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Blog: How an Unexpected Accelerator is Driving Real-World Change in the Banking Industry

June 03, 2020  |  GUEST AUTHOR - PULENG TUMELO NDJWILI-POTELE

As described by the UN Secretary General, António Guterres, the UN Principles for Responsible Banking are a guide for the global banking industry to respond to, drive and benefit from a sustainable-development economy. We asked the UNEP FI’s Banking Project Coordinator, Puleng Ndjwili-Potele, to share her insights on why the Principles are so critical to modern society, how banks can get involved and why now is the perfect time to get started

I have a real passion for sustainable development. I’m from South Africa, a country that has a lot of development challenges, and I’ve seen firsthand—in my work at Standard Bank of South Africa and here at the UNEP Finance Initiative—how financial institutions have the power to transform communities in a positive way through responsible and sustainable strategies. 

That potential was the driving force behind the creation of the Principles for Responsible Banking, a framework of six principles designed to help banks align their business strategy with society’s goals. What is so exciting about this initiative is that we worked side-by-side with banks from around the world to draft a framework that’s ambitious but also aligned with the real challenges and opportunities banks are facing. We began with a core group of 28 banks, then it grew to 30, and when the Principles were officially signed into action last year, 130 banks from 49 countries pledged their commitment to aligning their business strategies with society’s goals. 

Unprecedented challenges are leading to accelerated action
It has been nine months since the signing ceremony, and the world looks very different. All of the signatories to the Principles are facing unprecedented challenges from the global COVID-19 pandemic. But what has been fascinating to witness is the way many banks have stepped up to face these challenges head-on, proactively and in ways that support their commitment to the Principles. We’ve seen banks collaborating with governments to help role out relief measures, we’ve seen banks deferring home loans and other payments, using mobile money services to distribute funds more quickly, and of course we’ve seen donations of medical equipment and supplies. 

In that way, COVID-19 has actually accelerated responsible banking for many signatories. The banks that had already begun to take steps to implement the Principles,  such as systematically analyzing their impacts and engaging their clients and customers on social and environmental challenges, have shared that this has really helped to prepare them to respond to the crisis. This challenge has shown us all that we need to take sustainability seriously, and take our commitment to our societies, clients and customers seriously—none of us operate in a bubble. It’s making many in the industry ask some fundamental questions, like, What is the role of a bank? What should it be? How should banks contribute to and respond to what society needs? So it’s brought a lot of thoughtfulness to banks’ perspectives. 

It’s also accelerating the drive to enhance technology. We’re seeing how technology can be used to respond to financial and social exclusion, as well as contribute to climate action through changes in our behavior (enabling us to make more environmentally sustainable decisions). I think there’s a renewed interest in how technology can be used to address key challenges, but of course there is much more to be done. 

Bringing the Principles to life around the world
One thing I’m often asked about is how to take such ambitious goals and boil them down into realistic, actionable projects that small, regional and midsize banks can activate. And what I always say is that the Principles are designed to work for any size bank; what is important is to make the impact you are able to make. That is the key. That will look very different from bank to bank and region to region. For a local credit union in the United States, it might mean creating programs to help an underserved, underbanked population in the community. For a bank in Europe, it might mean taking a closer look at how to leverage technologies to reduce their carbon exposure, both in their loan book and their operations. And for banks operating in Africa or Latin America, it might mean seeking technological solutions that can be brought to scale for delivering financial services to remote communities, or gender-sensitive solutions that unlock barriers to women’s access to financial products and services.  

Building sustainable economies requires solutions that are developed in partnership by business, government, civil society and labor, amongst others. There is a real need for leadership and support from governments and policy makers, to empower businesses to take bold steps that make substantial contributions to building more inclusive economies, characterized by clean energy, clean technologies, and better land use practices. We’re seeing that when banks and governments work together, they’re able to operate in an environment that is more stable and certain, which enables more effective responses to challenges. 

While banks can’t wait for enabling legislation that can take years to come to fruition, they can seek out partnerships that can help them accelerate their ability to respond to societal needs. And that is critical to success. Because as we’re seeing magnified through the pandemic, businesses that don’t—or simply aren’t prepared to—respond to the needs and goals of their societies, clients and customers are facing increasing difficulties. There has never been a more appropriate time to elevate this conversation within each and every bank around the globe. I’m encouraged by the solutions I’ve seen our member banks come up with thus far, and I hope we see more banks sign up to the Principles for Responsible Banking, and contribute to building sustainable economies. 


Thirty-seven signatories have taken a remarkable additional step since signing the Principles in 2019; they announced a Collective Commitment to Climate Action. Learn more about it here. You can learn more about DN’s approach to a greener future here


About UNEP FI

United Nations Environment Programme Finance Initiative (UNEP FI) is a partnership between UNEP and the global financial sector to mobilize private sector finance for sustainable development. UNEP FI works with more than 300 members – banks, insurers and investors – and over 100 supporting institutions – to help create a financial sector that serves people and planet while delivering positive impacts. By leveraging the UN’s role, UNEP FI accelerates sustainable finance.

UNEP FI supports global finance sector principles to catalyze integration of sustainability into financial market practice. Among these UNEP FI has established Principles for Responsible Banking (PRB) launched with more than 130 banks collectively holding USD 47 trillion in assets, or one third of the global banking sector, on 22 September 2019.
 

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