Banking

Banking

Over the last decade, the banking sector has increasingly recognized the importance of green finance. Both commercial and investment banks are beginning to take action, including mainstreaming environmental factors across bank strategy and governance, as well as mobilizing capital for specific green assets through loan origination, the provision of credit and savings products, and capital markets activities, including green bonds. A number of global initiatives are driving this progress, including the Principles for Responsible Banking and the Sustainable Banking Network.

The need for action has been highlighted by central banks, especially the Bank of England, whose Governor has warned that climate change is a systemic risk to the banking sector. This has led to the establishment of the Taskforce for Climate-related Financial Disclosures (TCFD), which has issued recommendations for the finance sector and for public companies to integrate climate change into their business strategies.

Multilateral development banks (MDBs) also play a critical role in mobilizing international climate finance and scaling up financial leverage for low-carbon and climate-resilient investments by improving the planning, preparation, structuring, financing and de-risking of public and private investments. More broadly, sustainability and responsible investment are increasingly integrated within the investment process of MDBs.  Many have made ambitious commitments to ensure their loan portfolios support conservation activities and that they integrate natural capital and social impacts into their investment decision processes.