Responsible Banking Academy
This summer saw the launch of the Principles for Responsible Banking Academy – a unique global online platform that will support the implementation of the UN Principles for Responsible Banking (PRB) and provide mainstream training on the topic to the entire sector. Simon Thompson, Chief Executive, Chartered Banker Institute and Eric Usher, Head, UN Environment Programme Finance Initiative, (UNEP FI) explain its importance.
“If, as former Governor of the Bank of England Mark Carney said when speaking of the importance of the banking sector in the fight against climate change, every professional financial decision should include climate change – and sustainability much more broadly – at its heart, then every banking and finance professional needs to know at least the basics of climate change, sustainability, the principles and practice of green and sustainable finance, and be able to apply those in the context of their role. That implies we need to upskill millions of banking and finance professionals worldwide – and that’s where this Academy comes in.”
Those words, delivered by Thompson, show just how vital and pivotal those behind the newly launched Principles for Responsible Banking Academy believe it will be in helping the world meet its global sustainability objectives.
And Usher agrees: “The Academy – a joint initiative by the Chartered Banker Institute, UNEP FI and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH – will provide learning resources that assist banks and bankers from around the world in developing their knowledge and skills for practices that align with the vision society has set out for its future in the [17 UN] Sustainable Development Goals [SDGs] and the Paris Climate Agreement.”
He continues: “The banking industry has a key role to play in helping global economies become more sustainable. Through greener loans and more responsible financing, banks can support businesses to change their operational practices to ones that have a more positive impact on our planet and people. “There is an urgent requirement to accelerate banks’ capacity to adopt sustainable business models. At present, banks lack the knowledge and understanding of processes, systems and good practice to identify and manage the indirect sustainability impacts of their portfolios.
“They need to improve their ability to help customers and clients understand how their business impacts the environment and the communities they serve. Through financial products and services, banks can catalyse the transition to more sustainable business models across all sectors – this is what the Academy will help to achieve.”
Heightened urgency
While rhetoric around climate change and sustainability in general has been gaining momentum for some time, not least with COP26 taking place in Scotland last year, Thompson says that the scale of the shift that needs to take place around upskilling the sector, combined with growing awareness of the size of the climate challenge ahead, has hastened the need for action globally.
Thompson explains: “What we’re talking about here is a fundamental shift from a high to a low-carbon economy that will impact almost every economic activity, every economic entity, over a 20- to 30-year period. And within that, we’ve got to make very, very substantial reductions in carbon usage in the next decade. That’s what the IPCC [Intergovernmental Panel on Climate Change] tells us. And, within that, the role of banks, as the major provider of credit and funding to firms large and small, in all countries, is absolutely critical.
“But, as of today, even on the broadest definitions, sustainable lending is probably only around 5% of total bank lending overall, globally. So, we’ve got an awfully long way to go to get the other 95% there as much as possible
He continues: “The fact is that it takes time to build knowledge and skills across very large institutions and then align that with the strategies, activities and lending decisions.”
According to Usher, the ongoing energy crisis has also heightened the need for action – and delivers another strong purpose for the Academy.
“The current energy and climate crises have focused attention on the need for cleaner, renewable and more secure sources of energy,” he says. “Record-breaking temperatures around the world and increased severity of droughts, floods and other climate-change-induced natural disasters, such as wildfires, is bringing home the reality of the climate crisis to citizens globally.
“Banks’ customers are demanding that they take action on many of the issues facing humanity today, and many banks are realising their responsibility to provide finance to more people, and to do so in a sustainable way. By training their employees to respond to sustainability challenges, such as helping businesses to decarbonise the way they operate, banks are playing their part in the energy transition.”
What success looks like
The Academy’s initial curriculum has been developed to closely reflect the direction of two UN initiatives, the PRB and the SDGs. While topics associated with climate change, green and sustainable finance will obviously form significant elements of the curriculum, it is also concerned with broader social themes, further reflecting both initiatives. In terms of reach and what success will look like, both Thompson and Usher agree the potential for impact is vast.
“The huge variation in banks’ skills and knowledge levels when it comes to ensuring their financing is helping to deliver the objectives of international frameworks such as the UN Paris Agreement on climate change and the SDGs but is hindering progress [on sustainability],” explains Usher.
“But if the Academy achieves its aims, the main outcome will be to mainstream sustainability training and education in financial institutions.” he adds. “The Academy has been specifically designed using proven approaches to implement it among significant numbers, across institutions. Implementing the Academy broadly across institutions rather than just to restricted functions will ensure that a culture of sustainability develops within organisations.
“Our aim is to change culture and policy at banks in order to create policies and cultures that support sustainability. These changes will also result in banks developing sustainable business models, particularly lending criteria. This will in turn empower businesses and entrepreneurs to make sustainable decisions.”
Thompson agrees: “Ultimately, every banker around the world needs the education and training that this Academy will provide. And they will get that through the Academy because it is being quite deliberately designed with a global curriculum, informed by the priorities and needs of a very wide range of banks internationally.
“Although the Academy is, in some ways, something new and exciting, it’s also a reflection of the near-150 years of responsible banking that we’ve been promoting and the education and skills training we’ve been providing for nearly a century and a half as an Institute. It very much builds on the principles of stewardship, prudence and professionalism that the Institute was founded on.
“I think the difference now is that in terms of stewardship, we’ve moved beyond that kind of narrow idea of bankers as stewards of depositors or clients’ funds, to thinking of stewardship of the planet,” he adds. “In terms of prudence, we have shifted towards that prudent approach to banking as meaning much greater awareness of climate and other forms of sustainability and risk.
“We’re bringing education and training to a much wider global audience than ever before.” Simon Thompson Chief Executive, Chartered Banker Institute
“And in terms of professionalism, we’re talking about making sure that bankers have a wider skill set and can apply knowledge of sustainability within the context of their professional skills as bankers. We’re not asking bankers to become sustainability experts, but we are asking them to build a knowledge of sustainability and to deploy that in their everyday work.
“We’re bringing education and training to a much wider global audience than ever before, and I think that’s something that our members and the industry as a whole should feel very proud of.”
For more information on the PRB Academy and how to register for courses, visit prbacademy.com