“These principles mean banks have to consider the impact of their loans on society – not just on their portfolio,” Simone Dettling, banking team lead for the Geneva-based United Nations Environment Finance Initiative, said in an interview with Reuters.
Deutsche Bank, Citigroup, and Barclays were among 130 banks to join the new framework on the eve of the week-long UN Climate Summit in New York.
The financing for fossil fuels, including oil, gas, and coal, has come under increased scrutiny lately, and climate scientists and activists are voicing growing concerns over a world economy that is overly dependent on fossil fuels that could lead to an irreversible climate crisis.
UN-backed responsible banking principles
In order to have sustainable business practices, UN officials and banks drew up a set of principles that would require lenders to align their financial strategies with the 2015 Paris Agreement. The banking institutions would also have to align their strategies with U.N.-backed targets to fight poverty called the “Sustainable Development Goals.”
The industry would also set targets to increase “positive impacts” and reduce “negative impacts” on people and the environment, and work with clients and customers to encourage sustainable practices while being transparent and accountable about their progress.
UN Secretary-General António Guterres, speaking at the launch of the banking principles event challenged the 130 Founding Signatories and over 45 of their CEOs present at the UN – saying: “How you, as business leaders, respond can be a defining moment for our global goals. Only public-private cooperation can deliver sustainable development.”
“We will rely on you to scale up financing to businesses that stimulate green growth,” the Secretary-general said, adding: “Place your bets on the green economy, not the grey economy because the grey economy will have no future.”
