sustainable finance framework

The UK’s foremost standards body, the BSI, has released what it labels a “pioneering” framework to help organisations embed the principles of sustainable finance into their business processes.

The framework, or so-called Publicly Available Specifications (PAS), is launched in collaboration with the finance sector and UK government and kick-starts the BSI’s five-year Sustainable Finance Standardisation Programme.

The PAS, defined as a fast-track industry-wide standard to meet an immediate market need, is designed to enable firms to better align with global initiatives including the United Nation’s Sustainable Development Goals (UN SDGs) and the Paris Climate Agreement. Growing awareness of the urgent need to address global sustainability issues has driven increasing numbers of financial institutions to integrate environmental, social and governance issues into investment and ownership decisions.

The free to download framework has been produced by a steering group including Lloyds Banking Group, the UK Sustainable Investment and Finance Association, the Principles for Responsible Investment and asset manager WHEB Group. It offers a set of principles to help organisations develop and maximise opportunities that address sustainability challenges such as poverty, inequality, climate change, environmental degradation, prosperity, peace and justice.

The document, which builds on the UK’s green finance target to move to a low carbon economy, outlines how a firm can understand what successful sustainable finance practices and activities might look like and how to apply them in order to embed sustainable finance in their policies, processes, products, services and value chains. The second PAS in the programme is currently under development and will focus on responsible and sustainable investment management.

Responses invited

Available for public comment until 28 February 2020, the PAS draft is considering material factors such as ESG considerations on financial risks and returns in the context of creating sustainable long-term value.

A third PAS is also being planned, focussing on sustainable finance products and funds.

Scott Steedman, director of standards at BSI, said its first PAS follows widespread challenges within the financial services community in aligning with sustainability movements as each organisation interprets and responds to the goals in their own unique way.

“Bringing together government and industry, we have helped to establish best practice with the publication of the first framework standard for embedding the principles of sustainable finance in financial services organisations,” he said.

“This is the first of three standards projects to be published by BSI as Publicly Available Specifications and it provides the foundation for a harmonised global approach to sustainable finance.” 

Kwasi Kwarteng, Minister of State for Business, Energy and Clean Growth, added: “Transforming our financial system for a greener future is vital as we protect the planet and move towards net zero while growing our economy.

“Building on our Green Finance Strategy, this guide will help the UK financial services sector become more sustainable and promote the global spread of sustainable finance, as the UK continues to lead the world in tackling climate change.”

Last Updated: 31 January 2020
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