The key role banks play in providing capital throughout economies means they will be critical to addressing major societal challenges, giving weight to new global sustainability principles, according Responsible Investment Association of Australasia chief executive Simon O'Connor.
Ahead of today’s launch in Paris of draft Principles for Responsible Banking, Mr O’Connor told Westpac Wire the new principles would help to refocus banks on their purpose and role in society.
“The fact that banks are so integral to providing capital, that fuel of the economy, to building the kind of world we need for the 21st century, we're not going to solve climate change or inequality or any of these big issues without banks and finance. Like it or not, they're going to play a role, so (these) guiding principles (will be) helpful,” he said.
Listen to Siobhan Toohill’s full interview with Simon O’Connor:
Led by the United Nations Environment Programme Finance Initiative (UNEP FI) with input from 28 banks with more than $US17 trillion in assets, the draft principles aim to provide a framework for signatories to “make a positive contribution to society” and help achieve the UN Sustainable Development Goals and the Paris Climate Agreement targets.
In the wide-ranging podcast, Mr O'Connor said the bar set by the draft principles was higher than that set more than a decade ago by the Principles for Responsible Investment – or PRI – which play a similar role for asset managers.
“That's a reflection of where we're at today compared to 10 years ago,” Mr O’Connor said.
“We’re in a position now where we can talk much more about the purpose of finance and what our role is in society. That's influenced by a whole raft of things – by the rapid acceleration of climate change, royal commissions, a focus back on consumers, and what our real role is in terms of serving the community.
“You need to use that window of opportunity that allows you to set the initial parameters at that more challenging level.”
The UNEP FI and participating banks, including Westpac, have been working on the principles since April, and the draft will be open for consultation until May 31, 2019.