On 22 and 23 September 2019, 130 banks from 49 countries signed the Principles for Responsible Banking. The Principles were finalised on the side-lines of the annual United Nations General Assembly meeting in New York. Thirty banks led the development of the Principles. By way of example, this included: Barclays, Citibank, BNP Paribas, Arab African International Bank, Nordea and ICBC.
The Principles are:
Alignment: Each bank will align its business strategy to be consistent with and contribute to society’s goals
Impact & Target Setting: Each bank will set and publish targets to help increase positive impacts on people and the environment from its activities, products and services. Each bank will also manage the risks to, and reduce the negative impacts on, people and the environment resulting from its activities, products and services.
Clients & Customers: Each bank will work with its clients and customers to encourage sustainable practices and enable economic activities that create shared prosperity for current and future generations.
Stakeholders: Each bank will proactively and responsibly consult, engage and partner with relevant stakeholders to achieve society’s goals.
Governance & Culture: Each bank will implement its commitment to these Principles through effective governance and a culture of responsible banking.
Transparency & Accountability: Each bank will periodically review the implementation of the Principles and be transparent about and accountable for its own positive and negative impacts and contribution to society’s goals.
These Principles are intended to accelerate the banking industry’s contribution to the Sustainable Development Goals, the Paris Climate Agreement and other relevant frameworks, such as the United Nations Guiding Principles on Business and Human Rights (the “UNGP”). The UNGP recommends that business enterprises respect human rights in all aspects of their operations. There are arguments that the UNGP applies to banks and other financial institutions because those are forms of business enterprises.
Signatory banks are required to take three key steps to ensure the effective implementation of the Principles.
First, the bank must undertake an impact analysis to determine where the bank as a whole has significant positive and negative impacts on society, the environment and the economy. The bank can do this, for example, by assessing the scale of its activities in specific industries or geographies and by evaluating the most relevant challenges and priorities related to sustainable development in the areas in which it operates. The bank must also identify where it can realise the greatest positive impacts and also reduce significant negative impacts.
Second, the bank must set and work towards targets that address its identified impacts. These targets should be specific, measurable, achievable, relevant and time-bound. To help facilitate implementation of these targets, each bank should establish a means to measure and monitor progress, such as governance and oversight structure.
Third, the bank must demonstrate its accountability by reporting on its implementation of the Principles.
A Guidance Document was published in conjunction with the launch of the Principles. The Guidance Document is intended to point to relevant resources, tools, frameworks and good practices to assist a ba