The United Nations General Assembly adopted resolution Resolution 74/245 on 19 December 2019, which designated 4 December as the International Day of Banks in recognition of the significant potential of multilateral development banks and other international development banks in financing sustainable development and providing know-how; and also in recognition of the vital role of the banking systems in Member States in contributing to the improvement of the standard of living.

FORUM: 'The Principles for Responsible Banking " International Day of Banks 2020.

Integrated financing frameworks should not only respond to financing challenges, but also to the realities of a changing global landscape. For example, to combat inequality, including gender inequalities, national policies will need to address the falling wage share, growing vulnerabilities, digitization and increasing market concentration, among other issues. Governments should revisit their labour market policies, social protection systems, fiscal policies, competition policies, trade policies and financial sector regulations and strategies to ensure that they are in line with the new realities. The Principles provide the framework for a sustainable banking system and help the industry to demonstrate how it makes a positive contribution to society. They embed sustainability at the strategic, portfolio and transactional levels, and across all business areas. In the year since the launch of the framework, the signatories to the Principles for Responsible Banking grew from 130 to more than 190 banks representing more than a third of the global banking industry and around 1.6 billion customers worldwide. To celebrate the first anniversary of the launch of the Principles for Responsible Banking, signatories and civil society have shared their thoughts and experiences one year on!

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The 21st Century Banking Lexicon.

Melding the words sustainable or green with either finance or banking, announces that the bank has the intention to create both economic and social value through its business. It usually infers that the banks aim to reduce social and environmental risks through better assessments of projects they finance. And as the Co-directors of UNEP’s Inquiry into the Design of a Sustainable Financial Systems note, this is not just about funding environmentally friendly infrastructure or products, but as the 2007 financial crisis helped illustrate, such an approach addresses the need, “…to overcome an array of market failures – short-termism, misaligned incentives, inadequate transparency and ill-defined responsibilities – which entrench the allocation of capital towards resource and carbon intensive assets.” So as banks start to call themselves sustainable or green, the public will have to check that the actions match the lexicon.

WHAT IS SUSTAINABLE BANKING?

In light of our immanent climate and health crises, banks are beginning to revaluate their strategies; transitioning to responsible economic models that seek to improve affected communities and environments, whilst finding new ways to anticipate and tackle complex risks. According to a report by BankTrack ‘the discernible shift that many banks have made in recent years towards addressing the environmental and social impacts of their financial services is a welcome and important first step in this direction... more and more banks realise that ignoring social.’ Thus, advancing sustainability is not just an appeal to the eco-conscious consumer; but rather, hopes to introduce a radical new approach to business and culture itself.

The progress banks make in regard to this will not be measured solely by their charitable commitments, but should be acknowledged in every facet of their business; for example, by introducing new technologies, reevaluating the critical role employees and other stakeholders play in their long-term successes, as well as promoting green credit. This hopes to make systems more resilient, whilst helping to boost the profitability and creditability of institutions.

The Sustainable Banking Network (SBN) is a unique, voluntary community of financial sector regulatory agencies and banking associations from emerging markets committed to advancing sustainable finance in line with international good practice. The 41-member countries represent US$43 trillion (85 percent) of the total banking assets in emerging markets.

The idea for the SBN arose during the first International Green Credit Forum, hosted by IFC and the China Banking Regulatory Commission, in Beijing in May 2012, where banking regulators and associations from 10 countries requested that IFC facilitate a global knowledge network on sustainable banking. The Network was formally launched in September 2012.

SBN members are committed to moving their financial sectors towards sustainability, with the twin goals of improved ESG risk management (including disclosure of climate risks) and increased capital flows to activities with positive climate impact. It is a platform for knowledge sharing and capacity building that facilitates the mobilization of practical support for members to design and implement national initiatives.