One day ahead of the UN Climate Action Summit in New York, 22 September 2019 – The United Nations launched the Principles for Responsible Banking with the sign up of 130 international banks, collectively holding more than USD 47 trillion in assets.
As the banking sector provides over 90 per cent of financing in developing countries and over two thirds worldwide, global action from the industry is a crucial step towards meeting the sustainability imperative.
By endorsing the Principles, banks commit to align their business models and scale up their contribution to achieving the goals set out by the the Six Principles [3] developed by the United Nations Environment Programme Finance Initiative (UNEP FI) and a core group of 30 founding banks provide a common comprehensive framework. It enables set up and work towards the achievement of, meaningful targets for more responsible banking. The signatories are also committed to an accountability duty, reporting publicly on the reduction of their risks while supporting economic and social transformation.
Alongside the Principles, other initiatives have emerged, aimed at solving the challenge of standardised approaches for managing sustainability risk and, enhancing sustainability-related disclosures. For instance, the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) has developed a framework for effective reporting on climate-related financial risks. The UK Prudential Regulatory Authority has clearly stated its expectation that firms should consider engaging with the TCFD framework and other initiatives in respect of disclosures. The Central Banks and Supervisors Network for Greening the Financial System (NGFS) also encourages financial institutions to follow the TCFD recommendations.
Whether it’s business innovation, employee engagement or everyday productivity, technology promises to do it all. But amidst the limitless possibilities, leaders can find themselves uncertain on the benefits of certain technologies, how to focus their investments and how to get their people on board with change.
Since its launch, the Framework has allowed companies to more successfully integrate the UNGPs into their business operations. These Principles were unanimously endorsed by the UN Human Rights Council in 2011 and clarify the responsibility of governments and business as regards the impacts businesses can, and do, have on people and how business should provide or enable remedy to those who have been harmed. The UNGPs are the most authoritative guidance and the blueprint for embedding human rights practices in business.
As the traditional avenues of corporate growth become less attractive, many companies find the appeal of new venture strategies harder to resist. Though difficult to implement and often slow to repay investment, these strategies do offer the promise of facilitating entry into new business areas with innovative, usually technology-based products. And for large companies with many layers of management and detailed control systems, ventures offer the special promise of recapturing some vital spark of entrepreneurial energy.
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