Abstract

The relation between the financial industry and sustainable development is ambivalent. On the one hand, the financial industry supports sustainable development through lending and investment. On the other hand, it has been a cause for a financial crisis that has negatively impacted society globally. In financing the Sustainable Development Goals (SDGs), however, the financial sector can play a major role. Since it is clear that public funding will not be enough to finance the SDGs, the banking sector can stimulate private finance. This can be conducted through socially responsible investing, impact investing, social banking, and sustainable lending. Nevertheless, to guarantee prudent SDG finance, the banking sector has to develop assessment tools that take into account the sustainability impact of financial products and services in addition to their financial risks and opportunities through embedding SDG-related criteria into financial decision-making. Doing so would create a win–win situation for both the banking sector and sustainable development.

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