The UN Principles of Responsible Banking (PRB) are a framework for responsible banking developed by the United Nations Environment Programme Finance Initiative (UNEP FI). The PRB were published in 2019 and have now been signed by over 300 banks from 60 countries.
The PRBs are based on six guiding principles
The Principles for Responsible Banking help banks play their role in shaping a sustainable future. In doing so, 6 guiding principles are followed:
Banks align their strategies with the United Nations Sustainable Development Goals (SDGs), the Paris Climate Agreement and relevant national and regional frameworks.
- Impact and target setting
Banks increase their positive and reduce their negative impact on society and environment. To this end, they set corresponding targets with the greatest possible impact.
- Clients and customers
Banks work with their customers for sustainable business – for present and future generations.
Banks work actively and collaboratively with relevant stakeholders to achieve sustainability goals.
- Governance and culture
Banks create a responsible governance structure and corporate culture.
- Transparency and accountability
Banks continuously review the implementation of these principles and report on their achievement.
The PRBs were developed to cover the lending and asset management (wealth management) activities of banks. They complement the Principles for Responsible Investment (PRI) endorsed by the United Nations, which are aimed primarily at asset managers and owners. Since many banks offer asset advisory and management services, e.g. wealth management, it may make sense for these banks to be both PRB and PRI Signatories.
Three reasons why banks commit to PRBs
The world’s largest banks are signatories to this initiative. In Switzerland, for example, UBS AG, Zürcher Kantonalbank, Raiffeisen Group Switzerland, Pictet Group, Julius Baer and others have signed the PRB, thereby committing to comply with and report on the six principles.
Motivations for signing PRBs can vary, but three motives stand out:
- Contribution to global sustainable development
The PRBs are closely linked to international sustainability initiatives, such as the SDGs. By committing up, the bank actively contributes to global efforts to address major issues such as poverty, climate change and inequality, thus working towards a more sustainable and equitable future.
- Improved reputation and brand value
Commitment to the PRBs can enhance the bank’s reputation, foster trust among customers, investors and stakeholders, and increase brand value as an institution that prioritizes responsible banking.
- Risk mitigation and long-term sustainability
The PRBs require banks to identify and address environmental, social, and governance risks in their operations. By addressing these issues, banks can proactively address risks related to climate change, regulatory changes, and social issues, among others. This leads to greater long-term sustainability and resilience in the face of future challenges.
Implement the PRBs in three steps – with Sustainserv
Sustainserv accompanies banks in the implementation and reporting of the PRBs. We first collaboratively identify and analyze the most important impacts of the banks’ products and services on society and environment. Subsequently, we accompany our clients in underpinning these impacts with measurable targets. Finally, we support the banks in regular and transparent reporting on impacts, targets and their achievement. Banks that commit to these principles have 18 months to publish their first PRB-report and four years to implement the principles.
In addition, with regard to the development of climate targets, UNEP FI recommends joining the Net-Zero Banking Alliance (NZBA). The NZBA is an industry-driven association created by the United Nations. Its goal is to support members in creating and achieving credible, science-based net-zero targets by 2030, providing value to investors, clients and customers. PRB signatories joining the NZBA commit to subjecting their PRB and NZBA reports to an audit (limited assurance).
Client support for implementation of PRB reporting
Last year, Sustainserv accompanied financial companies in the implementation of PRB reporting. A central question is how companies can implement the impact analysis in a targeted and at the same time substantiated manner. Sustainserv suggests different approaches, such as the application of the UNEP FI Impact Analysis Tool. The tool is interactive and continuously optimized and thus, it is worth visiting the UNEP FI website regularly.
The reporting requirements on the Principles are also subject to revisions by the UNEP FI. In order to facilitate the continuation of the already existing PRB report, we showed our clients in an analysis which elements have changed compared to the previous year.
Along the mandate, we accompany our clients in the establishment of relevant internal structures and processes, such as the development and documentation of an ESG governance. At the same time, we ensure that our clients benefit from synergies with other reporting projects.
You can find more information on the Principles of Responsible Banking (PRB) here.