Financial institutions are pivotal in addressing arguably the biggest challenge the world faces today — sustainable development. Several pioneering financial institutions, some with the collaboration of non-governmental organizations, have developed key initiatives to act as a road map toward ensuring intra- and intergenerational equity. These initiatives are referred to as codes of conduct, and take on the name “voluntary,” because organizations are not mandated to adopt them. Nonetheless, these self-regulatory codes sometimes act as “soft” laws that are quasi-legal documents, but without any binding force other than benefits for the signatory. signatory. Codes that fall within the purview of this research include the United Nations Environment Programme Financial Initiative, the Equator Principles, the United Nations Principles for Responsible Investment, the Global Alliance on Banking Values and the Impact Reporting and Investment Standards. Despite being formulated as tools to combat sustainability challenges, research suggests that adoption of these codes can be largely attributed to financial risk management and enhancing reputation. This paper discusses the strengths and weaknesses of the financial sector voluntary sustainability codes of conduct. It concludes that enforcement of the codes of conduct is a major issue, that they mainly focus on the business case of sustainability, rather than the impact on sustainable development, and that the codes of conduct are compromises that each financial institution can agree to without changing their business to move in a more sustainable direction.
