- Principles for Responsible Banking Progress Report shows banks representing circa 50% of global banking assets embedding sustainability into strategy, governance and client relationships
- MSCI analysis shows PRB banks paid one percentage point less, on average, for equity and debt capital
- Clear signs of growing regulatory momentum for market practices pioneered by UNEP FI
The United Nations Environment Programme Finance Initiative (UNEP FI) today released the UN Principles for Responsible Banking’s (PRB) third progress report against a backdrop of accelerating global regulatory action to introduce transition plans and sustainable finance measures[1]. The report highlights how PRB signatories are increasingly moving from commitment to action, embedding sustainability into core business strategies, governance, and client relationships to manage risk, meet stakeholder expectations, to remain competitive in an evolving economy challenged by climate change and where over 50% of global GDP is dependent on nature[2].
Analysis by the MSCI Sustainability Institute shows that 61% of PRB signatories lead their industry in managing financially material sustainability risks and opportunities (compared 23% of non-PRB banks) and that PRB signatories paid one percentage point less on average for equity and debt capital[3]. This suggests that by better managing sustainability risks and aligning their business to support a more sustainable economy, banks increase their operational resilience.
There are clear signs of growing regulatory momentum for market practices pioneered by UNEP FI, such as impact analysis and sustainability target setting around the world; in the Asia-Pacific region, recent UNEP FI analysis shows regulators in eight out of 12 jurisdictions are embedding sustainability more systematically into their mandates[4].
The report, however, reveals that progress remains too uneven and slow to match the scale of today’s interconnected crises of climate change, biodiversity loss and increasing pollution. Policy frameworks and real economy transitions are still evolving. A main challenge cited by PRB signatories is difficulty in gathering social and environmental data, indicating a need to strengthen access to decision-useful corporate disclosures. Additionally, political and economic headwinds in some jurisdictions are testing banks’ commitment to sustainability, underscoring the need for strengthened resilience and renewed ambition across the sector.
“Over 50 per cent of global GDP is directly dependent on nature. Failing to act on climate and biodiversity risks can lead to stranded assets, regulatory penalties, and reputational damage,” said Eric Usher, Head of UNEP FI. “Achieving a resilient, low-carbon, and inclusive global economy requires coordinated action from governments, industry, and civil society and so our work must continue.”
Since its launch in 2019, the PRB has evolved into the world’s foremost framework on responsible banking, with over 350 banks across 87 countries, representing nearly 50 per cent of global banking assets.
[1] See page 9 in the PRB Progress Report
[2] Pg 13 of the WEF_New_Nature_Economy_Report_2020.pdf
[3] This data can be found in this article by the MSCI Sustainability Institute
[4] This information can be found in this recent UNEP FI publication
Further Resources
Download a copy of the report.
Download MSCI Sustainability Institute infographics
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