Banks Get Ahead by Funding Sustainability Projects

Banks Get Ahead by Funding Sustainability Projects

Banks that integrate environmental, social and governance concerns into their business strategy and seek out those opportunities make their businesses more valuable, according to a new report by the International Finance Corporation.

The IFC, the private sector arm of the World Bank Group, issued "Banking on Sustainability," providing practical examples of 14 financial institutions in 12 countries that have taken concrete steps to integrate sustainability into their policies, practices, products, and services.

"While detailing the evidence of potential benefits for banks in integrating sustainability into their business strategy, the report reveals a dramatic shift in banks' awareness of these benefits," said Rachel Kyte, IFC Director of Environment and Social Development.

In a 2005 IFC survey, 86 percent of 120 financial institutions interviewed reported positive changes as a result of steps they had taken to integrate social and environmental issues in their business.

"There are real opportunities for banks in reaching previously unserved segments of the market, including women entrepreneurs or energy efficiency projects," said Jyrki Koskelo, IFC Director for Global Financial Markets. "The publication provides a tool for banks to recognize these opportunities."

The report shows how 14 financial institutions developed innovative financial products to expand their business into areas related to social and environmental sustainability and how their businesses were positively impacted by doing so.

Some of the examples included in the report are: Ceska Sporitelna, a bank in the Czech Republic that is leading the way in commercial financing for sustainable energy projects; Afriland First Bank, an African bank that is providing loans for environmental improvements in waste collection and treatment as well as microfinance for rural communities and women; and Nedbank, the first African bank to publish a sustainability report and adopt the Equator Principles.

The full report is available for download from the IFC website.