New Report Reveals Banks' Sustainability Blind Spots
There is a growing commitment to sustainable banking within the international finance sector, but banks must adopt more transparent financing policies to further reduce their exposure to risk, says new study released by BankTrack and WWF.
There is a growing commitment to sustainable banking within the international finance sector, but banks must adopt more transparent financing policies to further reduce their exposure to risk, says new study released by BankTrack and WWF.
The report, Shaping the Future of Sustainable Finance: Moving the Banking Sector from Promises to Performance, ranked the financing policies of 39 international banks across 13 issue areas, from climate change to human rights. The study also benchmarked the banks' policies against international norms, and found that banks are failing to uphold environmental and social standards developed by U.N. agencies and other international bodies.
One of the foundations of sustainability is transparency and the report found a near total lack of publicly available information. The world has moved on from "trust me" to "show me" and without transparency even the more progressive banks leave themselves vulnerable to charges of greenwashing.
Robert Napier, WWF-U.K. chief executive, said: "This report shows that whilst there has been some good work done by a few of the banks to develop policies the whole sector still has a long way to go. The lack of transparent policies can not only result in over-exploitation of environmental goods such as fisheries and forests but also in increased financial risk to the banks, resulting in transactions being jeopardized."
“The first step on the way to sustainable banking is to increase the transparency of the banks' policies,” said Jules Peck, WWF global policy Officer. “This report clearly sets out international standards for 13 issue areas and acts as a challenge to the banks to improve their performance. Generally banks in this report have vaguely worded policies, which include limited commitments, and fail to meet international standards, even those leading the rankings.”
Of the 39 banks surveyed, the report only found two cases where bank policies meet all or most of the relevant international standards or best practices, Rabobank's adoption of the UN Draft Norms on Human Rights and HSBC’s adoption of the World Commission on Dams standards. The study also found that no bank has standards for fisheries and agriculture; only one bank has a policy specifically for dams (HSBC), extractive industries (ABN AMRO) and chemicals (HSBC); and that the vast majority of banks have no human rights guidelines.
“This study shows that the banks have some real blind spots when it comes to sustainability. Only eight banks -- or 20% of those surveyed -- have a human rights policy, which is a huge gap given the importance of this issue,” said Johan Frijns, coordinator of BankTrack, an international network of advocacy NGOs monitoring the finance sector. “Before the banking sector congratulates itself too much for its successes it should take a hard look at this report and tackle those problem areas where progress is urgently needed.”
The study also serves as a reality check for the banks which have adopted the Equator Principles, a set of project finance policies based on the International Finance Corporation standards.
“This report shows the Equator Principles clearly cannot be considered best practice,” said Michelle Chan-Fishel of Friends of the Earth -- U.S., who noted that banks adopting only the Equator Principles earned lower-than-average rankings. “First, the Equator Principles have always been weak in some areas, such as human rights. Second, this report identifies several examples where individual banks’ environmental and social policies go far beyond the Equator Principles in substance and scope.”
Finally, because public information was limited, the report only benchmarks the quality of the financing standards themselves, but does not attempt to evaluate their implementation or their effect.
“Good environmental and social standards on paper mean nothing if they ultimately do not make a positive difference in people’s lives,” said Andreas Missbach of Berne Declaration. “It is worrying that ABN AMRO, as one of the highest ranked banks, is involved in Shell’s highly destructive Sakhalin II oil and gas project along with lower-scoring ones like Credit Suisse.”
Download the complete report in PDF format online.
The report, Shaping the Future of Sustainable Finance: Moving the Banking Sector from Promises to Performance, ranked the financing policies of 39 international banks across 13 issue areas, from climate change to human rights. The study also benchmarked the banks' policies against international norms, and found that banks are failing to uphold environmental and social standards developed by U.N. agencies and other international bodies.
One of the foundations of sustainability is transparency and the report found a near total lack of publicly available information. The world has moved on from "trust me" to "show me" and without transparency even the more progressive banks leave themselves vulnerable to charges of greenwashing.
Robert Napier, WWF-U.K. chief executive, said: "This report shows that whilst there has been some good work done by a few of the banks to develop policies the whole sector still has a long way to go. The lack of transparent policies can not only result in over-exploitation of environmental goods such as fisheries and forests but also in increased financial risk to the banks, resulting in transactions being jeopardized."
“The first step on the way to sustainable banking is to increase the transparency of the banks' policies,” said Jules Peck, WWF global policy Officer. “This report clearly sets out international standards for 13 issue areas and acts as a challenge to the banks to improve their performance. Generally banks in this report have vaguely worded policies, which include limited commitments, and fail to meet international standards, even those leading the rankings.”
Of the 39 banks surveyed, the report only found two cases where bank policies meet all or most of the relevant international standards or best practices, Rabobank's adoption of the UN Draft Norms on Human Rights and HSBC’s adoption of the World Commission on Dams standards. The study also found that no bank has standards for fisheries and agriculture; only one bank has a policy specifically for dams (HSBC), extractive industries (ABN AMRO) and chemicals (HSBC); and that the vast majority of banks have no human rights guidelines.
“This study shows that the banks have some real blind spots when it comes to sustainability. Only eight banks -- or 20% of those surveyed -- have a human rights policy, which is a huge gap given the importance of this issue,” said Johan Frijns, coordinator of BankTrack, an international network of advocacy NGOs monitoring the finance sector. “Before the banking sector congratulates itself too much for its successes it should take a hard look at this report and tackle those problem areas where progress is urgently needed.”
The study also serves as a reality check for the banks which have adopted the Equator Principles, a set of project finance policies based on the International Finance Corporation standards.
“This report shows the Equator Principles clearly cannot be considered best practice,” said Michelle Chan-Fishel of Friends of the Earth -- U.S., who noted that banks adopting only the Equator Principles earned lower-than-average rankings. “First, the Equator Principles have always been weak in some areas, such as human rights. Second, this report identifies several examples where individual banks’ environmental and social policies go far beyond the Equator Principles in substance and scope.”
Finally, because public information was limited, the report only benchmarks the quality of the financing standards themselves, but does not attempt to evaluate their implementation or their effect.
“Good environmental and social standards on paper mean nothing if they ultimately do not make a positive difference in people’s lives,” said Andreas Missbach of Berne Declaration. “It is worrying that ABN AMRO, as one of the highest ranked banks, is involved in Shell’s highly destructive Sakhalin II oil and gas project along with lower-scoring ones like Credit Suisse.”
Download the complete report in PDF format online.
