Friday, September 12, 2014
Banks showing limited commitment to responsible investing
Despite the growth in responsible investment as reported by various sustainable investment forums, such as Canada’s Responsible Investment Association, the uptake of responsible investing in the banking sector leaves much to be desired, according to an extensive report on banking from RI research firm Sustainalytics.
Only 7% of banks surveyed by Sustainalytics report that the share of responsible assets is more than 5% of total assets under management. Nearly all of these institutions are from Europe, with three from North America and one from South America.
Another 96 institutions (27%) either have less than 5% of AUM dedicated to RI assets or do not disclose the value of their RI assets. Two hundred and forty-one institutions (67%) don’t provide any evidence of RI assets under management.
Further, just 20% of the banks around the world surveyed by Sustainalytics are PRI signatories. And only 27% have published some kind of responsible investment policy.
Only 6% of banks live up to Sustainalytics highest requirements, which include the application of at least two out of three RI strategies: exclusion, best-in-class and engagement.
“While a number of banks are engaged in RI, the majority of them are not PRI signatories, do not have RI policies in place and have not disclosed responsibly management assets,” the report says.
The report notes that the banking industry supports a wide range of sustainability related products and services, including green consumer loans, rebates for energy efficient home retrofits, large scale renewable energy project and green bonds.
In fact, 72% of banks assessed on this indicator have disclosed programs or activities to promote sustainability-related products and services, mostly in the form of clean energy financing and consumer loans. Eleven banks stand out for setting quantitative targets to expand sustainability financing commitments within a specific time frame.