• Monday, December 04, 2023
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Banks to enjoy improved brand reputation for adopting sustainability principles



One of the benefits derivable for complying with the Nigerian Sustainable Banking Principles (NSBP) by Deposit Money Banks (DMB) is improved brand reputation.

Other benefits include better innovation and product offering, improved perception of how well the company is managed, increased competitive advantage and reduced costs due to energy efficiency.

Making a presentation on “Implementing Sustainable Banking Principles in the Nigerian Financial Sector – a focus on Risk Management” at the quarterly roundtable and training workshop for Risk Managers Association of Nigeria (RIMAN) held in Lagos recently, Thomas Frénéhard of GRC Solution Management, said “companies that have put in place a sustainability approach have noted significant benefits that I would like to highlight here: Improved brand reputation (in the lights of Base III, this can only be positive), better innovation and product offering (so there is a competitive advantage), improved perception of how well the company is managed (influences the clients of course, but also the investors and the regulator).”

The Bankers’ Committee, as a commitment to sustainable development, adopted the Nigerian Sustainable Principles and the accompanying three sector guidelines on Agriculture, Power, and Oil and Gas in July 2012. The adoption, according to the CBN, of the principles means the integration of social and environmental consideration into its operations, policies, processes, procedures and strategies, as well as provision of structural mechanism to support implementation at the industry level.

Quoting from International Finance Corporation, he said: “Sustainability is about ensuring long-term business success while contributing towards economic and social development, a healthy environment and a stable society.”

According to the Central Bank of Nigeria’s (CBN) sustainable banking principles, each bank will need to develop an environmental and social management system that incorporates the principles and balances the identification of environmental and social risk and opportunities. The degree and level of environmental and social management should be commensurate with the scale and scope of a bank’s business activities and business operations.

The nine sustainable banking principles include – Business Activities: Environmental and Social Risk Management; Business Operations: Environmental and Social Footprint, Human Rights, Women’s Economic Empowerment, Financial Inclusion, E&S Governance, Capacity Building, Collaborative Partnerships, and Reporting.

Potential outcomes of sustainable banking principles, according to Carey Bohjanen, managing director/CEO, Sustainable Finance Advisory, include move the banking sector as one to drive development that is economically viable, but socially relevant and environmentally responsible, enhanced collaboration and co-operation between the banks to achieve transformational change, consistency with international standards and good practice, signalling enhanced governance, leading the way: for banks in Africa and beyond as well as other sectors.

Bohjanen, who made a presentation on “The Nigerian Sustainable Banking Principles,” tasked risk managers on leadership role and opportunity to work closely with sustainability champions.

However, Frenehard listed the challenges faced by stakeholders in the Sustainable Banking Prink Principles to include outdated, unreliable and inconsistent information, inability to meet corporate objectives and stakeholders’ oversight expectations, crisis driven, reactive and unreliable review and monitoring processes, information can’t be aggregated and reported, practices and tools are not standardised – collaboration is impossible, and high cost of control, no use of analytics or continuous monitoring.

Speaking with journalists shortly after the roundtable, Gregory Jobome, president of RIMAN, explained that “RIMAN is an organisation that has been in Nigeria for 10 years.

“In this 10 years, we have been training people, year in year out and a forum such as this is an evidence to how we are building capacity on our people to take the practice forward. We are going to do a lot more of it. As you know, risk management has become far more important than they used to be even five years ago, a lot more investment in training in risk management in particular is happening right now and we are at the fore front of driving that in the Nigerian economy.”