Policy frameworks shape the environment in which financial institutions operate, affecting the effectiveness, stability, and sustainability of financial, economic, and environmental systems. Banks, as key actors in directing capital flows, are in a unique position to not only respond to policy but to actively shape it in ways that promote sustainable, resilient, and inclusive economies through responsible policy engagement.

Responsible policy engagement goes beyond regulatory compliance; a consistent, accountable, transparent, and active approach can also maximize broader positive impact. Offering recommendations for developing and implementing effective policy engagement strategies, UN Environment Programme Finance Initiative (UNEP FI) best practice is captured in our new report Guidance on Responsible Policy Engagement, supporting banks in implementing Principles for Responsible Banking (PRB) “Principle 4: Stakeholder Engagement.”

Centred around four pillars of responsible policy engagement: consistency, accountability, transparency, and active engagement, these pillars provide a structured approach for banks to align their policy positions with sustainability commitments, establish governance mechanisms, disclose activities and outcomes, and engage proactively with policymakers.

The guidance covers practical steps including prioritizing engagement based on regional relevance and risk, participating in local, regional and global industry initiatives, building relationships with a variety of stakeholders, and managing trade association memberships to ensure alignment with sustainability values. Banks are also encouraged to integrate oversight across key committees and embed sustainability considerations into existing policy frameworks, as robust governance can help align policy engagement with the bank’s overall strategy.

Policy engagement can be complex, especially when balancing short-term business goals with long-term sustainability priorities or coordinating across diverse business units. Smaller banks may face added challenges in influencing policy. This guidance outlines potential solutions to these common challenges, including establishing a clear engagement framework, ensuring oversight across key committees, and maintaining internal consistency in policy positions.

As banks continue to drive the shift toward a sustainable economy, effective policy engagement can help bridge the implementation gap between commitments and action. This guidance offers a roadmap for doing just that.

Download the full report, Guidance on Responsible Policy Engagement, here.