Westpac has a three-pronged approach to sustainability, outlined in its 2020 Sustainability Strategy. The bank is committed to helping people make better financial decisions, supporting customers when it matters most and enhancing Australian prosperity. The institution maintains strong connections with its stakeholders, granting them an input in what direction Westpac and its sustainable activities take.www.westpac.com.au
Microfinance institution Bandhan was set up to alleviate socio-economic poverty in India. The company works with low-income households to create sustainable financial solutions, and aims to share its services with 10 million customers over the next two years. Bandhan’s values include respect for all, effective teamwork, transparency, accountability, professionalism and discipline.www.bandhanmf.com
New Zealand’s Kiwibank promotes sustainability through numerous methods, such as consistently monitoring its carbon emissions and using hybrid fleet vehicles to reduce its environmental impact. Each year the institution sponsors the New Zealander of the Year Awards, which recognises citizens who have made outstanding contributions to the prosperity of the country.www.kiwibank.co.nz
Though headquartered in Switzerland, private banking institution Bank Sarasin has established itself in more then 25 global locations. The family-owned business promotes the long-term success of its clients through a conservative approach to growth, and has a holistic attitude to sustainability. It has its own dedicated sustainability research team to ensure best practices are maintained at all time.www.jsafrasarasin.com
Vancouver’s Vancity is a values-based institution that puts sustainability and customer wellbeing at the heart of its operations. The bank returns 30 percent of its net income to members and communities, and has created initiatives to improve financial literacy. It also runs several programmes to promote affordable housing and home ownership among Canadian citizens.www.vancity.com
Triodos’ mission statement is to make money work for positive change. The principles that underpin this unique approach are: only lend customers’ money to trusted entrepreneurs; only lend to entities working to make the world a better place; and be transparent about how money is invested. These practices help create a society that protects the quality of life of all its members.www.triodos.com
In the 29 years since Access Bank was founded, it has evolved into a world-class financial institution. Over the past 10 years, the bank has worked to embed sustainability in its business strategy, driving environmental protection, community development and economic growth to build a sustainable future. This strategy has earned Access Bank a reputation as an institution that cares about more than just profit.www.accessbankplc.com
Bank of America
Bank of America has demonstrated its strong sustainability credentials by committing to investing $125bn in low-carbon financing and sustainable activities by 2025. To achieve its goals, the bank has implemented an Environmental and Social Risk Policy Framework to educate its employees. It also works to ensure its investments have a positive impact on the US economy.www.bankofamerica.com
A new era for sustainabilityBanks increasingly understand that they must do more to manage environmental risks and seek out new opportunities in the sustainable finance market
Off the back of multiple significant events – including the 2016 Paris climate accord, the World Bank’s decision to stop funding oil and gas exploration, and a record year for green bonds – sustainable investing has finally elbowed its way into the mainstream. Governments and businesses around the world are stepping up to link financial systems with sustainable development, as industry experts pile up evidence to support the business case for prioritising environmental, social and governance (ESG) criteria.
Banks too can no longer deny that the world – and the investment climate with it – is changing. While capital market decisions used to be based on a purely two-dimensional risk and return analysis, a 2017 report by Deloitte declared that in the new era of sustainable banking, decisions are based on three dimensions: risk, return and impacts.
Gaining momentum The hard work of fringe companies and organisations over the past decade appears to be paying off as sustainable banking is thrown into the spotlight. The United Nations Environment Programme has even said sustainable finance is “now recognised as one of the megatrends shaping the future of global capital markets”.
Through a number of studies, the International Finance Corporation has shown there is a direct link between a company’s ESG practices and higher, more stable profits, as well as stronger growth compared with other banks. What’s more, the benefits extend beyond the balance sheet by improving an institution’s reputation and building investor confidence.
Fresh initiatives have also taken off over the past year, including the Task Force on Climate-related Financial Disclosures (TCFD), led by billionaire Michael Bloomberg. The group aims to persuade companies to disclose climate-related information to help investors and lenders make more informed financial decisions. At the end of 2017, Bloomberg said 237 companies – boasting a combined market value of over $6.3trn – had publicly committed to supporting the TCFD’s recommendations.
More recently, the European Commission announced a strategy to align its financial system with the EU’s climate and sustainable development agenda. One of the key challenges of sustainable banking is a lack of standardisation between banks, and the commission hopes to address this by establishing a common language for sustainable finance, as well as by creating EU labels for green financial products. The EU also aims to enhance the transparency of corporate reporting in line with the TCFD’s proposals.
Foundations for the future Of course, challenges persist for the sustainable banking sector: although some headway has been made in establishing the methodology and tools to track and report green loans and credit financing, it remains an extremely complicated undertaking.
That said, bold actions by governments and individual businesses are constantly transforming what it means to be a sustainable bank. Deloitte’s Eric Dugelay said he hoped the world of financial institutions – and the banking world in particular – would go through a “new and promising era”, in which the sector’s contribution to sustainability would be widely acknowledged. Among this year’s winners, such a contribution is undeniable.