Johan Frijns, director BankTrack, email@example.com, mobile +31 6 12421667
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Forty-five civil society organisations from fourteen countries call on the United Nations Environment Programme Finance Initiative (UNEP FI) to reformulate the proposed ‘Principles for Responsible Banking’ (PRBs) so that banks aspiring to adopt the principles must make concrete, ambitious and timebound commitments upfront on how they will contribute to solving the world’s many pressing social and environmental problems.
The joint civil society submission was coordinated by BankTrack and endorsed by 350.org, Amazon Watch, Greenpeace International, Indigenous Environmental Network, Inclusive Development International, Fair Finance Guide International, Global Witness, Future in our Hands, International Rivers and Rainforest Action Network, amongst others.
The submission was presented today to UNEP FI which, together with 28 founding banks, took the initiative for the PRBs. The PRBs were first announced in Paris in November 2018 and are to be formally launched on September 22nd at the United Nations General Assembly in New York. Over 100 banks are expected to have adopted the Principles by the launch in September.
According to UNEP FI, the PRBs represent the “most significant mechanism ever jointly created by the UN and the global finance industry”, and will be “a framework for a sustainable banking system in which a bank’s business strategy is aligned with society’s goals and guide banks in demonstrating how they are making a positive contribution to society”. They address Alignment; Impact; Clients & Customers; Governance & Target Setting; and Transparency & Accountability.
BankTrack and the co-signing organizations insist that they would like to welcome the PRBs, but they consider the requirements contained in the draft PRBs wholly inadequate for them to be an effective and credible response from the banking sector to today’s massive challenges on poverty, wildlife loss, climate breakdown and human rights violations globally.
The submission, which addresses both the general PRBs framework and each of the six Principles, recommends that UNEP FI reformulate the PRBs to require banks to indeed set public targets in line with the Paris Climate Agreement, Sustainable Development Goals, the UN Guiding Principles on Business and Human Rights and other relevant frameworks, but to invert the adoption process so that such commitments precede rather than follow entry to the initiative. Banks would first need to set public, concrete, and timebound targets that commit them to the PRBs, and only on the basis of a public assessment by UNEP FI would they be admitted to join the initiative as a ‘PRB bank’.
In the current framework, entry into the PRBs only requires that bank CEOs issue a public statement endorsing and signing their bank onto the initiative. Depending on their self-categorization as a starter, intermediate or advanced bank, they may then take up to four years to deliver on their self-defined goals, all the while reaping publicity benefits from being a ‘PRB bank’.
The proposed assessment process would also require that UNEP FI establish firm baselines that all banks will be required to meet for eligibility for admission, rather than inviting any bank to sign on regardless of its level of ambition. This should include baselines around such issues as ending the financing of fossil fuel projects completely, rejecting all financing for projects threatening pristine and intact forests, respecting livelihoods and community interests when considering finance for business activities and respecting the rights of Indigenous people to give or withhold free, prior, and informed consent regarding projects that affect them, to name a few.
Finally, the submission expresses the expectation of civil society that adoption of the PRBs will lead to fundamental changes in business practices throughout the adopting bank, notably on community and stakeholder engagement, transparency and reporting, and across the board accountability.
Johan Frijns, Director of BankTrack, stated: “This is 2019; we are facing widespread poverty, complete climate breakdown, mass extinction of animal and plant species and ongoing human rights violations all over the world, with many banks having a lot to explain on their role in exacerbating these crises. In such an outright emergency situation we expect a bank initiative that meets these challenges head on, not something that allows banks to spend years pondering their next steps without making concrete commitment upfront, all the while publicly posing as UNEP-certified responsible bank. Without fundamental changes in the adoption process the very credibility of the PRBs is at risk right from the start”.
Alison Kirsch, of Rainforest Action Network, stated: “We welcome banks' public commitments to 'align their businesses with the Paris Climate Agreement goals', but these must include an immediate end to financing for fossil fuel expansion and a plan to rapidly phase out fossil fuel financing overall. We can accept no less from banks signing on to the PRBs — especially given the billions of dollars still flowing from many endorsing banks to the fossil fuel industry”.
Anja B. Riise, Director of Framtiden i våre hender, stated: “While this is a welcome initiative by UNEP FI, the framework needs to be substantially strengthened in order to be fit-for-purpose. What banks lack most is translating all these nice principles into policies that will impact their daily business at the necessary pace. The scale of climate and wildlife crises, unacceptable levels of economic inequality and unmet basic needs of the majority of world population leave no room for yet another set of nice words without substantially changing investment practices. We need banks to stop harmful investments and increase sustainable ones, and urge UNEP FI to fundamentally revise the PRB framework so as to help them do so”.
With this submission BankTrack and endorsing organisations urge UNEP FI and founding banks to adapt the proposed PRB framework, so that it will indeed deliver on the ambition level expressed by UNEP FI, and extend a hand to work together in order to strengthen the PRBs before they are launched in September.
Notes for editors:
See BankTrack press release at the time: https://www.banktrack.org/article/principles_must_bring_commitments_banks_endorsing_draft_principles_for_responsible_banking_called_upon_to_urgently_act_on_what_they_sign