The failure of the global financial markets has brought about an ethical crisis that needs to be understood in order to avoid a repeat of the predicament, World Vision chief executive Tim Costello said.
"If we do not understand the ethical issues around what has happened with the financial crisis we are doomed to repeat the same mistakes," Costello told an audience at the annual Investment Management Consultants Association conference yesterday.
"We need to understand the culture that allowed an asset class [sub-prime loans] to be sold unwisely. What were the forces that have pushed a borrow and consume culture?" he said.
While the response to a financial crisis is often more regulation, an ethical framework is just as vital, according to Costello.
"Any form of regulation needs to be supported by an ethical framework so that a crisis such as this won't happen again," he said.
He said the financial crisis may have impacted developed countries but developing countries were also affected, particularly as overseas aid will be cut.
"While the impact has been local for many countries the response must be international. We need to work with international agencies such as the IMF (International Monetary Fund) in order to respond effectively to the crisis," he said.
"The world is now faced with a loaded agenda - we need to deal with terrorism, global warming and a financial crisis."
Costello is part of a group of advisers who provide advice to AMP about ethical investments.
