On 22 September 2023, the United Nations Environment Programme (UNEP) published the second biennial progress report on implementation of the UN Principles for responsible banking.
The report highlights the key achievements of member banks in integrating sustainability considerations such as climate change mitigation into their strategies, transforming governance structures, understanding their impacts better, setting targets and developing innovative products and risk management approaches.
The report provides the following key findings:
- Member banks have made considerable progress understanding and disclosing how their portfolios and businesses relate to key environmental and social impacts.
- The majority of banks have set targets to address their most significant portfolio impact, driving alignment and contributing to the UN Sustainable Development goals (SDG) and the goals of the Paris Agreement.
- Member banks have also integrated sustainability oversight into their governance structures, primarily at the board and CEO levels, evidencing effective governance for embedding sustainability across the entire organisation.
- Almost all member banks have established public strategies aligned with the SDGs and the Paris Agreement. They offer sustainable finance products and engage with select clients to meet climate targets.
- Whilst progress has been made by member banks, there is still more to be done. Banks are encouraged to build upon governance and structural changes to drive concrete action, realising more real-world impacts while respecting national regulations, cultural norms and contextual variations. This includes continuing to set ambitious public targets in impact areas including climate change (mitigation and adaptation), nature, human rights, resource efficiency and economic inclusion, and focussing on implementing those targets in order to drive systemic change.
Following this report, new guidance on nature and climate change adaptation is expected to be released in Q4 2023.
For further updates on regulatory developments in the ESG space please visit our Financial Services Regulatory Developments in ESG hub.
