28 global banks to sign responsible banking pact

Group with $17trn in assets has  Access Bank as Nigeria’s only member

A group of 28 leading global banks with $17 trillion in total assets will gather next month in Paris, France to sign off on a new draft of what has been termed Principles for Responsible Banking, designed in the wake of the global financial crisis 15 years ago. Much of the blame of the crisis had been heaped on banks for failing in their responsibility of financial intermediation.

The group of banks is believed to be setting up the principles to clearly spell out their responsibilities and enthrone a culture of transparency in their dealings with the societies where they operate and the individuals who are their customers.

Access Bank, a founding member of the global banking group, is the only Nigerian financial institution that is identifying itself with this new ethical framework that is being championed for global banking business.

The new Principles for Responsible Banking are being spearheaded under the United Nations Environment Programme Finance Initiative (UNEP FI).  A UNEP FI’s Global Roundtable is already billed for 26th November in Paris during when it would be launched after discussion with relevant stakeholders in a global public consultation. The group expects the final version to become available the Paris launch in September 2019.

The so-called principles are a set of rules for the enthronement of a comprehensive framework for sustainable banking of the future. The principles align “the banking industry with society’s goals as expressed in the Sustainable Development Goals and the Paris Climate Agreement, and the 28 banks have been advised by a group of 13 civil society institutions in developing the principles

The major goal of the principles, following the errors that became obvious in the wake of the global financial crisis, is that “as society’s expectations change, banks must be transparent and clear about how their products and services will create value for their customers, clients, investors, as well as society.

It is hoped and believed that “the more banks that endorse and then adopt the Principles, the greater impact the banking industry will have in leading society to meet its goals for a sustainable and equitable future. Other key stakeholders such as banking associations, regulators, investors and civil society organisations can also support the initiative by becoming an Endorser,” according to a clarification statement on the matter.

The Principles for Responsible Banking also hope to provide banks with a vision linked to society’s goals, and a comprehensive framework for hardwiring sustainability into the bank’s DNA at all levels – strategic, portfolio and transactional – and across all business areas.

“They define, shape and ultimately secure the banking industry’s role in the society and economy of the 21st century, and help the industry to demonstrate how it makes a positive contribution to society,” according to a clarification note.

The principles will also help to accelerate the banking industry’s contribution to achieving society’s goals as expressed in the Sustainable Development Goals and the Paris Climate Agreement.

business a.m. learnt that the new principles will be in line with the existing Principles for Responsible Investment (PRI) and Principles for Sustainable Insurance (PSI), which are voluntary principles that provide signatories with a list of practices they can adopt to incorporate Environmental Social and Governance issues into their business decisions.

Christiana Figueres, former UN Climate chief and convener of the Mission 2020 initiative, had been among those calling for a banking equivalent to the investment and insurance principles, challenging UNEP FI to develop them for banks at its last Europe Roundtable in November.

“The material is already right in front of you, you don’t have to invent anything and you know what needs to be done, but it needs to be captured in principles that you would draft and that would be taken on board by your members,” she said.

The banks met in person for the first time in London on 19-20 April, this year.

The Principles for Responsible Banking are enshrined in six core areas of attention for banks, such as Access Bank, who have signed up and others who may yet be signing up. These six core areas the banks have agreed to abide by are:

·      Alignment: “We will ensure that our business strategy is consistent with individuals’ needs and society’s goals, as expressed in the Sustainable Development Goals, the Paris Climate Agreement and relevant national and regional frameworks. We will focus our efforts where we have the greatest impact.”

·      Impacts: “We will holistically assess and manage the risks, opportunities and impacts resulting from activities we enable by providing our products and services. We will continuously improve our positive impacts while reducing our negative impacts.”

·      Clients and customers: “We will work with our clients and our customers to encourage sustainable practices and to enable economic activities that create shared prosperity for current and future generations.

·      Stakeholders: “We will proactively collaborate with relevant stakeholders to further the objectives of these Principles.”

·      Governance and Culture: “We will implement our commitments through effective governance processes, management systems and a culture of responsible banking.”

·       Transparency and Accountability: “We will periodically review our individual and collective implementation of these Principles and be transparent about and accountable for our positive and our negative impacts and our contribution to society’s goals.”

The core members of the banking group are as follows: Access Bank (Nigeria), Arab African International Bank (AAIB) (Egypt), Banco Pichincha (Ecuador), Banorte (Mexico), Barclays (United Kingdom), BBVA (Spain), BNP Paribas (France), Bradesco (Brazil), Commercial International Bank (CIB) (Egypt), First Rand (South Africa), Garanti Bank (Turkey), Golomt Bank (Mongolia), Hana Financial Group (South Korea), Industrial and Commercial Bank of China (ICBC) (China), ING (Netherlands), KCB Group (Kenya), Land Bank (South Africa), Nordea (Sweden), Piraeus Bank (Greece), Santander (Spain), Shinhan Financial Group (South Korea), Societe Generale (France), Standard Bank (South Africa), Triodos Bank (Netherlands), Westpac Group (Australia), YES Bank (India)