Green banking can transform sector; sustainability-driven strategies important: KPMG
July 16 2020 08:39 PM
KPMG
“There is one similarity in all global crises — they never resemble each other; they are never identical. The world has been preparing for a crisis of overproduction, but the Covid-19 pandemic created a supply and demand crisis,” the KPMG report notes.

Green banking will transform the banking market and the integration of environmental and social considerations into product design is only a matter of time, KPMG said in its ‘Qatar banking perspectives 2020’.

“There is one similarity in all global crises — they never resemble each other; they are never identical. The world has been preparing for a crisis of overproduction, but the Covid-19 pandemic created a supply and demand crisis,” the report noted.

“This crisis is also impacting the banking sector but at the same time it creates an opportunity to strengthen trust of customers by using the aforementioned tools,” noted the report authored by Janka Karsai of KPMG (Risk Advisory).

Globally, several voluntary nonfinancial reporting standards are available such as the Global Reporting Initiative (GRI). The European Union has introduced a directive on non-financial reporting which has already been implemented by the nation states, and several other countries have obliged companies to disclose their social, economic and environmental impacts in one way or another.

Combining the GRI with reporting on Sustainable Development Goals is a common practice applied by banks and together with a meaningful Stakeholder Impact Assessment can help banks to maintain sustainable success while contributing towards support of local communities.

In Qatar, the Corporate Governance (CG) reporting of banks can serve as a good pillar for future non-financial reporting as the CG frameworks cover multiple aspects of the social impacts of banks.

Economic impacts are also well-monitored as a result of sound Internal Controls Over Financial Reporting (ICOFR) frameworks; thus the focus can be easily shifted towards measuring environmental impacts of the bank and integration of the three impacts in a meaningful report.

Another large-scale initiative that will define the future of banks is the introduction of the ‘Green Banking’ concept, which means promotion of environmentally friendly practices and reducing carbon footprints from banking activities, KPMG noted.

“The way banks will financially support initiatives will be very similar to what corporate sustainable investors and investment funds are doing today: banks will pick the right initiatives with the maximum economic, environmental and social benefits while having the lowest negative economic, environmental and social impact.

“These complex decisions require new methods of assessment and implementation of new data collection procedures focusing on obtaining the highest quality data in order to take sound decisions. Banks will have to transform their internal procedures and have to introduce new roles and responsibilities. Early birds will benefit significantly from this transformation,” KPMG added.




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