The European Commission commemorates the creation of the Principles for Responsible Banking
The European Commission has warmly received the Principles for Responsible Banking. The vice president of the European Commission applauded this UN-sponsored initiative, which BBVA has actively championed since its inception. “It is truly encouraging to witness this initiative. Now is the time to implement them and truly scale up in sustainable finance. We need European banks to lead the way,” explained Valdis Dombrovskis, vice president of the European Commission, at a European Banking Federation forum held on February 5 in Brussels.
BBVA's global head of Responsible Business, Antoni Ballabriga, used the event to share his opinion about the perspective the financial industry ought to have. “We need to re-imagine the role of banking, define its purpose, and transform it into what society needs. Banks need to guide their clients towards sustainability and a low-carbon economy.”
The initiative “has involved developing a framework that accommodates everyone, despite the vast differences of the participating banks, which come from different contexts and cultures,” Ballabriga, who also chairs the European Banking Federation (EBF) Sustainable Finance Working Group, pointed out.
“At the European Banking Federation, we are very proud to be one of the first organizations to support the Principles for Responsible Banking,” the organization's CEO, Wim Mijs, said in his opening remarks at the forum. According to Mijs, the Principles act as a compass and reference point for all those banks that are committed to the campaign for sustainability. “They are not merely pretty words. The Principles require long-term goal-setting, suitable governance, and independently verified transparency in their execution,” he explained.
The leading representative of the European Banking Federation also took advantage of the occasion to encourage those banks that have not yet signed up to the Principles to join the initiative led by the United Nations.
One of the forum’s main outcomes was the ratification of the Principles as the financial sector's response to the issue of climate change and the need for sustainable development. To this end, it was proclaimed that a global consortium was needed to mobilize sustainable financing, worldwide.
Forum participants included other European banks that have signed up to the Principles of Responsible Banking (Barclays, ING, Nordea, BNP Paribas, Banco Santander, and Société Générale, Piraeus Bank) as well as European regulators and supervisors.
The power of banks to make a difference does not merely sit with channeling funds, pointed out Martin Spolc, Head of the Sustainable Finance and Fintech unit in the European Commission's Directorate General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA). It’s essential to remember that success will depend on implementation. “Banks have to maintain the momentum behind their current ambition, to mobilize their clients and exploit synergies with the fintech sector.” Fintech is a sector that can do a lot for sustainability. For example, blockchain technology releases the potential to simplify the intricate processes between the various intermediaries.
The financial industry has never assumed as much responsibility as it has now
For her part, Slavka Eley, Head of Banking Markets, Innovation, and Products at the European Banking Authority, stated that “the Principles are truly pertinent to financial stability because they can reinforce a long-term view when banks are making decisions, thus playing a key role in mitigating the risks associated with transitioning to an anti-climate change approach.”
BBVA – with its Turkish subsidiary, Garanti – began to work on the Principles three years ago alongside 250 other financial institutions, of whom 120 were banks. BBVA has also kicked off many other initiatives to fight climate change such as its Pledge 2025, an eight-year project that aims to mobilize 100 billion euros to bolster sustainable development.
The financial industry has never assumed as much responsibility as it has now; so, it must take advantage of the window of opportunity that such initiatives provide. The world has reached a point of no return in regard to climate change, and the banking sector has a fundamental role to play: to be the key entities that channel funds. To this end, they must focus their business model on sustainability, positioning people at the center of their business activities.