Financial institutions advised on spending for environment, human rights

Chief risk officers and banking managers of 26 commercial banks and the executive team of the State Bank of Pakistan came together to develop a comprehensive understanding of the Financial Finance Guide International (FFGI) methodology on Saturday.

The FFGI Methodology assesses financial institutions’ approach to sustainability across 21 themes. Financial institutions in Pakistan are evolving to meet the environmental, social and governance (ESG) criteria, however, currently their policies remain silent on the scope and measures to limit ESG-related risks based on the international standards defined by the FFGI methodology.

Pakistani commercial banks have gaps in content and scope of policy commitments in their internal operations and the companies they invest in or finance. The purpose of the meeting was to make sure that financial institutions bring their policies and measurable due diligence protocols for the investee companies in the public domain to maintain transparency.

The information will build an understanding of the depositors to know how their money is contributing to environmental and economic growth in Pakistan. The meeting was organised by the Fair Finance Pakistan, which is a member of Fair Finance Asia and Fair Finance International and seeks to strengthen the commitment of financial institutions in Pakistan to social, environmental and human rights standards.

The FFGI methodology is active in 36 countries of Asia, Europe, Latin America and refers to over 422 international standards and criteria including Equator Principles, International Labour Organization and Organization for Economic Corporation and Development guidelines, UN Guiding Principles on Business and Human Rights to assess financial institutions across a range of themes including corruption, nature, climate change, gender available in the public domain.

The methodology comprehensively explains whether financial institutions have measurable action plans and agree on due diligence for companies they invest in or finance. The FFGI methodology assesses whether financial institutions have checklists in place to evaluate if the investee companies have fair tax practices and fulfil all income tax requirements, and whether or not the companies ensure minimum wages in labour practices.

The methodology also assesses if financial institutions have measures to ensure company policies are in place to reduce emissions in their production phase and utilise necessary technology to reduce fumes in the air. Financial institutions' role is central to reducing air pollution.

Banking sector leaders from public and private sector banks including HBL, Allied Bank, UBL, MCB, Meezan, National Bank of Pakistan, Askari Bank, Bank of Punjab, Sindh Bank, Standard Chartered, Samba, JS Bank, Al Barkah, Al Habib, Bank Alfalah, Bank Islami, Bank Makramah, Bank of Khyber, Dubai Islamic, Faysal Bank, First Women bank, Habib Metropolitan, MCB Islamic Bank, Silk Bank, Sindh Bank, Zarai Taraqiati bank attended the meeting.