Fair Finance urges banks to prioritize environmental, governance & HR issues

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Staff Reporter 
Islamabad

A bank’s money is people’s money and it must invest their money responsibly for a sustainable environment, caring of the communities and respecting human rights.

These views were expressed by expert bankers during the annual meeting of the Fair Finance Pakistan Coalition.

The Coalition members signed a solidarity statement urging commercial banks and regulators to conduct their business responsibly by adopting State Bank’s Green Banking Guidelines to embed environment, social and governance (ESG) criteria, ensure universal access to finance and incorporate the UN Guiding Principles for Responsible Banking at their strategic, portfolio and transaction level.

The two-day meeting was organised by Fair Finance Pakistan (FFP) with support from Fair Finance Asia.

Representatives from State Bank of Pakistan, Rawalpindi Chamber of Commerce & Industry, members of the civil society, academia, trade unions and the media joined the meeting.

Speaking on the occasion, social activist Jawad Ahmed stressed on equality of access over opportunities and resources for all citizens of Pakistan regardless of race, religion, ethnicity, nationality or gender.

He emphasized the role of institutions, media and the government to ensure equitable and people-centric social, economic and political participation.

Highlighting inequality as a major impediment to people’s development, Jawad Ahmed emphasized on empowering citizens, especially women and minorities to actively partake in socio-economic development of the country.

During the meeting, Fair Finance Pakistan presented key findings of its report on “Strengthening Sustainable Finance in Pakistan: A scoping review towards institutionalizing Fair Finance Pakistan,” authored by Dr. Abid Aman Burki from Lahore University of Management Sciences.

The scoping review gave an analysis on financial inclusion in Pakistan which is at 21% compared to the State Bank’s ambitious goal of 50% by 2020.

The FFP study found out that only five banks hold 50% of all banking assets in Pakistan, whereas 10 banks out of the total 29 reviewed are not registered with the Pakistan Stock Exchange.

Highlighting the role of the business community in promoting green practices, Talat Awan, Vice President, Rawalpindi Chamber of Commerce & Industry (RCCI) shed light on RCCI’s initiatives of utilizing renewable energy models.

The Chamber generates its own electricity of 50MW and has installed rainwater harvesting plant that provides water within one kilometer radius of the Chamber.

RCCI is one of the first chambers in Pakistan to have adopted the green model, Talat Awan informed.

Coalition members at the meeting discussed ways to leverage learning for banks to conduct their business responsibly by embedding human rights into their operations and policies and incorporating UN Guiding Principles on Responsible Banking and adhering to the Paris Climate Agreement.

Participants pledged to amplify citizens voices for sustainable finance and stressed on banks’ role to ensure responsible project financing, transitioning from reporting to compliance, financial inclusion especially for women, and consider social and environmental impacts for the well-being of the society.

Muhammad Tahir, Senior Deputy Chief Manger, State Bank Lahore highlighted the importance of integrating Green Banking Guidelines to foster a culture of responsibility in the banking sector.

These guidelines mandate banks to put in place adequate mechanisms that identify, assess and mitigate environmental risks of their clients.

Development on the State Bank’s draft policy ‘Banking in Equality Policy: Reducing the gender gap in financial inclusion’ was also discussed. The policy aims to promote equal opportunities for men and women to access formal financial services.

Missing links of social and governance criteria in the ESG criteria at State Bank’s policy level were identified as areas of improvement.

Global learnings and successes were shared from Sweden and Philippines demonstrating civil society’s impact on the banking industry. Banks’ policy assessments undertaken in the Philippines.

Thailand and Sweden are recent examples of the success of the FFGI methodology to assess banks and sets a benchmark for other countries to follow.

Asim Jaffry, Program Lead, Fair Finance Pakistan said the Green Banking Guidelines must transit from reporting to compliance to help reduce environmental, social and human rights impacts.

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