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Mazars, the international audit, tax and advisory firm, launches the third edition of its annual Responsible banking practices benchmark study. The global study assesses the sustainability practices of 37 of the world’s largest banks1 based across all continents.
The 2021 report shows that most banks assessed have demonstrated an interest in sustainability and have already advanced significantly in their sustainability journey by implementing relevant frameworks. However, full implementation of relevant practices to achieve the transition to a socially responsible and net zero economy remains an important challenge.
Phuong Gomard, Partner, Mazars says: “Banks are increasingly committing to making their practices more sustainable, and this has led to progress since our previous studies. The findings are encouraging, but they also reveal the work that remains to be done, especially in regions where ESG-related regulations and guidance are yet to be developed. We will continue our work on identifying best practices relating to governance, strategy, risk management, and disclosure. By providing financial institutions with exemplary practices and recommendations, we hope to help them progress to a more sustainable and socially responsible business model and contribute to the transition to a net zero economy.”
Global findings: banks significantly advance in their sustainability journey
The global analysis shows that most banks:
Progress made: 2021 vs 2020
Since the 2020 assessment – published in February 2021 – the criteria in all four areas assessed were tightened. This adjustment not only better reflects the progress made in implementing sustainability practices, but also in showing that progress remains to be made as banks continue on the pathway to sustainability and making a contribution to low carbon economies. Due to the changes in criteria:
French and UK banks lead on ESG risk management and more
French and UK banks still hold the leading position in all fields assessed, with the implementation of sustainability strategies being their strongest point. Banks from both countries achieved the highest scores across all geographies in ESG risk management. There is still room for improvement for European banks’ (excluding FR/UK) governance and disclosure arrangements. They are expected to bridge the gap with French and UK banks thanks to the enforced ‘EBA Report on Management and Supervision of ESG risks’.
Romanian banks make notable progress on sustainability
In Romania, like in most European countries, financial institutions are actively seeking new ways to reduce their climate-risk exposure, encourage net-zero carbon emissions, and develop new sustainable products. In the last few years, many banks have realised that becoming a sustainable provider is the next move, especially since more and more consumers, and here we refer to Millennials in particular, are choosing nowadays brands that have a sustainability agenda or sustainability credentials.
„The financial world can no longer see its future as separate from the environment and climate change developments. Despite the progress made in the last years by local banks, the full implementation of relevant practices to achieve the transition to a socially responsible and net zero economy remains an important challenge and more efforts are necessary going further.”, mentioned Răzvan Butucaru, Partner, Financial Services & Advisory Leader, Mazars Romania.
At the local level, we analysed the top ten Romanian banks by assets, using the public information available at Q1 2022, that can be found on every bank’s website, sustainability report, transparency report, or other sustainability policies. Our findings show that:
„Based on their current mandates, central banks do not have explicit climate targets, and there are divergences on the topic expressed by well-known economists, but the incorporation of specific policies could still be justified in terms of their influence on price stability and financial stability. The National Bank of Romania (NBR) actively contributes to improving the transparency, and the availability of information on climate change, as well as raising awareness of the impact of climate change on society and the financial system. Recently, the NBR's ongoing efforts have been focused mainly on communicating recommendations to supervised entities on the prudent approach to climate risk, supplementing the Credit Risk Center with information on green loans, and building a risk monitoring board on the banking sector from climate change, to be updated and disseminated regularly. At the same time, we are conducting analyses on making the prudential requirements for green financing more flexible, to stimulate this type of lending, without affecting financial stability.”, mentioned Cristian Popa, Member of the Board, The National Bank of Romania.
„The risks associated with a changing climate extend across many, if not all, sectors of the economy. Each sector will face its own challenges in understanding, assessing and managing the most material climate-related risks. For banks as well as other financial institutions, the ability to build a comprehensive understanding of their climate risk exposure will require knowledge of their own businesses exposure to climate-related risks and those of their customers and counterparties across a wide range of sectors.”, mentioned Ovidiu Otto Strasszer, Senior Manager, Financial Advisory, Mazars Romania.
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1The banks selected are the largest in their respective geographies based on their total assets
Methodology
The Mazars benchmark assesses the sustainability practices of a sample of 37 banks. We have focused our analysis on banks based in Africa, the Americas, Asia-Pacific and Europe. The banks selected are the largest in their respective geographies by total assets.
Most of the banks selected have demonstrated an interest in sustainability and have already advanced significantly in their sustainability journey by implementing frameworks, for example participating in the UNEP FI and/or committing to the UNEP FI Principles for Responsible Banking (PRB). This study builds on previous reports published by Mazars in February 2021 and 2020: “Responsible banking practices, benchmark study 2020”, “Responsible banking practices, benchmark study 2019” and “How banks are responding to the financial risks of climate change”.
About Mazars
Mazars is an internationally integrated partnership, specialising in audit, accountancy, advisory, tax, and legal services*. Operating in over 90 countries and territories around the world, we draw on the expertise of more than 44,000 professionals – 28,000+ in Mazars’ integrated partnership and 16,000+ via the Mazars North America Alliance – to assist clients of all sizes at every stage in their development.
*where permitted under applicable country laws.
www.mazars.com | Mazars on LinkedIn
About Mazars in Romania
In Romania, Mazars has 27 years of experience in audit, tax, financial advisory, outsourcing, and consulting. Our strength lies in the people we work with – the local team has 7 partners and 280 professionals.