Defining Responsible Banking: A guidance for banks
The United Nations Environment Programme Finance Initiative (UNEP FI) has released a guidance for banks on implementation of six Principles for Responsible Banking: alignment; impact & target setting; clients & customers; stakeholders; governance & culture; transparency & accountability.
Key takeaways for boards:
- The guidance requires setting and publishing specific, measurable targets in at least two significant impact areas within four years, and boards can lead on making the company accountable for its sustainability progress.
- Directors can help companies establish effective sustainability governance structures with clear executive accountability and integrate sustainability objectives into remuneration and performance reviews.
- Boards can oversee the development of action/transition plans with concrete milestones to meet sustainability targets around climate, nature, and human rights commitments.
- The guidance highlights the importance for banks to implement proper sustainability risk management structures, such as risk committees.
- Board directors can be crucial in guiding strategy development that aligns with major international frameworks like the SDGs and Paris Agreement, making sustainability central to bank’s core business strategy rather than a peripheral concern.
Read the full guidance here
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