ESG Bankers: No longer a small voice in a large institution?
It all started with a conversation at an event. Peter Webster (EIRIS’ Executive Director) and Paul Clements-Hunt (Head of UN Environment Programme Finance Initiative) were at a UNEP FI conference in South Africa and got talking about the challenges facing the banking sector in the wake of the financial crisis.
A seed of an idea started to grow: helping the integration of environmental, social and governance (ESG) issues into banking practice and exploring the opportunity that Rio+20 offers banks to take ESG into the centre of their operations and to begin the process of rebuilding the relationship between banks, regulators and the public.
This led to a series of fascinating roundtables run by UNEP FI and the EIRIS Foundation (EIRIS’ charitable parent company). The first was at Windsor in 2010, followed by one in Beijing, New York and most recently Windsor in 2011, called Banking on Rio+20: Best practice in responsible banking and ESG integration. ESG banking professionals from the UK, Germany, Spain, France, Switzerland, Israel, Australia, South Africa, Canada, United States and China took part. Key thoughts from these roundtables will be collated into guidance on best practice in ESG integration in the banking sector. This guidance will be presented at UNEP FI’s roundtable in Washington DC in October 2011 which also has big aims – to explore what banks should ask for and what can they offer at the Rio+20 United Nations Conference on Sustainable Development.
Why is the EIRIS Foundation focussing on the banking sector? The roundtables form part of a wider programme of work to explore how to make financial markets more long term and sustainable. Banks play a central role in the financial system, as investors, investees and major financiers for the global economy.
The most recent roundtable looked at the challenges and opportunities facing the banking sector in ESG integration: how to effectively promote ESG to senior management; exploring whether banks should and can rehabilitate the banking industry through ESG and sustainability; and the opportunity provided by Rio+20 for banks to win back public and political confidence. The forum didn’t try to impose any one process, but rather encouraged participants to learn from each other on what works well and what does not.
Anything that was particularly surprising? It is easy to forget the hard work ESG champions in banks have faced in the last twenty years. Participants gained value from sharing their experiences of implementing ESG with others – it may have felt surprising that there are others out there who face similar challenges. Often a small voice amongst louder voices, ESG is increasingly integrated across banks as they realise the value of either directly or indirectly considering these types of risks.
Those who can play a role in this process needn’t just be in banks’ official ‘ESG Teams’. ESG reps can also be spread across the organisation in the risk management team, credit loans department, investment team, public policy team, the board, or the CSR unit – maybe even external investors or NGOs can play a role here.
Amongst suggestions for possible ‘asks’ by banks at Rio+20 were:
- enhanced sustainability-disclosure requirements
- greater consideration of ESG in the Basel process
- engagement by policymakers with banks in BRIC nations on sustainable development
- clarity about the expectations of CEOs as leaders on ESG
- clarification about the obligations of pension funds in a green economy and
- greater efforts to further address corruption worldwide.
There were also ideas for what banks can offer society.
But what will the outcome be? Stephen Hine, Head of Responsible Investment Development at EIRIS, will be at the UNEP FI roundtable The Tipping Point. We’ll report back in October when the journey continues…
