Some of the salient goals include eradicating poverty and hunger, achieving true gender equality, proliferating access to empowering education, and taking a stance against climate change.
But how can the financial sector play a role in helping the United Nations achieve its goals? Well, the international organization also created a series of principles that it believes banks should abide by, called the U.N. Principles for Responsible Banking. These banking guidelines aim to more properly align banks to the aforementioned Sustainable Development Goals by building what the U.N. dubs, “the world’s foremost sustainable banking framework.”
So far, over 300 banks around the world have become signatories of this initiative, and together, these banks control over $47 trillion dollars, according to the Environmental Finance.
At its crux, there are six main guidelines that power the Principles for Responsible Banking: Alignment, Impact and Target Setting, Clients and Customers, Stakeholders, Governance and Culture, and finally, Transparency and Accountability.
The first principle requires that banks across the globe realign their business practices to orient them in a position such that they abide by agreements such as the Paris Accords and the United Nations’ 17 goals. Nordea Bank, for instance, has issued a proclamation claiming it plans to become a net zero bank by 2050, thereby helping meet the climate change goal outlined by the U.N.
The second principle dictates that banks need to magnify their positive impacts on the environment and surrounding communities, while simultaneously reducing the negative externalities of their business operations. Santander has pledged that to magnify its positive effects on its surrounding community, it wants to ensure that women will make up at least $30 of its managerial roles by the year 2030, which helps meet the United Nations’ goal of achieving true gender equality.
The third and fourth principles relate to the customers and stakeholders of banks. These guidelines ensure that banks must ensure they encourage their customers to engage in sustainable banking and team up with their stakeholders to uplift society. To help encourage its clients to pursue sustainable investing practices, Krungsri Bank launched an array of “green investments,” including green bonds, sustainability bonds, and sustainability loans.
The last two of the six goals were put in place so that banks would have transparent practices and promote a culture that aligns with the objectives of the 17 Sustainable Development Goals. They were also enacted to encourage banks to periodically check their actions to ensure that they were still on track to meeting the goals, or if they needed to correct some of their business operations and make them more sustainable.
But beyond abiding by the United Nations’ Responsible Banking Practices, banks can also pursue their own uplifting endeavors. For example, in 2015, The World Bank Group pledged $400 billion to help promote development in Addis Ethiopia.
As the 2030 deadline for the Sustainable Development Goals continues to approach, banks will have to play a vital role in helping attain these ambitions. From helping to finance these endeavors to adjusting their business practices, banks will be key for sustainable success in the future.