• October 26, 2022
  • Blog | Green finance | Blog

This summer saw the launch of the Principles for Responsible Banking Academy – a unique global online platform that will support the implementation of the UN Principles for Responsible Banking (PRB) and provide general education on the subject to all of the sector. Simon Thompson, Managing Director of the Chartered Banker Institute and Eric Usher, Head of the United Nations Environment Program Finance Initiative (UNEP FI) explain its importance.

“If, as former Bank of England Governor Mark Carney said when speaking about the importance of the banking sector in the fight against climate change, every professional financial decision should include climate change – and sustainability much more broadly – ​​at its core, then every banking and finance professional should know at least the basics of climate change, sustainability, green and sustainable finance principles and practices, and be able to apply as part of its role. This means that we need to improve the skills of millions of banking and finance professionals around the world – and that’s where this Academy comes in.”

These words, spoken by Thompson, show how much those behind the new Academy of Principles for Responsible Banking believe it will help the world achieve its global sustainability goals.

And Usher agrees: “The Academy – a joint initiative of the Chartered Banker Institute, UNEP FI and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH – will provide learning resources that will help banks and bankers around the world to develop their knowledge and skills for practices that align with the vision society has set for its future in the [17 UN] Sustainable Development Goals [SDGs] and the Paris Climate Agreement.

He continues: “The banking sector has a key role to play in helping global economies become more sustainable. Through greener lending and more responsible financing, banks can help businesses change their operational practices to adopt practices that have a more positive impact on our planet and our people. “There is an urgent need to accelerate banks’ ability to adopt sustainable business models. Currently, banks lack knowledge and understanding of processes, systems and best practices to identify and manage the indirect sustainability impacts of their portfolios.

“They need to improve their ability to help clients and customers understand the impact their business has on the environment and the communities they serve. Through financial products and services, banks can catalyze the transition to more sustainable business models across all sectors – this is what the Academy will help achieve.

Increased urgency

While the rhetoric around climate change and sustainability in general has been gaining momentum for some time, most notably with COP26 held in Scotland last year, Thompson says the scale of change that needs to taking place around improving the skills of the sector, combined with a growing awareness of the scale of the climate challenge ahead, has accelerated the need for global action.

Thompson explains, “What we’re talking about here is a fundamental shift from a high-carbon economy to a low-carbon economy that will impact almost all economic activities, all economic entities , over a period of 20 to 30 years. And within that, we need to make very, very substantial reductions in carbon use over the next decade. This is what the IPCC [Intergovernmental Panel on Climate Change] tell us. And, in this context, the role of banks, as the main provider of credit and finance to businesses, large and small, in all countries, is absolutely essential.

“But, to date, even on the broadest definitions, sustainable lending probably only accounts for around 5% of total bank lending globally. So we have a very long way to go to bring the remaining 95% as far as possible.

He continues: “The fact is that it takes time to build knowledge and skills in very large institutions and then align them with strategies, activities and lending decisions.

According to Usher, the current energy crisis has also heightened the need for action – and offers another strong focus for the Academy.

“The current energy and climate crises have drawn attention to the need for cleaner, renewable and more secure sources of energy,” he says. “Record temperatures around the world and the increased severity of droughts, floods and other climate change-induced natural disasters, such as wildfires, are waking up citizens around the world to the reality of the climate crisis. .

“Bank customers are demanding action on many of the issues facing humanity today, and many banks are waking up to their responsibility to provide finance to more people, and to do so in a sustainable way. By training their employees to meet the challenges of sustainable development, such as helping companies to decarbonize the way they operate, banks are participating in the energy transition.

What does success look like

The original Academy program was developed to closely reflect the direction of two UN initiatives, the PRB and the SDGs. While topics associated with climate change, green and sustainable finance will obviously form important parts of the program, it also touches on broader social themes, more reflective of both initiatives. In terms of reach and what success will look like, Thompson and Usher agree that the potential for impact is vast.

“The huge variation in the skill and knowledge levels of banks when it comes to securing their finance contributes to achieving the goals of international frameworks such as the United Nations Paris Agreement on climate change and the SDGs. , but hampers progress [on sustainability]“says Usher.

“But if the Academy achieves its goals, the main outcome will be to embed sustainability training and education in financial institutions.” he adds. “The Academy has been specifically designed using proven approaches to deliver it to large numbers, across all institutions. Implementing the Academy across institutions rather than in narrow functions will ensure that a culture of sustainability is developed within organisations.

“Our goal is to change the culture and policy of banks to create policies and cultures that support sustainability. These changes will also lead banks to develop sustainable business models, especially lending criteria. This in turn will enable businesses and entrepreneurs to make sustainable decisions. »

Thompson agrees: “Ultimately, every banker around the world needs the education and training that this Academy will provide. And they will get it through the Academy because it is deliberately designed with a global curriculum, informed by the priorities and needs of a very wide range of banks internationally.

“While the Academy is, in some ways, something new and exciting, it is also a reflection of the nearly 150 years of responsible banking that we promote and the education and professional training that we have been offering for almost a century and a half as an Institute, and it is based in large part on the principles of stewardship, prudence and professionalism upon which the Institute was founded.

“I think the difference now is that in terms of management, we’ve gone beyond that sort of narrow idea of ​​bankers as managers of depositors or client funds, to thinking about management of the planet,” adds- he. “In terms of prudence, we have moved towards this prudent banking approach, which means greater awareness of climate and other forms of sustainability and risk.

“We are bringing education and training to a much wider global audience than ever before.” Simon Thompson Managing Director, Chartered Banker Institute

“And in terms of professionalism, we’re talking about making sure bankers have a broader skill set and can apply their knowledge of sustainability as part of their job skills as bankers. We are not asking bankers to become experts in sustainability, but we are asking them to acquire knowledge of sustainability and deploy it in their daily work.

“We’re delivering education and training to a much wider global audience than ever before, and I think that’s something our members and the industry as a whole should be very proud of.”

For more information about the PRB Academy and how to register for classes, visit prbacademy.com