The big four Australian banks have received international accolades for their sustainability efforts. Despite these accolades, a number of recent controversies have stimulated public debate about the social and environmental responsibilities of the banking industry. Australian banks have suffered public outrage as a result of dubious financial advice costing thousands their life savings, disputed credit card fees, rate-fixing, and insider trading, as well as the funding of unsustainable activities such as coal mining and infrastructure projects along the great barrier reef, nuclear arms manufacturing, and land grabs in emerging economies.
Catalyst Australia examined the self-regulatory and voluntary measures aimed at producing socially and environmentally responsible banking and found a schism between symbolic and substantive sustainability efforts. The report advocates increased integration of corporate responsibilities in authoritative frameworks, and specifically recommends reformulating company directors’ duties to include social and environmental responsibilities, redefining sustainability reporting requirements and enshrining these in corporate governance systems, and founding social and environmental risk assessments on the precautionary principle, which shifts the burden of proof towards those parties that potentially cause harm.