Working together is key to turning banking green.
The Chartered Banker Institute (CBI) and the Global Ethical Finance Initiative (GEFI) have announced a three-year strategic partnership to support bankers to be a force for positive change.
The UN’s 26th climate conference, COP26, taking place in Glasgow this November, presents global leaders with stark choices about the legacy we want to leave for our planet. The scale of change to achieve net-zero carbon emissions is bigger than any transition the global economy has ever seen; to meet the climate targets set in Paris in 2015 will mean an 11% reduction in carbon intensity every year from now to 2050.
Financing this transition requires the deployment of global capital on an unprecedented scale, and a transformational shift in the banks and the bankers of the future. The Bank of England, under its former governor Mark Carney (now a UN special envoy for climate action and finance, and the UK prime minister’s finance adviser for COP26), set the objective in 2020 of ensuring that “every professional financial decision will need to take climate change into account”. In order to pass the ‘Carney test’, as it has been dubbed, we have identified the need for every finance professional to have the skills and knowledge to accurately assess climate-related risk and opportunities.
The UN Principles for Responsible Banking align banks and their lending decisions with the needs of our planet and its people. This work is well advanced in more than 200 banks worldwide; our two organisations have been helping bankers understand how to implement the principles and supporting the expansion into developing economies, for example, by supporting a group of Islamic banks who want to make this commitment.
The CBI, the world’s oldest banking institute, launched a green finance education charter at the end of June 2020. It is now supporting its 30,000 members across the world — and its network of affiliated organisations, such as the Asian Institute of Chartered Bankers and Finsia in Australia and New Zealand — to get the skills they need to pass the ‘Carney test’. GEFI has grown in scale and reach over the past decade, as more and more bankers from different disciplines have sought out the expertise they need for the herculean task ahead. It has launched a ‘Path to COP26’ campaign that brings together 40 financial institutions, managing more than £2tn in assets, who are committed to make finance work in support of COP26 and on the road to net-zero. In line with our efforts, we are pleased to see UK banks such as NatWest, a sponsor of COP26, strengthening its climate policies.
But we all need to do more. Knowing how to measure the size of the climate problem and the risks that banks face is not enough. The explosion in fintech and the recovery from the global financial crisis has demonstrated the powerful forces of innovation and adaptation that reside within banks. Leaders in banking must make it clear that they want to see that power mobilised and channelled in this direction. We should expect our banks and individual bankers to be at the forefront of developing solutions and enabling a transition to a greener, fairer and more sustainable future. However, the impact and timing of decisions in the short, medium and long term must also consider how change can provide a socially just transition for customers, communities and society through responsible lending and inclusive, customer-centric services.
Rebuilding the global economy after Covid-19 and delivering on the climate challenge presents a unique opportunity. Now is the time for bankers to be a force for positive change.
Simon Thompson is chief executive of the Chartered Banker Institute and Dame Susan Rice is chair of the Global Steering Group, Global Ethical Finance Institute.
