By borrowing in short-term wholesale markets to fund asset growth, banks became more dependent on continuous access to liquidity in money and capital markets. The system’s exposure to market confidence was enormous. Moving forward: what else is required? The collapse in confidence necessitated a host of extraordinary measures and bank rescues.
This is when ESG, the set of standards that promote sustainability; and ESRM, a risk management tool that promotes sustainable finance, usually get factored in. And these are areas that we need to explore deeper. Sustainable finance is any form of financial service that integrates ESG criteria into business decisions to benefit the environment and society at large4.