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PILLARS
Indicators for global benchmarking of sustainable finance
ESG INTEGRATION Governance of E&S
  • Role of governing bodies on E&S

    BangladeshBrazilCambodiaChinaColombiaEcuadorGeorgiaIndonesiaKenyaMexicoMongoliaMoroccoNepalNigeriaPakistanPanamaParaguayPeruSouth AfricaSri LankaTurkeyVietnam

    Does the country policy require one of the FI’s governing bodies (e.g., Board of Directors, Executive Committee, Supervisory Board, etc.) to approve an E&S strategy?

    Answer Source Reference
    • (1) - Page 2 - 1.1.

    • (2) - Art.10

    • N/A

    • (1) - Chapter II, 6-9 (3) - I. (2.7.1 and 2.7.2)

    • (2) - CONSIDERACIONES DE POLÍTICA Y GOBIERNO CORPORATIVO

    • N/A

    • (2) - CG code for banks - Art 17. Risk Management - 13) p.19

    • (2) - page 7 - Article 4 (4)

    • (1) : Principle 4 - page 30 (§2) and 32 (risk policies)

    • (1) - Page 7 - Pilar estratégico #1

    • (9) - Policy implementation - p.11 and p.12 and Changes to the Policy - p.16

    • N/A

    • N/A

    • (1) - page 5, §1 "Set the tone from the top"

    • (1) - 2,1 §i p4

    • (2) - page 4 - 1. Governanza

    • (1) - Page 11 & 12 - 9.2.1. Responsabilidad del Directorio

    • (1) - Page 4 - Article 5°

    • (4) Principle 3 - 14.d

    • N/A

    • N/A

    • (1) - V. 3.

    Does the policy require management to report on E&S strategy implementation to the governing bodies?

    Answer Source Reference
    • (1) - Page 2 - 1.1.

    • (2) - Art.10

    • N/A

    • (1) - Chapter II, 8. (page 2) (3) - 2.7.1 – 2.7.3 Responsibility of the Board of Directors, FI audit, 2.8.1-2.8.6 Responsibilities of the senior management

    • (2) - CONSIDERACIONES DE POLÍTICA Y GOBIERNO CORPORATIVO

    • N/A

    • N/A

    • (2) - page 21 - II - A -4. a & b

    • N/A

    • N/A

    • (1) - Principle 7 - Demonstrating progress - p.24

    • N/A

    • N/A

    • (1) - Principle 6 page 25, 1st line of tab "Demonstrating progress"

    • (1) - 2,2 §ii p4

    • (2) - page 4 - 1. Governanza

    • (1) - Page 12 - 9.2.2.6

    • (1) - Page 4 - Article 5°

    • (4) Principle 8 - 43.e & Principle 10 -78, 97

    • N/A

    • N/A

    • N/A

    Does the policy require FI operational bodies to report to the governing bodies (or specific Board committee) on implementation of the E&S strategy?

    Answer Source Reference
    • (2) - Page 13 - B.

    • N/A

    • N/A

    • (3) - 2.7.3 Responsibility of the Board of Directors, FI audit

    • N/A

    • N/A

    • N/A

    • N/A

    • (1) : Principle 3 - page 32 (Risk Policies)

    • N/A

    • (9) - Policy implementation - Monitoring and Reporting - p.12

    • N/A

    • N/A

    • N/A

    • N/A

    • N/A

    • N/A

    • N/A

    • N/A

    • N/A

    • N/A

    • N/A

  • Organization

    BangladeshBrazilCambodiaChinaColombiaEcuadorGeorgiaIndonesiaKenyaMexicoMongoliaMoroccoNepalNigeriaPakistanPanamaParaguayPeruSouth AfricaSri LankaTurkeyVietnam

    Does the framework ask FIs to define E&S roles and responsibilities?

    Answer Source Reference
    • (1) - Page 2 - 1.1.

    • (2) - Art. 3

    • (2) - Page 5 - 1.5.

    • (1) - Chapter II, 9. (page 2) (3) 2.9.1 -2.9.3 Dedicated officer and department

    • (2) - Estructura Requerida

    • (1) - Page 2 - Estrategia 3

    • N/A

    • (2) - page 22 - II. A. 5. a.

    • (1) : Principle 3 - page 29 (§1)

    • N/A

    • (9) - Policy implementation - Governance structure - p.13

    • N/A

    • 7.2 (p13)

    • (1) - page 5, §6 "Define clear E&S governance structures" and §8 "Build and maintain sufficient institutional capacity"; Principle 6 page 24 §5 " Establish E&S governance responsibility"; Principle 7 page 26, §5 "Identify relevant roles and responsibilities for delivery against Sustainable Banking commitments"

    • (1) - 2 p4 and 5

    • N/A

    • (1) - Page 9 - Articulo 7°

    • (1) - Page 4 - Article 7°

    • (4) Principle 8 -39

    • (1) 3.2.2 ESG Risk Management (2) Sri Lankan Sustainable Banking Principles - Principle 5 - https://sustainablebanking.lk/industry-guiding-principles

    • (1) - page 14 - paragraph 6

    • (3) – 2. Credit organizations – b)

    Does the framework highlight the E&S roles of front office staff and second lines of defense (e.g. risk officers and/or compliance officers)?

    Answer Source Reference
    • (2) - Page 13 - B.

    • N/A

    • N/A

    • (3) - 3.14.4 & 3.14.5 Capacity and 4.16.2

    • N/A

    • N/A

    • N/A

    • N/A

    • (1) : HR policies - page 32 (§2)

    • N/A

    • (9) - Policy implementation - Governance structure - p.14

    • N/A

    • 7.2 (p13)

    • (1) - Principle 6, page 25, row 2

    • (1) - 2.2 §vi p5

    • N/A

    • N/A

    • (1) - Page 4 - Article 7°

    • N/A

    • N/A

    • N/A

    • N/A

    Does the framework ask FIs to define E&S competencies for each role?

    Answer Source Reference
    • N/A

    • N/A

    • N/A

    • N/A

    • N/A

    • N/A

    • N/A

    • (2) - page 22 - II. A. 5. b.

    • N/A

    • N/A

    • N/A

    • N/A

    • N/A

    • (1) - Principle 7 page 26, §1 "What does this Principle mean?"

    • (1) - 2.3 §i p5

    • N/A

    • N/A

    • (1) - Page 4 - Article 7°

    • N/A

    • N/A

    • N/A

    • N/A

Source Reference
(1) - Page 2 - 1.1.

Policy Guidelines for Green Banking - Page 2 - 1.1.

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(2) - Art.10

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(1) - Chapter II, 6-9 (3) - I. (2.7.1 and 2.7.2)

Is it admitted that the "green credit strategy" is similar to the "E&S strategy? "Banks’ Board of Directors or Council shall promote concepts related to green credit including resource efficiency, environmental protection and sustainable development, emphasize banks’ role in contributing to the comprehensive, balanced and sustainable social and economic development, and develop a sustainable business model that allows win-win for banks and the society at large." "Banks’ Board of Directors or Council is responsible for defining its green credit growth strategy, approves banks’ green credit targets and reports that are developed by senior management, monitors and evaluates banks’ implementation of the green credit growth strategy"

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(2) - CONSIDERACIONES DE POLÍTICA Y GOBIERNO CORPORATIVO

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(2) - CG code for banks - Art 17. Risk Management - 13) p.19

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(2) - page 7 - Article 4 (4)

Sustainable Finance Action Plan shall be prepared by board of director and approved by board of commissioner.

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(1) : Principle 4 - page 30 (§2) and 32 (risk policies)

Sustainable Finance Guiding Principles : Principle 4 - page 30 (§2) and 32 (risk policies)

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(1) - Page 7 - Pilar estratégico #1

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(9) - Policy implementation - p.11 and p.12 and Changes to the Policy - p.16

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(1) - page 5, §1 "Set the tone from the top"

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(1) - 2,1 §i p4

The Board of Directors (BoDs) of banks/DFIs should accept overall responsibility of green banking and develop Green Banking Policy of their respective institutions.

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(2) - page 4 - 1. Governanza

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(1) - Page 11 & 12 - 9.2.1. Responsabilidad del Directorio

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(1) - Page 4 - Article 5°

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(4) Principle 3 - 14.d

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(1) - V. 3.

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(1) - Page 2 - 1.1.

Policy Guidelines for Green Banking - Page 2 - 1.1.

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(2) - Art.10

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(1) - Chapter II, 8. (page 2) (3) - 2.7.1 – 2.7.3 Responsibility of the Board of Directors, FI audit, 2.8.1-2.8.6 Responsibilities of the senior management

"Banks’ senior management shall […] provide annual report on green credit performances to the Board or Council, and report to regulators" "KPI 2.7.3 (1) The board of directors shall put forward report requirements on the management team, and identify report duties undertaken by the management team according to the green credit strategy and objectives approved by the board of directors. " KPI 2.8.6:" Regularly (at least annually) report to the board on the implementation of green credit strategy. "

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(2) - CONSIDERACIONES DE POLÍTICA Y GOBIERNO CORPORATIVO

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(2) - page 21 - II - A -4. a & b

Description on Board of Directors that must include: a. policy to respond challenges in keeping up with the sustainability strategy, that must cover at least the following:

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(1) - Principle 7 - Demonstrating progress - p.24

Providing internal reports to senior and/or strategic decision making bodies within the Bank

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(1) - Principle 6 page 25, 1st line of tab "Demonstrating progress"

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(1) - 2,2 §ii p4

The senior management should develop strategies, administrative procedures and accountability mechanisms for implementation of Green Banking Policy approved by the Board.

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(2) - page 4 - 1. Governanza

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(1) - Page 12 - 9.2.2.6

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(1) - Page 4 - Article 5°

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(4) Principle 8 - 43.e & Principle 10 -78, 97

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(2) - Page 13 - B.

Guidelines on E&S Risk Management - Page 13 - B.

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(3) - 2.7.3 Responsibility of the Board of Directors, FI audit

"KPI 2.7.3 (3) The audit committee of the board of directors shall carry out special audits on typical projects by random selection on environmental and social risks management by hiring the third party audit institution or entrusting the internal audit department of the bank."

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(1) : Principle 3 - page 32 (Risk Policies)

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(9) - Policy implementation - Monitoring and Reporting - p.12

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(1) - Page 2 - 1.1.

Policy Guidelines for Green Banking - Page 2 - 1.1.

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(2) - Art. 3

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(2) - Page 5 - 1.5.

Implementation Guidelines V4 - Page 5 - 1.5.

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(1) - Chapter II, 9. (page 2) (3) 2.9.1 -2.9.3 Dedicated officer and department

"Banks’ senior management shall identify a senior manager and a department to lead and manage green credit related work and provide necessary resources. If necessary, a cross-function green credit committee may be established to coordinate. "

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(2) - Estructura Requerida

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(1) - Page 2 - Estrategia 3

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(2) - page 22 - II. A. 5. a.

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(1) : Principle 3 - page 29 (§1)

Sustainable Finance Guiding Principles : Principle 3 - page 29 (§1)

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(9) - Policy implementation - Governance structure - p.13

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7.2 (p13)

For an ESMS to function properly, it is essential that roles and responsibilities for implementing procedures and making decisions are clearly defined.

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(1) - page 5, §6 "Define clear E&S governance structures" and §8 "Build and maintain sufficient institutional capacity"; Principle 6 page 24 §5 " Establish E&S governance responsibility"; Principle 7 page 26, §5 "Identify relevant roles and responsibilities for delivery against Sustainable Banking commitments"

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(1) - 2 p4 and 5

Chapter 2 Responsibilities, Management and Organization

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(1) - Page 9 - Articulo 7°

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(1) - Page 4 - Article 7°

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(4) Principle 8 -39

Only asked to define a governance

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(1) 3.2.2 ESG Risk Management (2) Sri Lankan Sustainable Banking Principles - Principle 5 - https://sustainablebanking.lk/industry-guiding-principles

Establish E&S governance responsibility, including clear lines of responsibility and accountability Incorporate ESG to corporate governance especially by defining roles and responsibilities of the board and senior management with regard to ESG issue

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(1) - page 14 - paragraph 6

Sustainability Guidelines for the Banking Sector - page 14 - paragraph 6

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(3) – 2. Credit organizations – b)

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(2) - Page 13 - B.

Guidelines on E&S Risk Management - Page 13 - B.

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(3) - 3.14.4 & 3.14.5 Capacity and 4.16.2

KPI 3.14.5: "(3)To establish a “cross-line” team which can enhance the environmental and social performance of the institution. The members shall include personnel from public relationships, risk management, company line and credit management line." KPI 4.16.2: "To make sure that the employees engaged in project compliance examination have sufficient knowledge and experience, or when necessary, with the help from experts to make proper judgment on the requirements of formal and substantial compliance of the project whom credit will be granted. "

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(1) : HR policies - page 32 (§2)

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(9) - Policy implementation - Governance structure - p.14

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7.2 (p13)

Role description of: relationship managers, credit risk managers/officers, legal department and credit authority.

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(1) - Principle 6, page 25, row 2

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(1) - 2.2 §vi p5

Audit & Compliance: Green banking is to be incorporated in the scope of compliance and routine internal controls. Appropriate walls should be established between internal audit function and units/lines (and their management) involved in any day-to-day green banking activities to ensure its independence. Specific green banking related checklists should be developed and made part of internal audit reports for each branch and head office unit.

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(1) - Page 4 - Article 7°

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(2) - page 22 - II. A. 5. b.

a. description of tasks performed by Board of Directors and Board of Commissioners, employee, official and/or work unit responsible for the application of Sustainable Finance; b. elaboration on competence development for members of Board of Directors and Boards of Commissioners, employee, official and/or work unit responsible for the application of Sustainable Finance;

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(1) - Principle 7 page 26, §1 "What does this Principle mean?"

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(1) - 2.3 §i p5

The Green Banking Officer should be well versed with environmental risk assessment and monitoring, green product development, and operational improvement measures to reduce resource consumption.

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(1) - Page 4 - Article 7°

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