Globethics.net is hosting a special institutional collection of documents related to different editions of the Ethics & Trust in Finance Prize. About the Ethics & Trust in Finance Prize:The Ethics & Trust in Finance Prize – formerly "Ethics in Finance – Robin Cosgrove Prize" – promotes greater awareness among young people throughout the world concerning the benefits of ethics in finance. It aims to encourage high-quality management of banking, insurance and financial services based on trust and integrity. Launched in 2006, this global competition for innovative ideas on ethics, responsibility and trust in financial activities is open to young people, aged 35 years or younger, from throughout the world – professionals as well as young academics. The competition invites creative papers setting out analyses or proposals for innovative ways to promote ethics & trust in finance. The Jury allocates the prize money of USD 20,000 among the winners. The management of the Prize is carried out by the Observatoire de la Finance, which is a Swiss not-for-profit foundation, and home of the manifesto entitled ‘For finance that serves the common good'. The distinguished international Jury of experts in ethics and finance is co-chaired by Mrs Josina Kamerling (CFA Institute, Brussels) and prof. Paul H. Dembinski (director of the Obervatoire de la Finance, Geneva)

Recent Submissions

  • Robin Cosgrove Prize collection

    Cosgrove, Robin (Ethics in Finance [previously Robin Cosgrove Prize], 2011)
  • Redefining Capitalism

    Pozuelo-Monfort, Jaime (Ethics in Finance - Robin Cosgrove Prize, 2007)
    "Today’s world is a world of increasing differences. There are objections to the previous statement, but the World Bank’s figures are self-explanatory. They point to a scenario whereby extreme poverty of the world’s poorest would have dramatically increased in the past 20 years in Sub-Saharan Africa, whereas South and East Asia have benefited from the phenomenal growth of China and India. There is overconfidence and a lack of realism in the first world as to how to tackle the situation that worsens day by day. Many individuals in the rich world, who are not directly involved with the difficulties faced by emerging economies, do not realize the depth and severity of the problems the poor encounter, or the degree to which the latter affect the daily lives of millions of people. No easy solution seems feasible or applicable. There have been, and there are interesting initiatives that, provided their success, could bring first and third world closer together in terms of income, growth opportunities and share of the pie. However although apparently straightforward, these proposals remain simplistic and hard to implement within the present regulatory framework, even if this may be possible on the long run. This situation is exacerbated by the fact that the individual is greedy by definition."(pg 74)
  • Accountability and the Second Line of Defence

    Dadiso Motsi-Omoijiade, Immaculate (Ethics in Finance - Robin Cosgrove Prize, 2011)
    "Cet article fournit des options politiques pratiques pour la régulation des agences de notation financière dans l’esprit de la promotion d’une éthique globale en finance. Les agences de notation sont essentielles pour le bon fonctionnement du système financier global en raison de leur valeur informationnelle, transactionnelle et réglementaire. Leur échec récent pour assurer la “deuxième ligne de défense” contre la crise financière a mis en évidence des questions clés au niveau de la responsabilité. Il s’agit notamment du manque de concurrence, de conflits d’intérêt et des incitations perverses. Cet article propose un “paquet de politiques” pratique de réglementation à examiner. Ce paquet inclut la création d’une agence de notation du secteur public et des spécifications détaillées sur la séparation des agences de notation et les services de consultants et de services dans le domaine de la finance structurée. Il comprend également un “gel” temporaire des notations. Ceci s’inscrit dans la ligne de l’identification du problème fondamental de la période récente lorsqu’il s’agit de traiter de l’innovation et de l’évaluation des nouveaux et complexes instruments financiers."(pg 103)
  • The South and Carbondioxide

    Bendell, Jem; Chawla, Inderpreet (Ethics in Finance - Robin Cosgrove Prize, 2007)
    "Money makes the world go round. The growth of the now 370 trillion dollar derivatives market, according to a Bank of International Settlements estimate for the first half of 2006, serves to remind us that the financial sector is the compass from which both companies and countries take their direction. Yet as news about climate chaos, persistent poverty and intensifying inequality continues to percolate our pleasant lives in the West, we have to ask whether money is now causing the downfall of the world. In recent years more people have been choosing to engage in global finance to solve problems of the environment and international development. Their efforts herald a new paradigm for ethical finance, which no longer focuses on personal ethical dilemmas within existing professional frameworks but on how to use opportunities as a financial services professional to transform those frameworks so the world’s most powerful motor - money - makes the world work around barriers to a more sustainable, just and healthy future. Our paper outlines how this is happening both in professions and in academia. It identifies urgent interconnected challenges of climate change, unemployment, local enterprise and poverty reduction, and suggests that a new approach to socially responsible investing is required to create new frameworks for the innovative financing of sustainable enterprise in the global South. Investors can make money while contributing to low-carbon high-employment societies, if they help support the development of appropriate risk adjusting mechanisms. This focus on creating new financial frameworks is one of the highest embodiments of a commitment to our common humanity and ecology, which is the ground of all subsequent ethical discourse and philosophy."(pg 54)
  • When Small Companies Dabble in Disinformation

    Ullah, Saif (Ethics in Finance - Robin Cosgrove Prize, 2007)
    "As a result, there is increased liquidity resulting from higher trading volume in the underlying securities. There are positive abnormal returns around the event date. This might be considered a result of increased trading and incorporation of ‘stale’ information in the security prices. It might also be due to the fact that investors really believed the promoters. Another important factor is the fact that these promoters targeted only buy-side investors, which might have led to higher stock prices. Ethical issues concerning the hiring of investor-relations’ firms by different firms were raised here. The fact that these investor-relations’ firms were charged, and that the firms that employed them were rarely charged, shows the complexity of enforcement of laws. These firms clearly benefited from the illegal behaviour of the investor-relations’ firms. However, the law enforcement agency did not/could not take any action against them. It might have been difficult to prove in court that the hiring firms knew about the activities of the promoters. But one can argue that these firms were agents of the hiring firms and consequently these firms should have known what their agents were doing, and should, in that capacity, have been prosecuted."(pg 88)
  • Microfinance

    Mueni Maina Kiiru, Joy (Ethics in Finance - Robin Cosgrove Prize, 2007)
    "In the first place, proponents of the model assume that many poor people can become micro-entrepreneurs. Entrepreneurship skills and managerial capability are assumed as given, thus the ability for microfinance to create employment even if self-employment. Secondly, even if the first assumption were correct, the model continues to assume that there is going to be a vibrant market for goods and services and that it will be possible for all micro-entrepreneurs to gain access to markets for their products; otherwise how else can incomes be improved from entrepreneurship if there were no markets? Thirdly, the supporters of this model also assume that as long as the poor can repay at market rates, or slightly above market rates, it is a good indication that they are doing well financially. Ironically, one of the major reasons why it was felt so justified to bring more ‘formal’ financial services to the poor was because it was assumed that the local money lenders were exploiting the poor by charging extortionate interest rates. Yet the poor were paying even then! The point is that microfinance should be understood as a resource reallocation policy tool and, just like any other such policy, it is important to keep close watch of the underlying assumptions, for if they are not valid, the policy objectives may not be realized. The main objective of this essay is not to challenge, prove or disapprove anything, but rather to bring to light the realities of what the poor people have to cope with in order to repay their loans promptly. The goal is to bring the social and financial costs associated with microfinance instalments to the awareness of the policy maker."(pg 65)
  • Gobierno Corporativo y Responsabilidad Social Empresarial

    Diaz Hevia, Javier (Ethics in Finance - Robin Cosgrove Prize, 2009)
    "El desarrollo sostenible se ha convertido en los últimos años en objetivo prioritario de gobiernos y de los principales organismos nacionales y supranacionales. Este impulso hacia la sostenibilidad del desarrollo orienta a los economistas hacia enfoques multidisciplinarios donde las causas económicas no son las únicas reglas de conducta. Esto implica otorgar un papel complementario al enfoque socialmente responsable. Dicho en otras palabras, la sostenibilidad abarca las perspectivas ambiental, económica y social, para así forjar un concepto de desarrollo entendido como un proceso de cambio y transformación que se orienta hacia la perdurabilidad del sistema. Pero además y para que estas bases sean sólidas, la sociedad debe promover la sostenibilidad del desarrollo definiendo estrategias globales que generen grupos de actuación local. En un mundo cada vez más interdependiente, aspectos como la cohesión social y la protección medioambiental se constituyen como un conjunto de reglas o códigos cada vez más predominantes, que legitiman el papel de cualquier organización y en general el de la empresa con la sociedad."(pg 38)
  • Etica

    Sifah, David (Ethics in Finance - Robin Cosgrove Prize, 2009)
    "Ética en general se ocupa de la conducta humana que es aceptable o “correcta”, y lo que no es aceptable o “incorrecto” de acuerdo a la moral convencional. Las normas éticas generales abarcan la veracidad, la honestidad, la integridad, el respeto por los demás, la equidad y la justicia. Se refi eren a todos los aspectos de la vida, incluyendo los negocios y las fi nanzas. La ética fi nanciera es, por tanto, un subconjunto de la ética general. Las normas éticas son esenciales para mantener la estabilidad y la armonía en la vida social, donde las personas interactúan unas con otras. El reconocimiento de las necesidades y aspiraciones de los demás, la equidad y los esfuerzos de cooperación para hacer frente a problemas comunes son un ejemplo de los aspectos de comportamiento social que contribuyen a la estabilidad social. En el proceso de evolución social, se han desarrollado no sólo un instinto para cuidar de nosotros mismos, sino también una conciencia para cuidar de los demás. Sin embargo, pueden darse situaciones en que la necesidad de cuidar de nosotros mismos entra en confl icto con la necesidad de cuidar de los demás. En tales situaciones, las normas éticas son necesarias para guiar nuestro comportamiento. Como Demsey (1999) afi rma: “La ética representa el intento de resolver el confl icto entre egoísmo y altruismo, entre nuestras necesidades materiales y nuestra conciencia”."(pg 83)
  • La ética personal y la vida profesional

    Benton, Meredith (Ethics in Finance - Robin Cosgrove Prize, 2009)
    "No es necesario hacer un recuento de la actual crisis financiera. Las repercusiones de un fallido sistema financiero mundial se harán sentir durante años, si no décadas. Las razones del descalabro de nuestro sistema económico global son innumerables. Hay muchos responsables y muchas más víctimas todavía. Si bien el análisis retrospectivo es esencial, lo más importante en este momento es la comprensión de cómo evitar futuras transgresiones de este tipo e impacto. ¿Una mayor supervisión por la Comisión de Bolsa y Valores (Securities and Exchange Commission SEC), de las políticas de los bancos en materia de hipotecas o un periodismo de investigación más profundo podrían ayudarnos a evitar futuras catástrofes similares? Estos y todos los esfuerzos similares de este tipo no hubieran impedido la crisis actual, ni impedirán otras crisis en el futuro. En lugar de hablar de las actuaciones de los bancos, las obligaciones garantizadas por una hipoteca, o el tipo de cambio, tenemos que recordar que el núcleo de estas instituciones y los conceptos no son leyes, estatutos corporativos o los tratados internacionales. En el núcleo, el sistema financiero fue desarrollado, es manejado, y depende totalmente de la toma de decisiones humanas."(pg 74)
  • Internacionalización, Instituciones e Individuos

    See, Geoffrey (Ethics in Finance - Robin Cosgrove Prize, 2009)
    "Los fracasos generalizados de la ética en el sector financiero, hacen un amplio llamado para introducir cambios de gran alcance en el sector. Al mirar Madoff, somos testigos de un individuo en el epicentro de un fraude financiero. Al examinar el desorden generado por la crisis hipotecaria (subprime), somos testigos que las instituciones no logran poner a sus clientes como la principal preocupación de sus actividades. Estudiando el caso del UBS, somos testigos de un conflicto internacional sobre el secreto bancario. Los problemas de ética en las finanzas son multidimensionales, con las causas situadas en diferentes niveles de la organización empresarial. Esto significa que la solución global que necesitamos debe incluir tres niveles: individual, institucional e internacional. Cada uno de estos niveles ejerce un conjunto diferente de presiones sobre la toma de decisiones éticas. El siguiente análisis define cómo la organización y la composición del sector financiero en cada uno de estos niveles plantea retos sistémicos para la toma de decisiones. A continuación se esbozan soluciones a los problemas éticos en cada nivel, con el objetivo de crear una interfaz que refuerce la toma de decisiones éticas realizadas por particulares, empresas y todo el sector financiero."(pg 63)
  • Etica en la gestión de tesorería,

    San-Jose, Leire (Ethics in Finance - Robin Cosgrove Prize, 2009)
    "En las empresas la gestión de tesorería o cash management corresponde a la obtención del disponible necesario, en el momento adecuado, al menor coste posible. Para ello, se utilizan un conjunto de acciones y técnicas relacionadas con la planificación de la tesorería, la toma de decisiones para las operaciones de financiación e inversión a corto plazo, la gestión de las relaciones con las entidades financieras, y la gestión de riesgos financieros. Pero además, el seguimiento y el análisis de la gestión del circuito de cobros y del circuito de pagos son esenciales, junto con la cultura empresarial."(pg 15)
  • In Search of Honesty and Altruism

    Abdul Rahim Mousa, Rania (Ethics in Finance - Robin Cosgrove Prize, 2007)
    "Ethics in general is concerned with human behaviour, which is the acceptance or ‘right’, or non-acceptance or ‘wrong’, based on conventional morality. General ethical norms encompass truthfulness, honesty, integrity, respect for others, fairness and justice. They relate to all aspects of life, including business and finance. Financial ethics is therefore a subset of general ethics. Ethical norms are essential for maintaining stability and harmony in social life, where people interact with one another. Recognition of others’ needs and aspirations, fairness, and co-operative efforts to deal with common issues are examples of aspects of social behaviour that contribute to social stability. In the process of social evolution, we, as human beings, have developed not only an instinct to care for ourselves but also a conscience to care for others. Situations may however arise, in which the need to care for ourselves runs into conflict with the need to care for others. In such situations, ethical norms are needed to guide our behaviour. As M. Dempsey (1999) puts it: ‘ethics represent the attempt to resolve the conflict between selfishness and selflessness; between our material needs and our conscience’. Ethical dilemmas and ethical violations in finance can be attributed to an inconsistency in the conceptual framework of modern financialeconomic theory and the widespread use of a principal-agent model of relationship in financial transactions. The financial-economic theory that underlies the modern capitalist system is based on the rationale of profit maximisation, whereby individuals become self-centred, and aim to maximise their own profits and serve their own interests. The principal- agent model of relationships refers to an arrangement whereby one party, acting as an agent for another, carries functions on behalf of that other. Such arrangements are an integral part of the modern financial system, and it is difficult to imagine it functioning without them."(pg 41)
  • A Ética como Sustentáculo da Credibilidade

    Araujo, Felippe (Ethics in Finance - Robin Cosgrove Prize, 2009)
    "Em qualquer economia, a existência de instituições financeiras é imprescindível. Através delas, os recursos dos atores que poupam chegam às mãos daqueles que precisam de uma injeção adicional de recursos, como investidores ou atores enfrentando um choque temporário em suas rendas sem reduzir gastos. Também é válido lembrar que graças à atuação de entidades financeiras uma sociedade pode contar com provisões essenciais de aposentadorias, seguros e capitalização acionária. Se, portanto, o setor financeiro desempenha um papel louvável (senão essencial) dentro da comunidade, por que tão frequentemente seus profissionais atentariam contra a ética? A hipótese mais recorrentemente citada (Dobbs, 1997) refere-se ao dilema do “problema do agente”. Tal conflito decorre de que serviços financeiros consistem em delegações do uso de capital, conferidas pelos ditos “principais” aos “agentes”, enquanto que tais agentes, de acordo com a teoria econômica racional, estariam determinados a satisfazer seus próprio desejo por mais renda, a despeito de qualquer consequência. Deste ponto adiante, se qualquer opção oferecer mais ganho ao agente do que aquela mais rentável ao principal, estará o agente enfrentando um dilema ético. O problema do agente põe em relevo uma pivotal incoerência lógica, enquanto subestima o papel dos interesses de classe dos agentes e a importância que um profissional atribui aos seus ganhos de longo prazo. Temendo a repercussão que sua escolha anti-ética pode ter, no longo prazo, sobre a reputação de sua ordem profissional, e de sua empresa e dele próprio, o agente pode racionalmente deferi-la. Para prover respaldo a essa escolha moral, membros do setor financeiro têm criado selos de qualidade para profissionais versados em práticas ética como o CFA, o CFM e o CMA."(pg 28)
  • Social Impact Ratings

    M. Wisebrod, Jonathan (Ethics in Finance - Robin Cosgrove Prize, 2007)
    "The investment sector plays a unique role in promoting ethical practices throughout the economy. With well over three trillion dollars invested in socially responsible investments (SRI) worldwide, environmental, social, governance and ethical factors (collectively, ‘social impact factors’) have a demonstrable impact on investment practices. SRI investors utilize various methods of influencing corporate practice, including social screening of investments, which can ultimately reward positive social impact with greater access to financing. This paper proposes a method for incorporating social impact factors as a quantitative parameter in investment analysis and a means of facilitating such analysis in practice. These proposals have the potential to integrate social impact factors into quantitative portfolio management techniques that have traditionally been based only on risk and return. Very broadly, SRI is the inclusion of any social or ethical criterion in the investment decision-making process. The first instances of socially responsible investing may be the Quakers’ rules against investing in arms companies and engaging in the business of slavery as early as the mid-eighteenth century (Kinder, 2005; Kinder and Domini, 1998)."(pg 29)
  • Ethics or Bust

    Payne, Clare (Ethics in Finance - Robin Cosgrove Prize, 2007)
    "Australia’s national dictionary defines ethics as ‘a system of moral principles, by which human actions and proposals may be judged good or bad, or right or wrong’. Other definitions include concepts such as values relating to human conduct, principles of right conduct, rules or standards or a theory of moral values. Popular understandings of ethics are more likely to include such notions as trust, integrity, honesty, social responsibility and doing the right thing. Whilst most of us have an understanding of what ethics is, and believe in the importance of ethical conduct in the cooperative functioning of society, difficulty is often met when determining agreed standards of ethical behaviour for the various complex situations in which individuals and organisations find themselves. It seems that society’s ethical ‘goal posts’ are constantly shifting and this presents particular challenges to the business world and the finance industry. Broadly, the finance industry refers to organisations that deal with the management of money. More specifically, this includes banks, investment banks, insurance companies, credit card companies, stock brokerages, private equity and hedge funds."(pg 18)
  • El Orden Dentro Del Desorden De Las Finanzas

    Pellerin, Elise; Crepin, Marie (Ethics in Finance - Robin Cosgrove Prize, 2009)
    "Cuando reina la prosperidad, y que los mercados financieros parecen ascender al cielo, el mundo de las finanzas se instalaría de buena gana en una torre de marfil. Pero en los momentos de crisis que estamos viviendo ahora, el cuerpo social, enteramente contaminado, reclama su derecho a examinar el comportamiento de aquellos que controlan los activos financieros. Declaraciones, acusaciones e intervenciones legislativas se multiplican en los últimos tiempos. Recordamos entonces que el flujo de dinero conlleva consecuencias políticas... y debería seguir algunos parámetros éticos. Ante esta situación mediática, popular y política, se constata que el discurso “ético” emanando del sector financiero se ha concentrado en los últimos años sobre temas tales que la huella de carbono, las energías renovables o en cuestiones de reciclaje - a menudo alejado de la realidad y desafíos que enfrentan las empresas. ¡A comenzar por desafíos que enfrentan las empresas en el sector financiero! Si la comunidad financiera ha logrado manipular las cuestiones sobre la “responsabilidad social” o el “desarrollo sostenible”, lo ha hecho sin discutir sobre temas sensibles. El primero de ellos consiste en medir su propia responsabilidad... y los deberes éticos que resultan de dicha responsabilidad."(pg 51)
  • Du bon usage de l’Ordre dans le désordre de la finance (Good practice and financial disorder)

    Casimiro, Marie; Pellerin, Elise (Ethics in Finance - Robin Cosgrove Prize, 2009)
    "Lorsque la prospérité règne, et que les marchés financiers semblent vouloir monter au ciel, le monde de la finance se place volontiers dans une tour d’ivoire. Mais dans les moments de crise que nous traversons actuellement, le corps social, tout entier contaminé, revendique son droit de regard sur le comportement de ceux qui contrôlent les masses financières. Déclarations, accusations et interventions législatives se multiplient. On se souvient alors que la circulation de l’argent entraîne des conséquences politiques… et qu’elle devrait suivre une certaine éthique. Face à ce tribunal médiatique, populaire et politique, on constate que le discours sur l’« éthique » produit par le milieu financier se concentre depuis quelques années sur des questions de bilan carbone, d’énergies renouvelables ou encore sur des problématiques de recyclage - le plus souvent éloignées des coeurs de métier et des enjeux des entreprises. A commencer par les enjeux des entreprises oeuvrant dans le secteur financier ! Si la communauté financière a fini par manipuler les questions de « responsabilité sociale » ou de « développement durable », elle l’a fait de façon à ne pas aborder les sujets qui fâchent ; le premier d’entre eux étant de mesurer sa propre responsabilité… ainsi que les exigences éthiques qui en découlent."(pg 16)
  • Ethical Cash Management ?

    San-José, Leire (Ethics in Finance - Robin Cosgrove Prize, 2009)
    "To respond to this problem, we need a change in corporate financial culture, which in our view can only optimize overall cash holdings and generate value for all if financial strategies rest on one basic pillar, namely mutual trust. Situations of illiquidity, insolvency and bankruptcy in which companies find themselves must be analysed not only from the point of view of their own corporate management, but from a broader perspective that takes account of the (essentially adverse) impact on the entire group of stakeholders. Thus, and from the point of view trust among interest groups, it may be considered that improved results - social as well as economic - can be achieved for all those involved if cash-holding techniques are based on the notion of mutual benefit and the common good."(pg 59)
  • Virtuous Enterprises

    Otte, Jan Thomas (Ethics in Finance - Robin Cosgrove Prize, 2009)
    "The term ‘responsibility’ is derived from the Latin ‘responsabilis’, which means the ability to respond to the obligations and expectations of others. To recognize these responsibilities, managers tend to use a mixture of intuition and rationality. But is it true that only individual persons can be responsible, as they have a conscience? In this context, it is certainly much easier for medium- sized and small companies to live virtuously according to the principles of CSR then it is for bigger companies. Do companies really have a character and, therefore, can they be made responsible for things? Peter French (1984) initiated this debate 20 years ago: ‘certainly a corporation doing something […] usually can be described as having reasons for [its] behaviour. In fact, by virtue of those descriptions they [companies] may be properly held responsible for their behaviour, ceteris paribus’. In his argumentation, saying that companies, as well as employees and managers, have a character which includes responsibility, French also uses the terms ‘reason’, ‘desires’, ‘intentions’, and ‘decision-making’ which support the focus on the character of individuals in CSR. In jurisprudence, companies usually are considered as judicial persons."(pg 87)
  • Investing as if People and Planet Mattered

    Jessen, Pernille (Ethics in Finance - Robin Cosgrove Prize, 2009)
    "If we examine the lessons of the financial crisis, we can see that a system built on both trust and the rational value-maximizing paradigm is fostering conflicts. The current situation therefore provides us with a unique opportunity to study the role of ethics in the financial system and to make concrete suggestions as to how to implement improved business codes of conduct. This article touches on two key areas in this development: the general public’s investments and the education of actors in financial markets."(pg 78)

View more