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The latest RBS International Banking Brief event focused on working together to tackle the climate crisis, and how business can drive change.
If there’s one thing the Covid-19 pandemic has taught us, it’s that working alone to find and deliver solutions to complex global problems tends to be less effective than working together. When challenges cross borders, affect all sectors and impact all layers of society, a co-ordinated and concerted approach is vital. As global leaders said, when they signed a letter calling for a more joined-up approach to the next pandemic, “nobody is safe until everyone is safe”.
RBS International recently hosted a Banking Brief webinar looking at the importance of collaboration to tackle the urgent climate crisis now facing us. Hosted by Sharyn Jaques, sustainability lead for institutional banking at RBS International, the event brought together two big hitters to discuss how important it is to foster collaboration within and between organisations.
The next decade
David Postlethwaite, head of strategic projects at Jersey Finance, pointed out that the Channel Island has led the way on embedding many of the core emerging principles guiding a more sustainable investment ecosystem.
“Jersey’s had a strong reputation as a future-focused jurisdiction for a long time now, thanks to the progressive regulatory framework and enlightened approach to global standards on AML [anti-money laundering] and so on. So that’s a good place to start,” he said.
For the past 18 months Postlethwaite has spearheaded a new project aimed at bringing all of Jersey’s key players into the efforts to embed sustainability into the financial services and investment ecosystem.
“Each sector has its own challenges but there are some basic principles that apply: it means putting collaboration as a priority, especially within the organisation. And where I’ve seen it working best, all internal teams are involved”
Gustavo Brianza, managing director, ESG Advisory, Debt Advisory, NatWest Group
“As representatives of the industry we’d spotted the convergence of some global megatrends accelerated by Covid,” he explained. “And they all point to some fundamental shifts in the global financial system in the next view years: a greater focus on ESG [environmental, social and governance], more social demands for fairness, and more regulatory and policy initiatives that aim to take high-level accords such as Paris and turn them into real tangible impacts.”
Consequently, Postlethwaite explained, Jersey Finance decided a joined-up, collaborative approach was needed, one that brought on board industry participants, politicians, trade bodies and others to produce a coherent and robust plan for the next decade.
“We started to sketch out a strong, collective vision for Jersey’s future that distils all that into a 10-year plan.”
The result is Jersey for Good, launched in March 2021, which makes clear the steps Jersey will take towards supporting the transition to a low-carbon economy.
“The ambition is to have Jersey recognised as the leading IFC [international finance centre] in the markets we serve,” he said. “That moves us away from the idea of sustainable finance as a niche product and more towards a fully embedded and natural part of the financial services landscape.”
The plan aims for some quick wins – largely through training and guidance for members – alongside building momentum towards real change. “The longer-term actions are really important too; that’s about leveraging our existing strengths. So how can our well-developed capital market infrastructure help drive change and support more green bonds, for instance?”
A framework to collaborate
Central to the plan’s success will be collaboration and a willingness to address the big challenges collectively.
“It’s so important to get buy-in from all the stakeholders and instil a common sense of ownership around the strategy,” Postlethwaite explained, pointing out that Jersey for Good’s governance structure provides a framework to collaborate and to remain flexible enough to spot risks and opportunities before they arise.
“There’s a lot going on and the only way to really drive systemic change is through strong collaboration with all your stakeholders.”
It’s a principle that Gustavo Brianza, managing director, ESG Advisory, NatWest Group, fully recognises from his work in the funds space. Working across sectors, Brianza says many of the same issues raise their heads when businesses aim to make progress in the ESG space.
“Each sector has its own challenges but there are some basic principles that apply: it means putting collaboration as a priority, especially within the organisation. And where I’ve seen it working best, all internal teams are involved; strategy and planning is aligned to sustainable goals, and every head of each business unit is brought on board to set the strategy.”
Some funds find different aspects of ESG easier to implement, Brianza pointed out. “While governance may lend itself to a more generic approach, environmental impacts are harder to standardise and measure,” he said, explaining that setting up an effective working group at the beginning can foster a more collaborative approach further down the line.
“When there’s clarity of ownership you can avoid people creating their own mandates and duplication of effort, so we work closely with our clients to help that.”
The most effective adopters of consistent and robust ESG strategies also tend to engage with the right external help and focus on benchmarking their own performance by looking at the best external arbiters, added Brianza.
“They also communicate effectively: strategy is useful but the last thing you want is for people to misunderstand why you’re following it. So, explain the rationale and what it means for the business.”
With the UN climate change conference COP26 on the horizon later in the year, the bank is pushing ESG further up the agenda and making its voice heard. “As a key partner for that event, we know how important it is. The purpose-led strategy that we announced in 2020 has three key pillars: climate, enterprise and learning, which has helped us cement climate into everything we do,” said Jaques.
A series of targets has emerged from that, with the bank aiming to be climate-positive by 2025. “There’s lots of work to do, but it’s the right thing to do and we feel we’ve got both the opportunity and the obligation to help the transition to a low-carbon economy.”