Beyond ESG: the CEI’s proposal for truly sustainable finance

At a time when sustainable finance is facing a period of growing complexity, the new Guidelines from the Italian Bishops’ Conference (CEI) on ethical and sustainable investment are a welcome and timely development. Not because they propose sophisticated financial innovations (nor do I believe that was the aim), but because they shift the focus to a fundamental question that has often remained in the background in recent years: what is the purpose of investment? Capital is not a neutral factor: every decision on the allocation of resources has economic, social and environmental consequences and should therefore also be assessed in the light of its effects on society and over time.

For over a decade, much of the financial world has equated – somewhat simplistically – sustainability with the adoption of ESG criteria. But the real demand for sustainability goes far beyond ESG criteria. The proliferation of different and not always transparent ratings, the difficulty of analysing and comparing often opaque methodologies, the emergence of cases of greenwashing and the resulting gradual tightening of regulations have fuelled growing mistrust amongst investors and the general public. And this has provided an excuse (or a motive) for a political approach that is too focused on the short term.

It is against this backdrop that the CEI document takes on a significance that extends far beyond the confines of the Church. The Guidelines, in fact, propose a vision in which capital is not simply a tool for maximising risk-adjusted returns, but rather a lever capable of steering the model of economic and social development. A clear shift emerges from a predominantly defensive approach to a generative perspective. Ethical finance is not reduced to the exclusion of controversial sectors, but is interpreted as the capacity to support activities that generate economic value and, at the same time, positive effects for society. In other words, it is not enough to ask what to avoid; we must ask ourselves what we intend to promote and to what end.

This approach seems particularly relevant at a time in history marked by structural challenges: the energy transition, climate change, an ageing population, intergenerational relations, rising inequality, and the need for social and environmental infrastructure. These are issues that require vast amounts of patient capital and a long-term vision which the financial markets, on their own, often struggle to provide. Or perhaps they do not have every incentive to do so. Turning awareness into incentives remains one of the most controversial issues in responsible finance. The direction to take is now clear; the problem is that in the short term (the time horizon overwhelmingly favoured by finance and politics) it is not in anyone’s interest to do so.

The message that emerges from the CEI Guidelines is simple but by no means self-evident: sustainability cannot be reduced to a label, a rating or regulatory compliance. It concerns the allocation of capital and the kind of society that is helped to be built through that capital, not least because the quality of an investment depends not only on the return it generates, but also on the value it creates for the community and passes on to future generations. And it is precisely the issue of intergenerational equity – as an autonomous principle of assessment in investment decisions – that might perhaps have deserved greater attention in the CEI document; however, the direction taken is undoubtedly the right one, and there is always time to make further additions.