Stepping Up to the Challenge of Responsible Banking
James Vaccaro of Triodos Bank examines the UN Principles for Responsible Banking and what they mean for the sustainability of the sector.
Stepping Up to the Challenge of Responsible Banking
By James Vaccaro, Director of Strategy, Triodos Bank
How can banking contribute to sustainability? It’s a question that is rapidly climbing up the financial services agenda. Sustainability isn’t just about good environmental stewardship. It’s also about helping to tackle big social and economic challenges.
In November 2018, the UN launched a global initiative for the banking sector: The United Nations Principles for Responsible Banking. This has been developed by the UN Environment Programme Finance Initiative (UNEP FI), a global partnership between the United Nations Environment Programme and the financial sector to promote sustainable finance.
Twenty-eight banks from across the world, including Triodos Bank, have been involved in designing the Principles. These set out what it means to be a responsible bank and aim to ensure that banks create value for both their shareholders and society. They provide the first global framework that guides the integration of sustainability across all business areas of a bank, from strategic to portfolio to transaction level.
By signing the Principles for Responsible Banking, banks will commit to being publicly accountable for their significant positive and negative social, environmental and economic impacts. They agree to set public targets on addressing their most significant negative impacts and scaling up their positive impacts to align with and contribute to national and international sustainable development such as the Paris Climate Agreement and the UN’s 17 Sustainable Development Goals.
Stretching ambitions
Signing up does not mean that banks will automatically be at the level of what could be described as ‘fully responsible’ on day one. There will be major differences between the starting points of different banks, in geography, business model, and how much sustainability is integrated into the core of their business.
So rather than being a static benchmark, the Principles act as a ladder to climb, continuously stretching the ambitions of all banks – in a collective ‘race to the top’ to inspire and gain traction across the entire global banking sector. The Principles set a trajectory for developing as a responsible bank and provide actionable guidance on how to get there.
For over 40 years, Triodos has only lent to organisations that can demonstrate a positive social, environmental or cultural purpose and – for us – the Principles are now a vital catalyst to accelerate the financial sector’s journey towards a sustainable business model.
We are calling on all banks to endorse and sign up for the Principles for Responsible Banking, no matter what their starting point. The more banks that adopt them, the greater impact the banking industry will have in helping society meet its goals for a sustainable, equitable and prosperous future.
James Vaccaro is Director of Strategy, Triodos Bank and represents Triodos Bank on the core group of banks developing the UN Principles for Responsible Banking.