Over 500 participants from 40 countries and territories registered for the webinar on “Climate Transition: A Roadmap for Banks in Emerging Markets” organized by the Asian Bankers Association (ABA) and auctusESG on 3 September 2024.
(1) Aspiration includes contextualizing the landscape in which banks are operating, assessing the risk of delayed action, creating a business case, convincing the Board, setting the bank’s goals and setting a menu of available resources required to achieve the goals. The idea is to establish a long-term protection of net profit margin in line with changes in the bank’s portfolio.
(2) Initiatives includes setting internal policies, implementing exclusionary screening to modify portfolios, creating a baseline assessment and quantifying the climate risk. At this point, the quantification will allow Target setting based on time and priorities. Finally, at the Initiative stage, banks will need to integrate instruments of climate risk such as bonds.
(3) Evaluation is the quantifiable area of the strategy where setting the metrics and coverage of the new strategy will be established. At this stage, reviews of short-term and long-term progress are necessary for obvious reasons. The reviews need to be aligned with the bank’s current resources. The last step in this area is Setting the trade-off that refers for the short-term impact of implementing the new policies.
(4) Responsibility establishes the organization’s structures and accountability mechanism. At the internal level of the bank, Executive remuneration; and culture and capacity need to be aligned. KPI are set and new hierarchies inside the bank might be needed. The bank culture needs to be educated to include climate change in their modus operandi.
(5) Engagement is about communicating and cooperating with regulators, borrowers, capital market investors and other social players, including scientists.
To conclude his presentation, Mr. Aiyer presented 10 basic recommendations to banks in emerging markets. These recommendations ranged from whether climate goals and net zero are relevant to the bank up to what is the carbon footprint of the bank’s operations. Finally, he shared a Checklist that banks can use to start methodically a climate change implementation in their respective operations.
After Mr. Aiyer’a presentation, four distinguished experts joined the panel discussion. These included Adheesha Perera, Head of Sustainability, Union Bank of Colombo; Anjalee Tarapore, Executive Vice President, ESG, HDFC Bank; Manish Kumar, Head-ESG & CSR, ICICI Bank and Siloshini Naidoo, Head ESG, Development Bank of South Africa. They expressed their opinions and observations about the report, its operational implications, as well as the practical issues that they face in their bank’s operation vis-à-vis the new climate change policies.
A video recording of the webinar can be viewed at the ABA YouTube HERE.
