Following the results of a membership-wide survey, consultation of selected external stakeholders and careful deliberation, the governance body of UNEP FI’s banking membership, the Banking Committee, has unanimously come to the conclusion that UNEP FI’s banking membership should develop Principles. These Principles will define and affirm the banking industry’s role and responsibilities in shaping and financing a sustainable future, in alignment with internationally agreed targets detailed in the Paris Agreement and the Sustainable Development Goals.
We believe there is a strong case for a banking industry-driven development of such Principles at this point in time because:
- In the last couple of years, world governments have jointly set out a clear path for the future, detailed in the Paris Agreement, the Sustainable Development Goals (SDGs) and the UN Guiding Principles on Business and Human Rights. It is time for the banking industry to define its role and responsibilities in shaping and bringing about this future.
- Almost ten years after the start of the global financial crisis, the banking sector is still working to re-establish trust. By defining its role and responsibilities in bringing about a sustainable future, the banking-industry can re-position itself as a crucial part of the future economic system that is proactively financing and contributing to society’s goals.
- Existing principles and frameworks for the international banking industry cover specific instruments (e.g. Equator Principles for project finance and project-related corporate loans) or specific issues only (e.g. Natural Capital through the Natural Capital Declaration, and Human Rights through the UN Guiding Principles on Business and Human Rights). There is a need for overarching Principles that can bring together and recognize the full contribution banks can make to addressing societal challenges and achieving sustainable development. An accompanying accountability framework should allow banks to set their own targets based on their individual circumstances and thereby credibly demonstrate their contribution to society.
- Expectations of the banking industry to provide leadership, be accountable and make a positive contribution to society’s goals have been increasing. Civil society has been challenging the banking sector for some time, but more recently finance ministries (e.g. G20 Green Finance Study Group), central banks (the Financial Stability Board) and the investment community have been exerting increasing pressure on banks to disclose information about their climate-related risks and opportunities, withdraw from lending to unsustainable economic activities and increase the share of financing for green technologies and sustainable economic activities.
How can you get involved?
- Drive the process: help draft the Principles and become a Founding Member
Experience from other successful processes for developing principles for the financial industry (Principles for Responsible Investment, Principles for Sustainable Insurance, Equator Principles) has shown that the single most crucial element in such a process is a committed Core Group of institutions (in our case banks) that drive the process, mobilize the necessary resources and publicly back and promote the Principles at the highest level, i.e. CEO level.
Consequently, we are convening a Core Group of 10 -15 banks. The Core Group’s role will be to develop draft and final versions of the Principles, the accompanying accountability framework and further supporting documents giving consideration to feedback received from consultation of members, the wider banking industry, and selected external stakeholders.
Participation in the Core Group is open to all UNEP FI member banks that are willing and able to fulfill the requirements set out in the attached Terms of Reference. We are striving to put together a geographically diverse group of banks of different sizes. If you are interested, please contact the UNEP FI Banking Team Lead Simone Dettling firstname.lastname@example.org by Wednesday, 7th March. We will schedule one on one calls with banks that are interested. These calls will allow you to ask questions, bring various team members into the conversation and jointly discuss details and potential workarounds for challenges you see. Final decisions regarding participation in the Core Group will be required by 30th March.
- Provide your inputs and views and help shape the Principles
The first draft of Principles will, of course, be shared with all UNEP FI member banks to get the widest range of views and feedback from you all. You will be able to provide inputs online as well as during regional consultation meetings taking place between May and August 2018. For further details, please see the draft timeline in the attached Terms of Reference document.
- Become a signatory
The developed Principles will be voluntary for existing UNEP FI members. While new UNEP FI members will in the future sign up to the developed Principles, existing members may remain signatories of our current Statement of Commitment only. However, we are hoping to migrate most of the banking members to the new Principles over time. We are counting on as many of you as possible to sign up to the new Principles already in 2019!
The attached Terms of Reference are for UNEP FI member banks only. Please do not circulate them outside the membership.
We are looking forward to your feedback, questions, comments and concerns and especially to the one on one calls with those of you who are interested in driving this process.