As custodians of large sums of the public’s money, financial institutions have a considerable and wide impact not only on the economy but also on the prosperity of the society that the economy is intended to serve and on the environment on which we all depend.
Seeing the increasing importance and influence that banks and other businesses have had over recent decades several countries have taken policy action for responsible and sustainable financing. Sustainable and responsible investing and green financing are also rapidly becoming significant.
Fair Finance Guide International (FFGI), an international civil society network active in 11 countries, seeks to strengthen banks’ and other financial institutions’ commitment to social, environmental and human rights standards.
For this assessment, the Fair Finance Guide India coalition selected a sample of eight Indian banks (public and private). The assessment was based on 10 FFGI themes under three categories– Environment – Nature and Climate Change; Social – Labour Rights, Human Rights, Gender Equality, Financial Inclusion and Arms; Governance – Transparency and Accountability, Corruption and Tax.
Assessed banks have scored highest on the themes of Financial Inclusion followed by Corruption. Under the Environment category, almost all the banks scored zero in the themes Nature and Climate. Banks have scored low on some themes in the Social category especially Human Rights, Labour Rights and Arms.
Indian banks have an opportunity for promoting transparency to foster higher levels of trust and certainty amongst investors and the wider public, and for promoting wider economic stability. Banks can have a positive impact on the environment and reduce risks of climate change by screening for companies that are committed to protecting biodiversity, reducing their greenhouse gas emissions and supporting a low carbon economy. By taking decisions to support companies that support living wages and gender equality and those which respect human rights, banks can demonstrate their respect and support for business and human rights.
This assessment can serve as a baseline that enables the Indian banking sector to prepare itself for facing and addressing challenges of sustainability. It also provides an opportunity for Indian banks to assume the leader’s role in transforming the Indian banking sector to set a benchmark for sustainable, responsible and fair finance.
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