High-level messages on Sustainable Finance - WSBI-ESBG
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High-level messages on Sustainable Finance WSBI (World Savings and Retail Banking Group) ESBG (European Savings and Retail Banking Group) Rue Marie-Thérèse, 11 - B-1000 Brussels, Belgium ESBG Transparency Register ID 8765978796-80 February 2019
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The importance of sustainable finance
Sustainable finance has become one of the top policy priorities in banking and finance as we enter
2019; it is no different in the regional- and locally-focused savings and retail banks that WSBI-ESBG
represents in 80 countries, representing the interests of approximately 6,000 banks in all continents.
Building more sustainable economies is of utmost importance. The effects of climate change are now
being felt around the globe through increasingly severe weather patterns and natural disasters. The
impact this is having is noticeable for WSBI-ESBG member banks as well, as we are present in remote
areas, close to the people, and focus the majority of our work on SME and private household lending.
Working for a sustainable future, in particular tackling climate change and strengthening social
cohesion, is a priority for citizens, businesses and local communities in our towns and regions.
How can WSBI-ESBG members help?
Shifting to a more sustainable economy will imply important changes to key sectors such as housing,
transport and manufacturing. A successful transition to a sustainable economy will only happen if
everybody works together. Savings and retail banks are willing to bear their part to support this change.
We are fully aware that the transition to a sustainable economy implies taking into account risks,
including transition and asset risks, but also entails sustainable growth opportunities like financing
energy savings and investments in renewable energy, or funding new approaches to mobility.
Regional and locally-focused savings and retail banks provide fundamental banking services, such as
bank accounts, loans and financial advice, to their customers – primarily private households, SMEs
and local/regional communities. Based on the social tradition of our members, we are fully aware that
sustainability should integrate social as well as environmental aims. Therefore, striking a balance
between what is green and what is social is of crucial importance. We also agree that good governance
is fundamental for any sustainable economy.
What can policy makers do?
In 2019, policy makers around the world are taking into account the impact that human activities have
on the environment. The Sustainable Development Goals, the UNEP FI Principles for Responsible
Banking, and the Task Force on Climate-related Financial Disclosures (TCFD) Recommendations
have all set out frameworks that banks are encouraged to adopt, in order to sustain local development
and ensure a more sustainable future. We are supportive of achieving these goals and have published
a note on the SDGs on our website.
With this in mind, WSBI-ESBG members are following closely the EU-level Action Plan on
Sustainable Finance, including the debate on the taxonomy and sustainability ratings and research. As
our business models traditionally have been responsible and conscious of the needs of society, we are
particularly interested in policies fostering both environmental and social aims. We urge EU policy
makers to adopt measures that are applicable in a straightforward manner for the finance industry,
including a reasonable sense for the principle of proportionality. This is of crucial importance to
WSBI-ESBG’s regional- and locally-focused member banks.
Overall, we warmly welcome the objective to channel more funds into sustainable projects. This
should be done by giving true incentives to the real economy, private households and SMEs to make
sustainable solutions attractive at local, national and global levels.
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In this regard, we point out that retail banking activities are fundamentally different from wholesale
banking activities regardless of size. In addition, the differences between banking, asset management
and insurance have to be fully considered and taken into account. We therefore urge policy-makers to
design sustainable finance policies adapted to the specificities of retail banking and supportive of a
diversified banking sector. We also encourage them to adopt legislative steps in the right order. In this
respect, regarding the parallel initiatives being carried out at EU level, whose objectives have our full
support, WSBI-ESBG urges policy makers to carefully consider timelines for implementation. For
example, it is necessary to have a common understanding of what environmentally and socially
sustainable investments are before implementing compulsory requirements relating to ESG products.
Finally, we also underline that unnecessary administrative burdens should be avoided as they would
be counter-productive and hinder the market for ESG products. Legislative initiatives should always
include cost-benefit and impact analyses, pursuant to the better regulation principles, so as to ascertain
that greening the economy is fully coherent with the social aims supported by retail banks, sustaining
local communities and SMEs, which is most crucial for innovation and job creation.
At the international level, we welcome the institution of the Network of Central Banks and Supervisors
for Greening the Financial System (NGFS). The Network’s purpose is to help strengthen the global
response required to meet the goals of the Paris agreement and to enhance the role of the financial
system to manage risks and to mobilize capital for green and low-carbon investments in the broader
context of environmentally sustainable development. We nonetheless underline that the assessment
of capital buffers should be purely risk-based and capital requirements should not be detrimental to
the goal of financing a sustainable economy.
In order to connect finance with the global and the EU’s agenda for sustainable development in a
fruitful way, it is crucial to smoothly guide investors into a low-carbon future without disruptive
impacts on the whole economy and to reduce the cost of financing to raise sustainable finance. The
Commission highlighted in her supporting papers1 to the Communication ‘A Clean Planet For All’
that “climate and environmental risks should be mainstreamed in economic and financial decision-
making and the valuation of assets. Once markets and credit risk agencies will price climate risks
properly, borrowing conditions will adjust to favour sustainable investments.” ESBG welcomes such
an approach which should support the re-orientation of capital flows towards green and sustainable
investments.
What next for us?
Retail and savings banks are committed to support fully the transition to a sustainable economy. At
the same time, we trust that both international and EU decision makers know that some changes, such
as updating IT infrastructure, recalibrating risk assessments and reviewing financial advice, take time
and additional resources to implement. Furthermore, in some respect, a lack of appropriate data might
hamper the swift application of new processes. An adequate transition period and suitable
requirements and expectations during this transition period will be fundamental to cater for the
specificities of retail banking. Furthermore, some flexibility would be very much appreciated by
savings and retail financial institutions within the WSBI-ESBG membership to implement new
legislation whilst we move forward in supporting the economy to become more sustainable in the near
future.
1 European Commission “In-depth analysis in support of the Commission Communication ‘A Clean Planet
for All’ COM(2018) 773”, 28.11.2018, see page 238
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Since building up an environmental and social economy, with a strong governance at its service,
concerns us all and since a lot of effort is being required from all of us in order to transition to a more
sustainable economy, we are stretching out our arms and invite decision-makers all over the globe to
work together with WSBI-ESBG and its members. Let’s build a more sustainable future together.
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About ESBG (European Savings and Retail Banking Group)
ESBG represents the locally focused European banking sector, helping savings and retail banks in 20
European countries strengthen their unique approach that focuses on providing service to local
communities and boosting SMEs. An advocate for a proportionate approach to banking rules, ESBG
unites at EU level some 1,000 banks, which together employ 680,000 people driven to innovate at
50,000 outlets. ESBG members have total assets of €5.4 trillion, provide €500 billion in SME loans,
and serve 150 million Europeans seeking retail banking services. ESBG members are committed to
further unleash the promise of sustainable, responsible 21st century banking.
European Savings and Retail Banking Group – aisbl
Rue Marie-Thérèse, 11 ￭ B-1000 Brussels ￭ Tel: +32 2 211 11 11 ￭ Fax : +32 2 211 11 99
Info@wsbi-esbg.org ￭ www.wsbi-esbg.org
About WSBI (World Savings and Retail Banking Institute)
WSBI represents the interests of 6,000 savings and retail banks globally, with total assets of $15 trillion
and serving some 1.3 billion customers in nearly 80 countries (as of 2016). WSBI focuses on
international regulatory issues that affect the savings and retail banking industry. It supports the aims
of the G20 in achieving sustainable, inclusive, and balanced growth, and job creation, whether in
industrialised or less developed countries. WSBI favours an inclusive form of globalization that is just
and fair, supporting international efforts to advance financial access and financial usage for everyone.
Learn more at: www.wsbi-esbg.org
World Savings and Retail Banking Institute - aisbl
Rue Marie-Thérèse, 11 ￭ B-1000 Brussels ￭ Tel: +32 2 211 11 11 ￭ Fax : +32 2 211 11 99
Info@wsbi-esbg.org ￭ www.wsbi-esbg.org
Published by WSBI-ESBG. January 2019.
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