Back to the Future

  • Simon Thompson
  • 28 March 2019
  • Blog | Green Finance | Blog

Since 1875, the Chartered Banker Institute – the oldest institute of bankers in the world – has played a leading role in helping finance professionals develop and demonstrate the traditional banking values of stewardship, thrift, prudence and professionalism. 

In fact, in the very first article, in our very first Institute journal, our then President wrote – in elegant Victorian prose:

There has been no time in the history of banking more interesting than the present to the student of the great science of finance, no period more filled by problems theoretical and practical. It seems as if … we stand at a parting of the ways, when only the ethical principles … are to remain to us as the perpetual foundation on which new ideas and modes of practice are to be raised, superseding many of the old ways of accountancy, trade methods and profit-making, and replacing the old by new and improved plans.

Our early appreciation of the importance of strong professional and ethical values in banking has established us as a trusted and distinctive voice in the UK and internationally.

More recently, the global financial crisis demonstrated, by their absence, just how important these traditional – universal - values are if, as a finance profession, we are to rediscover our sense of social purpose and reconnect finance with the customers, communities and societies we serve. 

One of the ways we can best do this, in my view, is for our profession to support the transition to a sustainable, low carbon, socially just world, by putting sustainability and stewardship in the broadest sense at the heart of finance.  By stewardship I mean going well beyond being a steward of depositors’ funds, as our Institute’s founders would have seen it, and being responsible stewards of our natural resources and planet for current and future generations.

With this in mind, endorsing, promoting and encouraging the adoption and embedding of the Principles for Responsible Banking (PRB) across the banking sector is something that we, as a professional body are fully supportive of.  The Principles will not only help embed sustainability within our sector but will demonstrate in a very practical way the social purpose of banking and help reconnect banks and society.

The six PRBs that banks commit to, for those readers who are not already familiar with them, are as follows:

1) Alignment: We will align our business strategy to be consistent with and contribute to individuals’ needs and society’s goals, as expressed in the Sustainable Development Goals, the Paris Climate Agreement and relevant national and regional frameworks. We will focus our efforts where we have the most significant impact. 

2) Impact: We will continuously increase our positive impacts while reducing the negative impacts on, and managing the risks to, people and environment resulting from our activities, products and services.

3) Clients & Customers: We will work responsibly with our clients and our customers to encourage sustainable practices and enable economic activities that create shared prosperity for current and future generations.

4) Stakeholders: We will proactively and responsibly consult, engage and partner with relevant stakeholders to achieve society’s goals. 

5) Governance & Target-setting: We will implement our commitment to these Principles through effective governance and a culture of responsible banking, demonstrating ambition and accountability by setting public targets relating to our most significant impacts.

6) Transparency & Accountability: We will periodically review our individual and collective implementation of these Principles and be transparent about and accountable for our positive and negative impacts and our contribution to society’s goals.

So - what does it take to successfully deliver the Principles?

Change in banking and financial services needs alignment at the industry level, at the institutional level, and at the individual level.  If we want to deliver, and embed, the Principle, we need to work at all three levels:

  • At the industry level, with relevant global and national industry bodies leading a collective approach to endorsing and implementing the Principles;
  • At the institutional level, with banks leading by example and sharing good practice; and
  • At the individual level, with professional bodies and educators such as the Chartered Banker Institute, bringing the Principles to life for their members, embedding them in our professional standards and qualifications, and setting out how the Principles can be demonstrated in day-to-day professional banking practice.   

Change is led, ultimately, by individuals getting to lead their institutions and, ultimately, their industry.

The change we seek in mainstreaming responsible, sustainable finance in general, and the Principles for Responsible Banking in particular, needs to be led by increasing numbers of finance professionals with an understanding of the critical role of financial services in supporting the transition to a sustainable, socially just world.  Professionals with the knowledge and skill of finance to be able to develop and deploy products, services and tools that will mobilise capital to support that transition, address climate-related and societal risks, and help customers and communities direct investment to responsible and sustainable finance opportunities.  Professionals such as those who have joined Bankers For Climate (https://www.bankersforclimate.com/), leading by example. Join us if you haven’t done so already!

And what does this mean in practical terms for the Chartered Banker Institute? Well, last year, we launched the world’s first benchmark qualification for Green Finance Professionals, the Green Finance Certificate.  It sets the standard for green and sustainable finance professionals worldwide by providing an overview of and introduction to the underpinning science, principles and practice of green and sustainable finance. This year’s revision also includes the Principles for Responsible Banking

We are also currently revising our benchmark Professional Banker Certificate – our foundation banking qualification.  It embeds a responsible, professional approach to banking throughout already, but when the revised version is released later this year it will cover the Principles for Responsible Banking too, providing a professional banking qualification for a responsible and digital age of banking.

And, as our main Chartered Banker and associated professional qualifications are updated over the next 3 or so years, we will be integrating sustainable finance – including significant coverage of the Principles – into our core professional qualifications.  Responsible banking and sustainable finance will join credit, risk, regulation, operations, technology and professional ethics as core topics that all future Chartered Bankers will study, and be assessed in. 

It’s what I like to think of as the Marty McFly approach – we’re going Back to the Future.  Nearly 150 years ago, banks and bankers thought of themselves – and were thought of - as responsible citizens and trusted stewards. Prudence and professionalism were givens. At least some parts of banking, and some bankers, seem to have lost their way in recent years – the Principles for Responsible Banking can and will play a key role in reconnecting banks and society, and supporting a more sustainable and responsible approach to finance. 
 

Simon Thompson

Simon Thompson

Chartered Banker Institute | Chief Executive

 

Simon leads the Institute’s thought leadership on green and sustainable banking.  He has been Chief Executive of the Institute since 2007, and for more than a decade has led our work on enhancing and sustaining customer-focused, ethical professionalism and responsible banking.  In 2011, Simon led the establishment of the Chartered Banker Professional Standards Board (CB:PSB).

Simon led the development of the world’s first benchmark qualification for green finance, the Green Finance Certificate, launched in 2018, and is editor of Principles and Practice of Green Finance that underpins the course programme.  He has contributed two new chapters to the 2019 update, on Fintech in Green Finance and the Role of the Green Finance Professional.  In 2018, Simon represented the Institute at the UN Climate Change Summit (COP24) in Katowice, Poland.

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Read more on sustainable finance in our Sustainable Finance Report 2019.