibility aspects of sustainability reporting for financial institutions.
• Two landmark legal reports via our Asset Management Working Group: the ‘Freshfields’ legal interpretation in October 2005, and the ‘Fiduciary II’ report in July 2009, which are transforming how the mainstream investment industry sees environmental, social and governance issues in the context of fiduciary law.
• Incubation of the Principles for Responsible Investment (PRI) from 2003 until its launch by then UN Secretary General Kofi Annan at the New York Stock Exchange in April 2006.
• An increasingly popular series of on-line and in-class training courses in 2007 devoted to environmental and social risk issues and climate change. Hundreds of financial service and investment executives, as well as policy-makers and civil society representatives have now successfully completed these courses.
• The Principles for Sustainable Insurance, to be rolled out over 2010–12, building on the first global survey of sustainability issues in the worldwide insurance industry, undertaken in 2009.

As co-chair of UNEP FI, I will make it my personal goal to ensure that the organisation continues to be a working model of how major financial companies can demonstrate a true commitment to sustainable finance.

It is clear that the financial crisis has created an environment where the philosophy, ideas and disciplines of sustainable finance and responsible investment can thrive. It is now up to the industry to deliver the products and performance that push the approach into the mainstream of finance, and ensure that the promises of the past three decades are delivered at scale. We believe that UNEP FI will continue to lead this transformation. We invite any financial institution that shares these goals to join us in our pressing work and commend our current signatories for their ongoing commitment.

Barbara Krumsiek is CEO of Maryland-based asset manager Calvert Group and co-chair of the UNEP Finance Initiative. E-mail: communications@unepfi.org