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Does anyone really deliver Responsible Banking?

In November 2018 the United Nations published the consultative version of their Principles for responsible banking - shaping our future and 28 banks were founding members with each of their CEOs.  Each of the founding bank member’s CEOs was quoted about their commitment to the principles of responsible banking, for example:

  • Jes Staley, Group CEO, Barclays PLC: “Barclays has been a member of the UN Environment Programme Finance Initiative for more than 20 years and we’re proud to be part of the core group of 28 banks developing the Principles for Responsible Banking. Barclays exists to help develop sustainable economies and to empower people to build better futures. We are committed to playing our part to deliver the SDGs and we do this by helping our clients to raise billions of dollars of social and environmental financing, upskilling millions of people and helping to drive job creation.”
  • Jean-Laurent Bonnafé, CEO, BNP Paribas: “Finance in its very nature is forward-looking, and we must make sure that it works not only for profit but also for the future of the people and the planet. The framework set out by UNEP FI in its Principles for Responsible Banking will enable us to move collectively in that direction.”

Responsible banking principles

The consultative version summarises the approach:

  • Banks play a key role in society. As financial intermediaries, it is our purpose to help develop sustainable economies and to empower people to build better futures.
  • Banking is based on the trust our customers and wider society put in us to serve their best interests and to act responsibly. Our success is intrinsically dependent on the long-term prosperity of the society we serve. Only in an inclusive society that uses its natural resources in a sustainable manner can our clients and customers and, in turn, our businesses thrive.
  • We, therefore, want to take a leadership role and use our products, services and relationships to support and accelerate the fundamental changes in our economies and lifestyles necessary to achieve shared prosperity for both current and future generations.

The supporting banks commit to delivering the six principles of responsible banking which are:

  1. Alignment: We will align our business strategy to be consistent with and contribute to individuals’ needs and society’s goals, as expressed in the Sustainable Development Goals (SDGs), the Paris Climate Agreement and relevant national and regional frameworks. We will focus our efforts where we have the most significant impact.
  2. Impact: We will continuously increase our positive impacts while reducing the negative impacts on, and managing the risks to, people and the environment resulting from our activities, products and services.
  3. Clients & customers: We will work responsibly with our clients and our customers to encourage sustainable practices and enable economic activities that create shared prosperity for current and future generations.
  4. Stakeholders: We will proactively and responsibly consult, engage and partner with relevant stakeholders to achieve society’s goals.
  5. Governance and target setting: We will implement our commitment to these Principles through effective governance and a culture of responsible banking, demonstrating ambition and accountability by setting public targets relating to our most significant impacts.
  6. 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 negative impacts and our contribution to society’s goals.

Fine words, but few if any banks are achieving this. Indeed, they may be focusing on the wrong targets as Chris Skinner points out in his blog today.

Banking for humanity

Chris Skinner in his superb blog today wrote on Banking for humanity he believes there are five inter-linked areas which banks should provide:

  1. Financial inclusion
  2. Financial literacy
  3. Financial capabilities
  4. Financial wellness
  5. Sustainability and responsibility which, for Chris, is best illustrated by Ant Forest in which account holders fund planting of new trees.

He finishes his blog with: “All I do know is that many of the new breed of FinTech firms are focused on the five things I discussed here……….How many traditional banks can you name that are championing these causes?”

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CTMfile take: Financial inclusion, literacy, capability and wellness are vital, but seem to be ignored by many of the founding member banks of the UN’s Principles for responsible banking initiative, let alone other banks.

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