Nineteenth International Conference on Environmental, Cultural, Economic & Social Sustainability

Abstract

In recent years, the concept of sustainability has gained growing relevance in European Union (EU) policy discussions in the banking field. This study examines the concept and role of sustainability in the regulation of commercial banks in the EU, with a focus on its three functions as: a) A practice to be disclosed by commercial banks b) An element to be factored into the commercial banks’ risk management; and, c) A target to be pursued by commercial banks in their activities. As regards the latter, the presentation examines whether directors of commercial banks in the EU are bound by any duty stemming from EU law to pursue the maximization of sustainability/SDGs and, if so, whether and the extent to which this is leading to a redefinition of the corporate purpose of commercial banks across the EU. The paper also aims at answering the question about the balance between the different functions of sustainability in regard to commercial banks’ regulation and the extent to which the EU’s regulatory approach can effectively contribute to building a more sustainable banking system. The study takes a holistic approach based on a multilevel analysis of EU financial and banking law as well as soft-law instruments, such as guidelines, recommendations, and opinions issued by the European Banking Authority or the European Systemic Risk Board. In addition to financial services/banking normative instruments, the study also considers the wider legislative and regulatory framework (e.g. company law) with a potential impact on the commercial banks’ business model.