Sola David-Borha, the Chief Executive of Africa Regions Standard Bank Group, and over 100 banking representatives globally on Sunday, September 23, became founding signatories to the United Nations (UN) Principles for Responsible Banking.
The Principles for Responsible Banking are designed to help banks align their business strategies with society’s goals – as expressed in the UN’s Sustainable Development Goals and the Paris Climate Agreement – thereby laying the platform for a sustainable banking system. They require banks to embed social, economic and environmental considerations in their processes, practices and decision-making.
The Principles aims to drive sustainable economic development, ensuring the prosperity of current and future generations was launched at the annual UN General Assembly in New York by CEOs from five continents along with UN Secretary-General António Guterres and the UN Environment Programme Finance Initiative. The 130 banks which signed the Principles collectively have more than $47 trillion in assets or a third of the global industry.
David-Borha who played a role in developing the framework over the past two years signed the Principles document on behalf of the group. According to him, “The Principles align with Standard Bank’s purpose: to drive Africa’s growth and uplift her people by doing business the right way. They also support the group’s drive to maximise our social, economic and environmental impacts.”
“The UN Principles for Responsible Banking are a guide for the global banking industry to respond to, drive and benefit from a sustainable development economy. The Principles create the accountability that can realize the responsibility and the ambition that can drive action”, said UN Secretary-General Antonio Guterres.
The Secretary-General also challenged the 130 Founding Signatories and over 45 of their CEOs gathered for the event to not only align their business goals with the SDGs, the UN’s blueprint for tackling poverty, protecting the environment and ensuring a fairer world for all, but also to support gender equality, to invest in climate action and to disinvest from fossil fuels and pollution in general.
All signatory banks are required to conduct impact analyses to identify their biggest potential positive and negative contributions to the societies, economies and environments in which they operate. Based on these analyses, banks must then identify strategic business opportunities to increase positive and decrease negative impacts. Each bank must then set at least two targets that address their biggest impact areas, and work towards achieving them. Standard Bank is one of the 30 founders of the Principles for Responsible Banking which was unveiled in Paris on November 26, 2018.
Transparency is also a key element of the Principles as all banks must report their progress to the public. Recently, customers, investors and the broader public have increasingly advocated that banks take ownership of the direct and indirect impacts of their funding activities. There was also a public consultation that saw over 500 stakeholders contribute their feedback, drawing interest from an increasing number of banking institutions.
According to the United Nations, while action on climate change is growing, it is still far short of what is needed to meet the 1.5°C target of the Paris Agreement. Meanwhile, biodiversity continues to decline at alarming rates and pollution claims millions of lives each year.
Against this background, The United Nations Environment Programme (UNEP) says that more ambition, backed by a step-change in investment from the private sector, is needed to tackle these challenges and ensure that humanity lives in a way that ensures an equitable share of resources within planetary boundaries.
The banking and private sectors can benefit from the investment they put into backing this transition. It is estimated that addressing the SDGs could unlock $12 trillion in business savings and revenue annually and create 380 million more jobs by 2030.
The six principles for responsible banking
These are the 30 banks that led the development of the Principles for Responsible Banking