Professional Documents
Culture Documents
&
Sustainabil
ity
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Benefits of sustainability
A survey was carried out by International Financial Corporation in 2005 among commercial
banks. About 74% of the banks responded that it helps in reduction of risk, 45% admitted it
helped in easing access to international financing. Improved brand value and reputation,
developing new businesses, improved community relations, Cost Savings, Better quality of
work/regulation, increased revenues, developed new products and services were other benefits.
Barriers to implementation of sustainability practices
Operation by following the ESG (Environmental, Social and Government) factors in risk
analysis.
London Principles of Sustainable Finance Based on three pillars of Economic Prosperity
(Easy access to funds for investment, promotion of transparency), Environmental Protection
( Calculating cost of environment, equity ownership) and Social Development ( CSR,
disadvantaged communities), it lists principles which ease sustainability in Financial institutions.
World Business Council for Sustainable Development Financial Various CEOs participated
and reached to certain conclusions such as recognizing transparency as urgent need of the hour,
recognizing drivers of sustainability, and pledged to promote sustainable thinking.
Other than the above there are UN Global Compact, The business charter for sustainable
development ICC, Sigma principles all of which are universally applicable
Strategies devised for implementing sustainability
Internal Strategies
Measuring of Footprints by various metrics and by ensuring that it reduces over the years
till it reaches reasonable level
Increase in the proportion of Intangible Assets such as patents, brand value, is an indirect
way for sustainable banking since it saves much of tangible assets.
Improvement and retaining talent reduces unforeseen risks, brings stability, preserves
organization culture and in turn sustainability.
Cutting costs by means of eco-efficiency methods in turn getting access to funds for
implementing more sustainability
Risk management process taking into account unconventional risks such as that of social,
environmental, regulatory etc.
Effective corporate governance, well defined rules & guidelines in place for high
standards of ethics and transparency. Complying with those laid down by the regulatory
authorities in many countries itself ensures this.
Innovative practices supported by technology. It is technology which has saved lot of
paper and therefore lot of trees by increasing the proportion of paperless transactions and
opening up of Atms/E-Branches instead of high-cost full-fledged branches.
Developing an organizational culture where each individual understands the importance
of sustainability , to enforce such a culture by means reward/punish
Hiring expertise who can handle sustainable projects. Agriculture experts are recruited for
proper disbursal of agro-based projects.
Incorporating the idea itself in the mission and vision.
External Strategies
Financing sustainable projects at lower interest rates, relaxed norms. Keeping a fixed
percentage of credit reserved for them. In India most of the lending done via priority
sector lending somehow help in promoting sustainability indirectly.
Increasingly Banks are channelizing funds for the greater good via CSR activities in
which they often help under-privileged sections of the society or directly contribute in the
environmental welfare by undertaking initiatives like plantation campaign, etc.
Sustainable criteria for selection of creditors, suppliers, debtors etc.
Selling of products and services which promote sustainability directly/indirectly such as
plastic money, microfinance etc.
Transforming money by scale , duration and location itself promotes sustainability as it
leads to efficiency in expenditure by customers and reduction of usage of resources in
adjusting with locational constraints
Establishing of a stakeholder complaint system mechanism, which is exhaustive and
covers all kinds of stakeholders from customers to suppliers.
Ensuring consistency, transparency and due diligence in each of the transactions.
Developing efficient information exchange mechanisms with customers, NGOs, Govt. etc
Avoidance of tax havens which result in non-payment of millions in taxed to the govt.
and in turn affecting the sustainability budget as well redistribution of income.
Some of the sustainability promotion examples of Banks across the world
Co-operative bank of UK has made its customers to pledge to avoid investing in
environmental degrading sectors like tobacco etc.
Commonwealth Bank clearly outlines sustainability practices via Corporate Governance
(Transparency, Communication with shareholders, prevention of money laundering etc.)
Standard Charted has delved into serving community by providing finance to small
businesses, microfinance, Islamic Finance, Agribusiness, and Infrastructure projects with
ease, this is apart from the CSR activities which have direct impact.
Ned Bank of South Africa regularly publishes Sustainability report , established an
environment policy , has built upon Equator principles and tied up with WWF
State Bank of India promotes microfinance, financial inclusion, environment-friendly
projects, agri-projects and CSR to commit itself to the principles of sustainability.
AFRIland First Bank often conducts seminars on sustainable development, it has created
several funds like Carbon Renewal Energy Fund to invest in sustainable projects
Center-Invest Bank of Russia is ranked among top banks to provide affordable housing
finance and has been supported SMEs of river region in addition to encouraging of its
customers to invest in social and environment friendly projects.
Conclusion
Though banks have lately realized the importance of sustainability, they are still far behind many
other industries in terms of implementation of practices. Basel Norms, the guiding beacon for the
banks, in fact still has not incorporated the risks of environment distress. That is the first thing to
be done. Sharing of strategies, practices is another. We have observed that bringing sustainability
in banks would in fact enforce sustainability in other sectors as well and not only that, it would
also create a market in sustainable products. Projects, services as well which are in fact the new
emerging sector in the world economy all poised for growth and stability.
Declaration
I declare that this written submission represents my ideas in my own words and where others
ideas or words have been included, I have adequately cited and referenced the original sources. I
also declare that I have adhered to all principles of academic honesty and integrity and have not
misrepresented or fabricated or falsified any idea/data/fact/source in my submission. I understand
that any violation of the above will be cause for disciplinary action by the institute.
References
Research Reports:Bank Track
http://www.banktrack.org/download/the_dos_and_donts_of_sustainable_banking/061129_the_do
s_and_donts_of_sustainable_banking_bt_manual.pdf
NBI
http://www.nbi.org.za/Focus
%20Area/ClimateAndEnergy/Documents/IFC_Banking_On_Sustainability.pdf
GMI
http://www.sustainability-in-finance.com/gmi-jeucken-bouma.pdf
IFC
http://sustainability-in-finance.com/ec-web.pdf
IMD
https://www.imd.org/research/publications/upload/WP_2008_07_Steger_Lins_Wajnberg_Ionesc
u_Somers_Level_1.pdf
Forum for the Future
https://www.forumforthefuture.org/sites/default/files/project/downloads/londonprinciplesexecuti
vesummary.pdf
PWC
https://www.pwc.lu/en/sustainability/docs/pwc-fsbanks.pdf
UNEP FI
http://www.unepfi.org/fileadmin/documents/StabilitySustainability.pdf
Links
Equator principles
http://www.equator-principles.com/
Wikipedia
http://www.wikipedia.org/
UNEP FI
http://www.unepfi.org/
Standard Charted
https://www.sc.com/in/
Appendix