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Responsible banking practices 2021
Financial institutions increasingly recognise that climate change and other environmental, social and corporate governance risks jeopardise the world’s economy and financial system.
Responsible banking practices 2021
11 January 2022: 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’.
North American banks perform well on ESG disclosures
Though North American banks still rank among the leading institutions, they did not make significant progress this year, in comparison to their European peers. North American banks are performing well in disclosure as reporting under TCFD may become mandatory in the near future. There is still room for better integration of ESG risks into risk management frameworks, but the New York Stock Exchange ESG Guidance enforced in 2021 is expected to help banks progress in this area.
South American banks stand out for sustainability strategy
South American banks achieved a better score than Asia-Pacific and Africa on strategy. However, the local regulatory and governmental initiatives in sustainability and climate change remain at an early stage of development given the absence of any sustainable finance taxonomy.
Asia-Pacific banks fall behind on governance and more
One Australian bank is performing well with regards to governance and risk management and is ranked as a ‘leader’. Overall scores for the region show room for improvement on governance, risk management and disclosures. In China, the Green Finance Development Regulations enforced in 2021 will oblige listed financial companies registered in Shenzhen to disclose environmental-related information from January 2023.
The third edition of the Responsible banking practices study shows a significant development in efforts to implement an ESG strategy. This is a great achievement considering the fact that more stringent criteria were applied in our analysis for the assessment of practices and requirements. The survey results also indicate that the banks still face a lot of challenges and have work to do, in particular in the area of corporate governance and reporting. We observe a similar trend among the Polish banks which will face new regulatory requirements in this respect in the coming years, says Małgorzata Pek-Kocik, Partner responsible for financial institutions audit and advisory at Mazars in Poland.
Click here to download the full report.
1The banks selected are the largest in their respective geographies based on their total assets
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”.
Lorraine Hackett, Group Brand & Communications Director, Mazars: email@example.com // +44 (0)20 7063 4435
Renata Stefanowska, Manager Marketing & Communications, Mazars in Poland: firstname.lastname@example.org / +48 22 25 55 200
https://pol.mazars.pl | http://www.linkedin.com/company/mazars-in-poland
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 42,000 professionals – 26,000+ 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.
In Poland, Mazars employs over 350 specialists in Warsaw and Krakow and serves more than 800 Polish and international companies of various sizes, offering them a full range of services in the fields of audit, accounting, HR & payroll outsourcing, tax, consulting and financial advisory.
*where permitted under applicable country laws.
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