Guide to banking and sustainability: Edition 2
This guide provides advice, best practices, and case studies for banks to integrate sustainability principles into their operations and services, ultimately enhancing the long-term value of their businesses.
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OVERVIEW
Chapter I: Leadership
The guide emphasises that sustainability must be driven from the highest levels of bank leadership, including boards, executive committees and senior management. Sustainability is presented as financially material, with evidence that climate disruption already costs the global economy approximately US$1.2 trillion annually, reducing global GDP by 1.6%, while action on emissions could unlock economic benefits of around US$190 billion per year by 2020. Leadership is expected to integrate environmental and social considerations into long-term strategy, governance and culture. Risks of inaction include higher credit and reputational risk, loss of investor confidence, and unpreparedness for regulatory change. Leaders are encouraged to communicate clear priorities, embed accountability structures such as sustainability committees, and align incentives with sustainability outcomes.
Chapter II: Sustainability
This chapter focuses on the role of dedicated sustainability teams and committees as drivers of strategy, integration and performance monitoring. Sustainability teams act as change agents until sustainability is fully embedded across banking functions. The guide highlights that effective sustainability management balances environmental and social impacts with revenue generation, cost efficiency and brand value. Practical examples show banks aligning sustainability strategies with core business objectives, such as setting quantified environmental finance targets (for example, Citi’s US$100 billion environmental finance goal). Banks are encouraged to move beyond compliance and integrate sustainability into business decision-making across all markets.
Chapter III: Risk
Sustainability-related risks are framed as core banking risks rather than peripheral issues. Environmental and social risks are increasingly recognised by regulators and should be embedded within standard risk assessment, credit processes and risk appetite frameworks, in line with Basel III principles. Evidence from European banking assessments shows that while ESG risk identification is improving, integration into lending and investment decisions remains insufficient. The guide recommends systematic identification, quantification and management of environmental and social risks, particularly in high-risk sectors, to protect asset values over the short and long term.
Chapter IV: Legal
Legal teams are expected to support sustainability integration by managing regulatory, liability and compliance risks linked to environmental and social issues. The guide highlights growing legal exposure associated with climate change, human rights and environmental harm. Proactive legal oversight can help banks anticipate regulatory developments, support policy alignment and reduce litigation and reputational risks. Banks are encouraged to align internal policies with international frameworks and evolving national regulations.
Chapter V: Corporate banking
Corporate and investment banking teams play a critical role in financing the transition to a low-carbon and inclusive economy. Market evidence shows rapid growth in clean energy investment, reaching approximately US$329 billion globally in 2015. At the same time, fossil fuel divestment commitments exceeded US$3.4 trillion by more than 500 institutions by 2015. The guide highlights both transition risks, such as stranded assets, and opportunities in renewable energy, sustainable infrastructure and green bonds. Banks are encouraged to develop products and services that support clients’ sustainability transitions while maintaining competitiveness.
Chapter VI: Retail banking
Retail banking is positioned as a key channel for influencing consumer behaviour and supporting financial inclusion. Sustainability considerations include responsible lending, inclusive access to financial services and environmentally efficient operations. The guide encourages retail banks to design products that support social outcomes while managing affordability and consumer protection risks.
Chapter VII: Communications
Effective communication is critical to embedding sustainability internally and externally. The guide highlights integrated reporting as a best practice, enabling banks to link financial performance with environmental, social and governance outcomes. Transparent, consistent disclosure supports stakeholder trust and improves internal understanding of sustainability performance.
Chapter VIII: Human resources
Human resources functions are responsible for embedding sustainability into organisational culture through recruitment, training, incentives and performance management. Leadership commitment, staff engagement and aligned reward structures are identified as essential enablers of long-term change.
Chapter IX: General services
General services contribute through operational efficiency, including reductions in energy use, emissions, waste and water consumption. Operational improvements support cost savings and credibility while reinforcing the bank’s broader sustainability strategy.
