Demanding Sound Responsibility in the Banking Sector
25 March 2021
By: Santiago Lorenzo, Head of Sustainable Finance (CAN); CAN Representative to the UNEP FI PRB Civil Society Advisory Body (CSAB)
For many decades different actors, including civil society organizations, have been demanding that private sector companies take responsibility for their operations. Responsibility starts with respecting the law, but it is not limited to it. Despite these calls, we continue to see ample evidence of how businesses fail to act responsibly in pursuit of profit. Such impunity needs to come to an end. Businesses operate with the social license endowed by citizens and communities and as such are also directly accountable to society. Globalization has transformed our world into ‘Spaceship Earth’[1] with the result that actions by businesses reverberates through every corner of our planet.
Against this background, the financial sector today faces its most important challenge in decades: how to deal with the onslaught of multiple crises – social, environmental and economic. Some in the banking industry who are aware of the urgency to address this issue came together to develop the Principles of Responsible Banking (PRB[2]). Housed within the United Nations Environment Finance Initiative (UNEP FI), the PRB provides a much-needed framework for the sustainable banking system of the future – and enables the banking industry to demonstrate how it makes a positive contribution to society[3].
Climate Action Network (CAN) has recently joined the initiative as a member of the PRB Civil Society Advisory Body (CSAB). With great honor comes great responsibility and we take our role in the CSAB very seriously. Aware that Indigenous Peoples are not represented, CAN will work with this important constituency to represent IPs interests to the best of our ability. We will also work with the other members of the CSAB, as we recognize that all ESG matters of banking responsibility are interconnected.
Together with others, including many banks, our main objective as CSAB members are to work with partners to eliminate greenwashing within the PRB. The purpose of recruiting more banks as members of the PRB allows for flexibility in establishing the baseline on the extent to which principles are taken up. Once a bank becomes a PRB member, it has to set out clear criteria and a credible roadmap for PRB implementation. They also have to implement robust transparency and accountability measures. Sadly, there is still evidence[4] that some PRB members are not living up to expectation bynot walking the talk.
CAN will also work towards ensuring that PRB members’ operations are aligned with the Paris Agreement. In doing so, our engagement will be guided by science, we shall promote increased ambition in line with the climate emergency we face, demand full accountability by PRB members at all times.
[1] https://www.laceiba.org.mx/wp-content/uploads/2017/08/Boulding-1996-The-economics-of-the-coming-spaceship-earth.pdf
[2] https://www.unepfi.org/banking/bankingprinciples/
[3] https://www.unepfi.org/publications/principles-for-responsible-banking/
[4] As shown in the annual Banking on Climate Chaos report 2021, to be launched next March 24.