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Financial Institutions & Markets that Fail to Understand Impacts & Dependencies on Ecology, Face Unnecessary Risk

June 16, 2017 |

This article was originally published on ScienceDirect.

“Finance ignores ecosystems, which has resulted in a growing list of environmental and social problems. In this article, the importance of ecology for finance is assessed. We suggest The piece also suggests that the financial intermediation perspective can align finance and ecology for the benefit of society. This requires that financial institutions account for information about the impact of finance on the environment and vice versa, and that they are held accountable by their supervisors in this domain.


Financial institutions and markets have an enormous impact on ecosystems. They require information to perform their function effectively. However, they hardly account for ecological information in their decision-making processes. The result is that a lot of harm is being done.

This opinion article argues that finance should care about ecology, because there is a lot of information, currently untapped, that impacts the value of financial services and their value added to the society, and vice versa. Financial regulators should not only assess financial performance and report about how they account for environmental and social issues, but also provide guidance and requirements regarding the ways in which financial institutions impact ecosystems. This will advance the allocation of scarce resources and reduce risks to both firms and society. Financial institutions and markets should care about ecology because it helps them perform their societal and economic role in an efficient and effective manner…”

Read on at: ScienceDirect.

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