Covid-19 has reaffirmed the positive role the banking sector can play by working with governments and regulators to keep the economy going. These findings should remind banks that the crisis is an opportunity to look beyond immediate priorities, re-assess their purpose and values and use some of the best practice outlined in our report to truly embed ESG factors in their decision-making on investments for the good of the business, their clients and society.
Leila Kamdem-Fotso Partner - Financial Services
Responsible banking practices: benchmark study 2020
With Environmental, Social and Governance factors, and responsible banking practices more broadly becoming an essential focus for the banking industry, Mazars has assessed how banks are embedding sustainability into their commercial practices.
Whether it’s supporting environmental initiatives or acknowledging its societal impact, the banking industry is on a mission to operate responsibly and embed sustainability into its very purpose and value proposition. More recently, the Covid-19 pandemic has brought to the fore the importance of the positive role the banking sector can play with both governments and regulators looking to banks to provide support to corporates and customers, keep the economy going and help mitigate the economic effects of the Covid-19 crisis.
To assist banks and their stakeholders to ascertain where they stand, this benchmarking study examines the sustainability practices of a sample of 30 banks who are UNEP-FI Members and/or signatories to the Principles for Responsible Banking, to compare them and identify, where possible, examples of best practice. Our research is based on publicly available information, including the banks’ CSR reports. Our assessment methodology which is described in more detail in the report, leveraged guidance as to “what good looks like” from the UNEP FI.
Our assessment shows that although many banks report working towards embedding sustainability, this is not always yet reflected in their corporate strategy, governance and policies. Much work remains to be done for ESG factors to be fully integrated in banks’ risk management framework.
Overall, only three out of the 30 banks assessed were identified as demonstrating best practice across a wide range of sustainability factors (Leaders), with 10 banks identified as showing a sustainable approach across some factors (supporters) and 17 banks identified as indicating limited evidence of a sustainable approach across most factors (followers).
Commenting on the findings, Michael Tuohy, Partner at Mazars in Ireland, says “This pandemic has undoubtedly accelerated the efforts of our banks in their understanding of how systemic risk affects their organisation and shape their investment decisions. ESG is undoubtedly a vital component of this consideration, and it is therefore timely that this Mazars benchmarking study examines the sustainability practices of a sample of 30 banks who are UNEP-FI Members and/or signatories to the Principles for Responsible Banking. Our analysis shows that although many banks report working towards embedding sustainability, this is not always yet reflected in their corporate strategy, governance and policies. Much work remains to be done for ESG factors to be fully integrated into the banks’ risk management framework.”
Download our full study to learn more about how banks are integrating environmental, social and governance criteria into their commercial strategies and risk management frameworks.
Want to know more?
Tackling climate change: Mazars - OMFIF Report
Mazars and the Official Monetary and Financial Institutions Forum (OMFIF) are proud to have come together to produce a global report providing unique insight on current and upcoming financial regulatory evolutions aimed at tackling climate change. What policy adjustments are being undertaken in different jurisdictions around the world to assess and control climate risks? How are these actions likely to develop in future? Find out in our new research and get ready for radical regulatory change.
Banks’ response to climate change risks
With sustainable finance expecting to be a crucial factor in the economic recovery in response to Covid-19 and regulators still encouraging banks to actively embed climate-related risks in their business operations and risk management frameworks, Mazars has analysed how 30 of the largest banks worldwide have been handling climate-related financial risks.