The idea of the finance industry becoming a force for good is a powerful one, and the business of being good, doing good and leading for good makes it actionable. The ways in which the industry is doing this are becoming increasingly clear. That this is a journey, and it has begun in earnest, is not in doubt. The stakes for the world are high given the extreme challenges we face and given the financial system's role in addressing key issues throughout all civilizations in history, the finance industry and its leaders are a critical force in the world. Although there is very far to go for not just this industry but for all stakeholders, this report has found that the leaders of the finance industry have made important foundational changes, are making even greater changes and the strongest and boldest among them are becoming leaders, and not just of finance.

The Common Ground Among Leaders in the Finance Industry Sets a High Bar for Others

The Bar for Leadership is High. The emerging common ground among the leading financial institutions across the world sets a high bar for others in the industry. Given that the industry leaders in the data set are among the largest and most visible in the industry, and that many are publicly listed with significant disclosure requirements regarding their business activities, they will likely be more advanced in their engagement as a force for good than the rest of the industry. If others are motivated to catch up, and the industry has always shown signs of doing so, the leaders' actions and engagement have the potential to catalyze fundamental change in the industry and, more fundamentally, in capitalism itself to adapts to changes in the world around it. The industry's continued resilience throughout history has been driven by its adaptability, indicating that such change is possible.

A Definition of What it Means to Be a 'Force for Good' is Emerging. Leading institutions are setting the standard for the finance industry’s engagement on critical issues. Through their collective actions – adopting policies, practices and actions that promote environmental, social and governance factors into how they do business and what they choose to finance; financing sustainability, using the SDGs increasingly as their benchmark, and embracing wider stakeholders, including the community and employees, as their core mandate and responsibility – a definition of what it means to be a 'force for good' is emerging.

Call for Change Beyond the Industry Leaders. The ongoing shift in strategic priorities is being driven by both external and internal drivers, with companies both responding to the pressures of the environment they operate in, as well as proactively initiating change as a result of their increased awareness. Whatever their driver, the shift in priorities and the changes they result in are profound and will inevitably lead to wider changes in the industry as a whole. Any participant that wishes to be resilient in this highly competitive industry will not be able to resist this call for change. Those that might begin by merely "ticking the boxes" will inevitably be held accountable by their people, their customers, their peers, and by the community at large and so will eventually embrace change.

Pushing Beyond the Common Ground. Any industry participant that seeks to play a significant role in the industry will find the common ground staked out by leaders to be the threshold they have to cross and progress beyond, in an environment where the leaders themselves, driven by stakeholder demands, competition, the performance benefits and increasingly their own values, will not be standing still.

Companies operating predominantly in the highest tier, ‘leading for good’, showed the most significant Doing Good Leads to Superior Performance. Finance industry leaders that embrace acting as a 'force for good' also enjoy superior performance relative to the market, their industry and even their less-active peers, generating superior returns for their shareholders. Companies that have widened their priorities from shareholders to stakeholders are robustly demonstrating that value is not a finite commodity allocated between stakeholders in a zero-sum game, but one that can be grown for all in a virtuous circle that seeks to address each stakeholders’ needs.

Leaders in the Industry are Breaking New Ground to Address Issues, Create Opportunities and Change the World

Setting Priorities to Fund Change. Throughout history, the finance industry has funded change. With few exceptions, they have done so within a mandate of allocating capital to maximize narrowly defined risk-adjusted returns. In today's era of discontinuous change and its rising demands for everyone to step up to do their part to create a sustainable system of enterprise for the world, the industry and its leaders have begun to answer this call and are initiating potentially ground-breaking actions in terms of scope and/or scale that can catalyze further long-term change.

Defining the Goal. For a system of enterprise to be fundamentally sustainable, it would need to holistically incorporate several critical features: First, it would need to deliver increasing prosperity to the world, not just to the 7.8 billion people alive today but to the billions of people being added in the decades to come as well. Secondly, it would need to be sustainable in terms of the resource used and its impact on the environment, implying the overwhelming use of renewables to achieve net zero or near net zero use of finite resources as well as net zero emissions. Thirdly it would need to be inclusive in terms of opportunities and equitable in terms of outcomes, ensuring that everybody can participate, contribute, and benefit

Charting the Course. How to develop and integrate these features without breaking the system is the conundrum. One path to doing so lies in changes in the values that run through the system so that participants no longer link consumerism with happiness and the rest of the system with supplying that. Such a change would fundamentally reset the system but requires the simultaneous and For holistic changes to take root requires a critical mass of the many participants in the global economy, or a critical mass of powerful ones, to insist on their adoption and a critical mass of the leading financial institutions seem ready to act as role models and catalysts collective buy-in of every participant and is therefore unlikely to happen without a massive change in global awareness. A series of incremental changes to the system over time can cumulatively lead to the same place without requiring the coordination of every actor and without creating the massive disruptions brought about by sudden change. Steps like accurately pricing externalities – both positive and negative – and defining norms for managing common goods and adopting alternative sources of energy and resources can bring about systemic change in an organic fashion that realigns interests and allows parties to adapt. For these holistic changes to take root in the system of course requires a critical mass of participants, or a critical mass of power, to insist on their adoption as well as harmonized measures to compare investment contribution to the SDGs and ESG.

Industry Leaders Showing the Way. The global finance industry has the critical mass of power required to initiate sustainable long-term changes and the industry's most dynamic, scaled global institutions are leading the way for the industry. They have realized the value of this shift and their initiatives speak to this growing awareness. Their initiatives are growing in scope and scale and are changing the way finance works and what gets financed as a critical step for longer-term change. They are addressing issues of importance to their stakeholders and the most ambitious of the leaders in the finance industry are addressing the most pressing issues and opportunities of society, locally and globally. Importantly, the definition of 'we' has changed from the organization and its people to encompass the planet and those left behind.

The journey itself is transformative … in terms of their organizational DNA, scale impact organizations are not only a force for good, they are the beginning of a new species Evolving into a New Species. The experience of making a difference in society is one that teaches invaluable skills and emboldens an organization to develop its core business in ways that it could not do if its model was to be ‘sitting at home' doing the regular business. The journey itself is transformative ultimately creating an insurmountable gap between those that learn to change the world at large for good and the rest. In terms of their organizational DNA, impact organizations are not only a force for good, they are also the beginning of a new species.

There are three important implications of the changes, firstly, a de facto standard is emerging for what leadership means for the finance industry and the success factors for being an industry leader involve a broader focus on the world’s major issues, secondly, a tipping point has been reached since the direction of travel is unlikely to be reversed, there being no reason to do so and, thirdly, the self-sustaining growth of these initiatives over time suggests systemic changes in how and where capital is allocated and how returns are measured and so ultimately rewarded.

The Direction of Change is Clear and Set to Change the World for Good

The cumulative and collective actions of finance industry leaders as they reposition their organizations to increasingly act as a 'force for good' in the world provides foresights into a series of mega-trends, big ideas and themes, with the potential to reshape not just the financial system, but the wider system of capitalism, and the shape of the world over the coming decades at a historic time that sees the world in a transition of civilizations.

1. Beyond Money, Leading Change in the World

Finance industry leaders’ current direct initiatives already aim to create international Financiers aim to create international institutions like the World Bank, drive mass inclusion to address structural poverty, regenerate impoverished cities, restore ecosystems and address racial equity in their communitiesinstitutions working alongside organizations like the World Bank, drive mass inclusion to address structural poverty, regenerate impoverished cities, restore ecosystems and address racial equity in their communities. The scope of actions being taken makes such institutions leaders in society as a whole, beyond finance, assuming a broader role in the global community. The example being set by leaders in the finance industry will be embraced by leaders in other industries who will seek to address major global issues suited to their industries, and we should expect to see healthcare leaders tackling healthcare inclusion, food companies tackling hunger, and media and technology companies tackling education and illiteracy on a global stage in the future.

2. Collective Action Across All Boundaries

Transnational organizations like the UN, World Bank, WTO have established a system of global rules and the principle of leadership through collective action. Engagement with the UN and others has prepared the leaders of the finance industry to work collectively on major issues beyond finance and to do so across national boundaries Having long embraced this principle for the purpose of self-regulation and the organization of markets and transactions, the finance industry is also collaborating with transnational organizations on major objectives like climate change and the SDGs. This engagement with the UN and others has prepared the leaders of the finance industry to work collectively on major issues beyond finance and to do so across national boundaries. This experience places every major world issue on the potential agenda for the industry to consider as a cause for collective action leveraging its commitment, capital and relationships. The future is set for collaboration across all boundaries.

3. Capitalism Revitalizes Through Every Stakeholder's Choices

The success of today’s capitalist system has resulted from the alignment of manufacturers, resource businesses, trade organizations, governments, entrepreneurs and scientists on delivering product to the consumer in every corner of the world.Responsible financing is being adopted in ways that are ambitious enough to aim at reversing the harvesting of the planet and its resources However, this inevitably leads to the harvesting of the planet and its resources, with everyone being both a participant in and a contributor to this system. Financiers are only one player within this system and cannot be held accountable for the actions of others. Addressing the issues built into the system will require each participant to make different choices: for example, the consumer choosing to buy only from businesses that 'do good', manufacturers adopting sustainable processes, and financiers only funding those that do no harm and indeed do good. The finance industry has made the leap and with its control over 90% of the net liquid assets in the system, it is an effective catalyst for systemic changes to the way capital is allocated and therefore used in the world. The other participants are also pursuing their own initiatives and these all lead to the transformation of the system. Other participants, consumers and business owners need comprehensive, comparable and harmonized measures of being, doing and leading for good to be able to do their part.

4. Financing the SDGs

Financing the SDGs by 2030 in developing countries is expected to require up to US$5-7 trillion over the next ten years, with an annual funding gap of US$2.5 trillion.²⁸ With US$ 15 trillion mobilized to support the global economy during the current pandemic, the path to financing the SDGs can now be envisaged However, the coronavirus pandemic has demonstrated that there is no shortage of additional capital available for the right issues; with US$15 trillion²⁹ committed to the global economic recovery by governments in less than six months. With the leaders of the finance industry showing a growing awareness of the importance of the SDGs, a path to funding the achievement of the SDG goals becomes increasingly visible, with UNCTAD having mapped out the current gaps, such as closing the business model gap for specific SDGs to secure necessary capital as well as the challenge of getting this capital into developing regions with the largest gap to close to achieve the SDGs.³⁰ Closing the funding gap and coordinating spending to allocate capital to where it is most needed requires a new plan and tighter mechanisms to co-opt the energies of the finance industry as a whole.

5. Carbon Defunded, Alternatives Funded, Energy Transition Supported

Our industrial economy is built on carbon energy sources. Carbon energy’s functional properties and economics have underpinned the level of prosperity the world enjoys today. To go beyond the current level of achievement of humankind – particularly Adding 2 billion people to the planet by 2050 requires a breakthrough in energy science as profound as moving from steam to oil considering the addition of c.2.0³¹ billion people to the global population by the middle of the century – will require a cheaper, cleaner and more abundant energy source. While it is uncertain what this new energy source will be, what is certain is that the transition is underway. The finance industry is prioritizing a growing number of initiatives related to reducing carbon including new energy. These include plans to defund industries contributing to carbon based pollution, reduce or freeze investments for fossil fuels and to fund alternatives and renewables to achieve global carbon neutrality.

6. Creating Mass Inclusion, In the Developed World Too

Capitalism’s successes in generating wealth have not reached enough people and so have seen divisions arise and be exploited within nations and across the world,An estimated ¾ of the world's population are not active participants in the banking system … the future sees those 'with' solving for those 'without' for peace within nations and across them and for the common good driving protest and conflict, mass migrations, and political populism. Housing inclusion is an issue for more than 20% of the world’s population who lack adequate housing³². Quality healthcare coverage remains a global issue with half the world lacking access to adequate healthcare and significant populations uninsured or under-insured, while educational inclusion is an issue for 43% of the population having no higher (tertiary) education in the most educated countries, while 14% of the world is illiterate.³³ Without these challenges being solved, the world can expect more severe disruption, and inclusion has therefore emerged as a high priority by the overwhelming majority of (88%) finance industry leaders. The future sees those 'with' solving for those 'without' if there is to be peace within nations and across them.

7. The Democratization of Finance

It is estimated that three quarters of the world’s population are still not active participants in the banking system,³⁴ a problem that extends to developing and developed countries alike with 71m³⁵ households in the United States unbanked. Finance will be increasingly democratized, decentralized and personalized as a result of technological innovation and network technology Technology provides the means to drive mass financial inclusion globally in the coming decade, as technology reduces the cost of acquiring an incremental customer to nearly zero and financial institutions increasingly factor in positive externalities to determine the value of a new customer. Finance and financial services will be increasingly democratized, decentralized and personalized as a result of technological innovation and network technology that will eliminate intermediaries and governing agencies that provide insufficient value in key areas of financial services. Clearly there are hurdles to be overcome for digital finance, including security challenges, questions of standards and governance and the need to create mass digital literacy to enable inclusion. Solving these challenges will be a priority and the companies that do so stand to become the future leaders of the industry driving the democratization of finance.

8. Post Crisis Capitalism: A Holistic Sustainable Approach

The coronavirus pandemic has upended the world's understanding of the resilience and risk of countries, triggering an unprecedented health and economic crisis that has found many of the world’s leading nations wanting. However, it has also raised awareness of many of the social challenges facing the world and in response has triggered the explosive growth of products like social bonds to address them.The pandemic has brought misery and has also been an oracle pointing to the transformation of the world through environmental regeneration, a rethinking of urbanization and work, global digital participation in education, payments and healthcare, and a new approach to healthcare and medicines backed by government and private enterprise Further, the global response to the pandemic has also pointed to the possible transformation of the world through environmental regeneration, a rethinking of urbanization and work, global digital participation in education, payments and healthcare, and a new approach to healthcare and the development of medicines among many other changes. As part of this transformation, the changes in the operating models of leading financial institutions, which this study shows, are already incorporating practices that respect the environment, social needs and governance, sustainability and stakeholders and so hold the possibility of a fundamental change in values that embody mindful action, caring and compassion, as part of a broader shift in global awareness and consciousness. For instance, if the more than US$ 15 trillion³⁶ in COVID-related stimulus were allocated to SDGs sectors, it would greatly accelerate their implementation.

9. Funding the Future

The future, beyond solving the many issues facing the world, also needs to be financed, now. This includes financing the foundations for the next part of man's journey including great innovations that change the scale, reach of humanity and its civilization. Solving today's problems is the essential step that is being taken to financing the future and the great innovations that will change the scale and reach of humanity and its civilization This includes financing nearer-term rapidly developing technologies like artificial intelligence, which is becoming increasingly pervasive in every aspect of modern life, and energy innovations to improve energy efficiency and sustainability, as well as research into long-term innovations in material sciences, synthetic biology and space travel that will reshape humanity’s footprint on the planet and beyond it, opening up new commercial opportunities and leading to a new wave of transformative innovation. The lessons being learned by the finance industry in addressing sustainability and leading as a 'force for good' in society and the world are building the skills, innovation and risk management capabilities needed to develop financing solutions that accurately consider and allocate risk and reward for this innovation funding, ensuring the availability of sufficient capital for the next stage in the journey for the world

These emerging trends, ideas and themes point to profound changes. They are indicative of a finance industry that, from the top of the industry, while continuing to run its current markets driven businesses, is also maturing and adapting to reinvent itself. While the initiatives to date, as bold and ambitious as they are, are at an early stage of the industry's evolution, the industry has set in motion changes that that will change its self-conception. Given the world is in the throes of a disruptive series of challenges, there is much further to go in what will ultimately be a transformation to enable capital to play its essential role in the creation of a new civilization, but there is strong evidence to believe that this is exactly where we are headed.