On 15 October 2021, the United Nations’ Environment Programme Finance Initiative (UNEP FI) published its first collective progress report on the implementation of the Principles for Responsible Banking (PRB).
The PRB commit signatories to aligning their business strategies with the Sustainable Development Goals and the Paris Climate Agreement. Since the launch of the PRB in September 2019, banks from across the globe have been collaborating on implementing the actions. This first report reflects the collective progress that the signatories have achieved 18 months since the formal launch of the PRB.
Collective progress is assessed through three steps:
- An analysis of signatories’ current impact on people and planet.
- Based on this analysis, prioritisation and setting of targets where they have the most significant impact. This is followed by implementing actions to meet targets.
- Publicly reporting on progress, and, by year four, having this reporting verified by a third-party.
Key findings within the report indicate early signs of progress. For example:
- 94% of signatory banks have identified sustainability as a strategic priority.
- 93% of signatory banks are analysing the environmental and social impacts of their activities.
- 30% of signatory banks are setting targets, with a strong collective focus on climate and financial inclusion. Within this 17% of banks have set at least one robust target in an area of significant impact (this is mainly climate mitigation and financial inclusion).
However, the report also sets out areas where signatory banks need to improve. For example:
- The availability and quality of data. The report shows that many banks are struggling to track and measure progress due to the limited availability and quality of data, both within the banks’ internal IT systems and from external data sources.
- Strengthening their impact analysis as banks develop a better understanding of how to review the impact of their products, portfolio and services on society and the planet.
- Increasing action on further critical sustainability issues. Some sustainability themes appear underrepresented, when they have been identified by science and the international community as critical. For example, at this time only 15% of banks identified biodiversity as an area of significant impact, and 23% human rights despite research and stakeholders suggesting both are important risks and impacts to be addressed by the sector.
- Ensuring all targets are sufficiently linked to the outcomes of the impact analysis. Targets should be in line with the PRB requirements and encompass the activities financed by the bank. Too many banks are setting targets linked to internal, operational activities such as head office electricity consumption.
An independent view from the Civil Society Advisory Body (CSAB), a 12-member body mandated to support signatory banks to implement the PRB and assess progress, is also featured in the report (chapter 3).
The findings in the report, including the CSAB independent view, will be considered by UNEP FI’s Banking Board, and inform the strategic priorities of the PRB work programme. They will also inform a review of the PRB Framework Documents in Q4 2021.