Macro Stewardship: A Transformative Approach in Sustainable Finance for Achieving Sustainability

This conceptual paper introduces Macro Stewardship (Ma-S) as a transformative approach in sustainable finance to challenge financial market failures that contribute to systemic collective action issues such as climate change, biodiversity loss, and inequality. It argues that traditional Environmental, Social, and Governance (ESG) strategies focus on individual corporate actions and often fail to drive systemic change. Ma-S, on the other hand, leverages the power of financial institutions to engage governments, policymakers, and stakeholders in addressing market failures tied to sustainability. Unlike Micro Stewardship (Mi-S) or ESG approach, which centers on corporate-level engagement, Ma-S promotes collaborative interventions to align the interests of businesses, governments, and society. This approach aims to influence regulatory changes, shape public policy, and support the United Nations Sustainable Development Goals (SDGs). The paper is guided by the research question: How can Macro Stewardship by financial institutions serve as a transformative approach in sustainable finance to achieve systemic change? It proposes a definition for Ma-S, outlines its practical applications, identifies implementation challenges, and presents a research agenda to evaluate its effectiveness and impact. In doing so, the paper lays a foundation for future empirical studies and calls for a shift in how financial systems contribute to global sustainability.