By Patricia Lang-Schönberger, RBI |

As the first Austrian Banking Group, RBI officially signed and committed to the UN Principles for Responsible Banking (PRB) at the beginning of 2021 – a single framework for a sustainable banking industry developed through an innovative partnership between banks worldwide and United Nations Environment Programme Finance Initiative.

We talked to Puleng Tumelo Ndjwili-Potele, Banking Project Coordinator for the UNEP FI, about the Principles for Responsible Banking (PRB), its goals and its impact and what we can personally do for a sustainable lifestyle.

How does UNEP FI support banks in becoming more responsible?

The Principles for Responsible Banking is the first global framework that guides the integration of sustainability across all business areas of a bank, from strategic to portfolio to transaction level. Signing up to the Principles aligns Signatories with an external initiative that offers a shared and inspiring vision of what the future of banking looks like. The Principles offer opportunities to collaborate with, and learn from peers, individual implementation support and guidance from the Secretariat, and a means to communicate collectively with key stakeholders and build trust.

Signatories need to fulfil three key steps in their first four years of PRB implementation.

  • The first is for banks to undertake an impact analysis of their core business activities.
  • The second step is to set a minimum of two targets that address at least two areas of most significant impact.
  • The third step is for banks to report periodically on the progress they have made to implement the Principles.

To achieve its targets, a bank will need to work with its clients and customers. It has to ensure that their activities support more sustainable outcomes. The bank has to support clients in carbon intensive sectors to decarbonize and align with the goals of the Paris Climate Agreement and the latest science. Signatories will also need to ensure that the governance structures within their organization, as well as the organization’s culture, support the achievement of its sustainability targets and strategies.

Principle 2 is about impact analysis and target setting and is at the centre of the Principles for Responsible Banking. It requires banks to undertake an objective and systematic analysis of their core business activities to identify the impacts associated with the products, services, industries, sectors, and technologies that banks provide lending and investments to. Banks must then set targets that address their areas of most significant impact. The impact analysis helps banks understand the impacts that are associated with their business activities. Thereby it enables them to make more informed decisions that support greener and more inclusive economies, and drive alignment of the bank’s portfolios with society’s goals and priorities.

What was the most important work that had to be done in year one of the Principles for Responsible Banking? What will come up in year two?

In year one of the Principles we focused on developing the governance structures for the Principles, putting the Banking Board in place, and starting the process of constituting the Civil Society Advisory Body. We also focused on delivering implementation support to Signatories through several working groups. These focus on impact analysis, target setting, and reporting. In year two, we are focused on providing greater support to Signatories to guide them as they work to complete their impact analysis and start the process of setting targets in areas of most significant impact.

In the third quarter, we will be starting the Individual Progress Review, which will provide Signatories access to individual feedback and support from the UNEP FI Secretariat. The annual feedback and support meetings give Signatories individualized, substantive and actionable feedback. They also advice on the steps they can take on their journey to implement the Principles and make substantial contributions to sustainable development. We will also be working on a further collective commitment this year, taking guidance from Signatories on which area of impact the collective commitment should focus.  In addition, every two years Signatories issue a collective progress report. In it they show the progress and contributions made by all Signatory banks. We will be delivering the collective progress report by end of September of this year.

What is the first step to responsible banking that you would advise every bank to take?

In line with the first key step to PRB implementation, banks should undertake an impact analysis. This will help them identify which impacts in their portfolios they need to prioritize. The impact analysis guides a bank on which areas of impact it should address through setting targets. It also informs decision-making across the bank since it will have a clear picture of the impacts that are associated with the sectors, industries and technologies it lends to and invests in.

Is there a remarkable example of the undertakings of banks leading to more responsible banking?

Signatory banks are supporting their communities and clients through the COVID-19 pandemic. Additionally, some of them have made substantial advances in analyzing the social, environmental and economic impacts that are associated with their portfolios. They share this knowledge and their experience with peers.  

Accelerating climate action has also been a key area of focus, with 38 pioneering banks signing the Collective Commitment to Climate Action in 2019 and fast-tracking the commitment all Principles for Responsible Banking signatories have made to align their business strategy with the goals of the Paris Agreement. These banks drafted a seminal ‘Guidance on Climate Target Setting for Banks’, published in April this year. This Guidance also underpins the new Net-Zero Banking Alliance, which sees over 40 banks worldwide committing to align emissions from their portfolios with pathways to net-zero by 2050 or sooner.

We are now in the second year of implementing the Principles. We will be publishing a report on the collective progress made by Signatories in September of this year. This report will measure the progress Signatories are making together, showcasing highlights, global best practice, as well as the challenges Signatories have encountered and detailing how Signatories are delivering on their commitments.

Has COVID-19 changed the role of sustainability in general – and if yes, how?

COVID-19 has caused unprecedented impacts to our health and economies around the world.  It has made all of us examine our relationship with nature, as we continue to encroach on wildlife spaces and come into contact with zoonotic diseases. It has also revealed the inequalities in and across our societies. And the interconnectedness of our well-being and that of nature. Therefore, the recovery of our economies must be characterized by better land use practices, clean energy, clean technologies, and more inclusion. 

UNEP FI Member Banks and Principles for Responsible Banking Signatories have responded to the health and economic crisis created by the COVID-19 pandemic by acting and introducing a broad range of measures to support their societies, customers and clients. Signatories have supported their clients by introducing measures to help sustain their businesses, in line with Principle 3 (Clients & Customers). They have also introduced measures to support their customers through the crisis. Their responses have been amplified by partnering with their governments to manage the economic and social impacts of the virus, in line with Principle 4 (Stakeholders).

How will businesses of banks change due to sustainable finance?

The banking industry is undergoing a period of change in response to the evolving needs of the societies and communities it serves. This is partly driven by awareness of their interdependence. Prosperity of each part of the system relies on that of the others. The Principles are how the banking community is shaping the future of banking. This future is based on a belief in an inclusive society founded on human dignity, equality and the sustainable use of natural resources.

The Principles offer a starting point for any banking institution to act on sustainability irrespective of their starting point. It ensures that there is no excuse for any bank not to get involved. They facilitate change in the banking sector by setting out a clear, consistent, measurable approach to sustainability for the banking industry. They provide a means by which investors, policy makers and regulators, clients and civil society can compare banks. And hold them publicly accountable for their environmental, social and economic impacts, and their contribution to society’s goals.

The Principles are setting the standard for how the banking industry serves people, societies and the planet to secure prosperity for current and future generations. It is a journey of change that we are embarking on together. Signatories to the Principles are taking a leadership role. They demonstrate how banking products, services and relationships can support and accelerate the changes necessary to achieve shared prosperity for both current and future generations.

What makes the initiative powerful?

By lending and investing in a manner that advances society’s needs, as expressed in international frameworks such as the Sustainable Development Goals (SDGs) and Paris Climate Agreement, banks and the industry as a whole, will not only be poised to leverage new sustainability-driven business opportunities and support their clients through their transition, but will also be able to stay ahead of the shifting regulatory environment. This will enable these leading banks to remain effective in their operations, and relevant in their markets during these changing times.

More and more customers want their bank to act sustainably and responsibly. What can customers expect when banks sign the Principles?

Banking customers are expecting leadership from the banking community. They are also looking for products and services that align with their values. Banks want long term, fruitful relationships with customers and the societies in which they operate, which requires trust and confidence. More banks are responding to customer demands by offering products and services that align with their values. Thus, they support the delivery of more sustainable economies. Banks are realizing the importance of supporting and working with their clients to identify and finance transition plans that will align their client’s activities with sustainable outcomes, and help banks meet their targets and commitments in response to the most pressing challenges to sustainable development in their societies.   

Sustainable business strategies of large companies are likely to lead more quickly to sustainability goals. But it is also said that every individual can contribute something to a sustainable life on our planet. What do you personally do for a sustainable lifestyle?

Achieving sustainable development is in all our hands. We all have a role in supporting greener and more inclusive economies and societies. As individuals and customers, the choices we make about our consumption can help steer and achieve significant changes in how goods are produced, manufactured and sourced. Thus, we can create systemic changes in well-established practices and supply chains through our decisions about the food we eat, how it is produced and where it is sourced, choosing to think carefully about our purchases (reducing our consumption, reusing and recycling goods), and being more discerning about how we invest our savings and how we travel. All of this will result in significant collective contributions that drive the necessary changes needed in the global economy to achieve sustainable development.  We are part of an ecosystem, and we have a responsibility to act as stewards for nature, in order to secure a sustainable future for generations to come.


UNEP Facts and Figures:

UNEP FI at a glance

The United Nations Environment Programme Finance Initiative (UNEP FI) is a partnership between UNEP and the global financial sector to mobilize private sector finance for sustainable development. UNEP FI, launched in 1992, works with more than 350 members – banks, insurers, and investors and over 100 supporting institutions – to help create a financial sector that serves people and the planet while delivering positive impacts. It aims to inspire, inform and enable financial institutions to improve people’s quality of life without compromising that of future generations. By leveraging the UN’s role, UNEP FI accelerates sustainable finance.

UNEP FI is a unit within the Economy Division of the UN Environment Programme (UNEP). UNEP has a mandate to encourage economic growth compatible with the protection of the environment and works closely at a government and policy level with Member States. UNEP FI was established as a unit in recognition of the fact that the financial sector has a powerful role to play in protecting the environment through their investment, lending and underwriting decisions, as well as their relationship with clients. UNEP FI partners across three industries; Banking, Investment and Insurance. Following the establishment of the Principles for Responsible Investment (2006) and the Principles for Sustainable Insurance (2012), UNEP FI launched the Principles for Responsible Banking in 2019 in order to bring a global sustainable finance framework to the banking industry.

Facts and Figures

The Principles were launched by 132 Founding Signatory Banks in September 2019 during the annual UN General Assembly in New York, in the presence of the UN Secretary General. Since the launch the coalition of signatories has grown to 226 Signatory Banks from 69 countries. They account for over USD 57 trillion in assets, which represents approximately 40 per cent of the global banking industry.

Puleng Tumelo Ndjwili-Potele

Puleng Tumelo Ndjwili-Potele

is Banking Project Coordinator for the UNEP FI.