Nigerian banks’approach to sustainability

Globally, sustainable business practice has become a topical issue as it raises concerns for today’s economic survival and assurance of continuity tomorrow. CHIJIOKE NELSON and LUCKY ORIOHA, examine banks’ strides in sustainability.

FROM the 1968 United Nations’ Biosphere Conference, Paris, to 2007, when Australia signed the Kyoto Protocol on climate, the word “sustainability” has elicited no fewer than 27 international conferences that require ratification and domestication by individual countries and some corporate organisations.

In 2012, the Central Bank of Nigeria (CBN) brought home the sustainable principle, when it unveiled a guideline for the nation’s deposit money banks to key into its overaching nine principles- one of which bothered on banks’ relationship with the environment it operates, the customers and profit motives.

The initiative, which is aimed at fostering inclusive development, is defined as the development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

It is about “live and let others live”.  In banking particularly, when they think of their operations as a system, it is possible for them to understand that their activities affect the quality of lives, the economy as a whole and their very existence.

Put simply, their operations could be likened to the spray of either a fragrance for fresh air or gas emissions with dire consequences.

Banks have a strong role to play in promoting sustainability in the system through trade facilitation, which involves evolving new lending criteria and product innovation.

According to a report by Global Trade Review (GTR), there are drivers to sustainable businesses by banks, with particular reference to trade facilitation- innovative finance and bank initiatives, with increasingly stringent sustainability requirements becoming a condition for importers and exporters to secure financing.

Bisi-Onasanya

For the First Bank of Nigeria, the process of consciously embedding sustainability in the financial institution, which started in May 2013, included training over 350 employees as well as executive management and the board members through workshops conducted both internally and externally, as part of awareness, using also the “train-the-trainer” approach to sustainability.

“This resulted in the sustainability strategy and opportunities to drive business and sustainability benefits. The FirstBank sustainability strategy is designed to deliver value in a structured way along four key areas.

“Driving sustainable finance– our customers remain a vital element of our business. We constantly seek responsible ways in providing products and services to meet their needs while ensuring that we manage our environmental and social impacts in the process, thus, contributing to the overall sustainable growth and development.

“Empowering people make us committed to growing ethical people, providing opportunities and the appropriate environment and culture for personal and organizational development; supporting our communities, as we invest our time and resources as part of our community development responsibilities to enrich the communities in which we work and live; and contributing to environmental sustainability as we are committed to avoiding or minimizing environmental impacts beyond our responsible lending efforts,” the Managing Director and Chief Executive Officer of the bank, Bisi Onasanya, said.

He pointed out that two key categories of opportunities were identified- opportunities to drive value- specific projects focused on delivering business and stakeholder benefits (financial literacy projects, energy reduction, resource efficiency, new products and services, thought leadership).

There were also internal capability development opportunities, ensuring that First Bank has the capabilities to deliver the value at stake and meet its regulatory obligations (environmental, social and governance system, employee training, sustainability performance management and reporting.)

“These are designed to be achieved over a period of time. Presently, there are some opportunities being implemented which include sustainability performance management reporting, responsible lending and customers/stakeholders education.

“A key aspect of this is the partnership with the Lagos Business School with the First Bank Sustainability Centre as a vehicle for customer and wider stakeholder engagement.

Segun Oloketuyi

The Centre, since the partnership has delivered programmes through workshops, seminars and conference,” Onasanya said.     The Managing Director and Chief Executive Officer of Sterling Bank Plc, Yemi Adeola, also said that sustainability is at the core of the bank’s business strategy as its corporate culture and business model strongly emphasize stable and mutually beneficial relationships with customers, employees, shareholders, suppliers and the society as a whole.

“We established a Sustainable Banking Committee to ensure the development of sustainable banking commitments, which includes governance and accountability for environmental and social issues in various units.

“Our growth strategy and decision making are hinged on promoting sustainability as we have restructured our business to focus primarily on the retail market segment, consolidating our position in financial inclusion initiative, prioritizing collaborative partnership with development agencies to drive our targets.

“We have set in motion various initiatives to reduce greenhouse emissions and increase energy efficiency in our daily operations like use of low energy bulbs at most of our locations, video conferencing facilities, heat extractors and solar energy as an alternative power source at some of our locations.

“We have raised the bar in our credit processes with the sector-specific guidelines of the Nigerian Sustainable Banking Principles to ensure that our operations do not indirectly affect our environment or community.

“We are one of the very few banks in Nigeria to publish a comprehensive sustainability report in line with the Nigerian Sustainable Banking Principles and the Global Reporting Institute standards,” the bank chief said.

Also, the Chief Executive Officer of Wema Bank Plc, Segun Oloketuyi, noted that sustainability is about taking care of societies where we live, work and do business, and being sensitive to their changing needs, adding that the lender is committed to delivering banking services in compliance with local and global best practices and ensuring compliance with environmental, social, cultural and economic principles.

“We believe we do not operate in isolation of competition, customers and the environment and therefore, must abide by a sustainable code of conduct,” he said.

Noting that sustainability builds trust and confidence, he said: “Sustainability has been built into its strategy, business model, internal policies and processes.”

He said Wema Bank offers responsible and sustainable products and services that meet customers’ needs, providing innovative solutions and building long-term relationships and cutting across age, class and gender, while they not only take into account financial performance criteria, but also incorporate ethical, social and environmental aspects.

“We support the communities where we are present by contributing to their economic strength and social development. The projects we sponsor focus on education, financial inclusion, entrepreneurship, culture and the environment.

“Integrity, openness, and mutual respect are important values for us in ensuring sustainability. We are convinced that a work environment that is characterized by a diverse workforce, inclusion and equal opportunities is vital for sustainable satisfaction of our staff, as well as our acceptance as a responsible financial institution.

“We have ensured that within the sphere of all our operations, no staff, customer, contractor or business associate is subject to discrimination, either directly or indirectly, on the grounds of ethnic/national origin, colour of skin, gender, physical disability, age, health or marital status.

“The Bank remains committed to improving access to financial services and will continue to implement its business sustainability strategy,” Oloketuyi said.

Meanwhile, Access Bank said that a successful company strategy is one that is informed by the world around it, which also considers the social and natural resources on which the business depends.

Herbert Wigwe

The Managing Director and Chief Executive Officer of the bank, Herbert Wigwe, said the lender records significant growth opportunities and are able to better meet market demand for innovative products and services that are good for society and the planet with sustainability.   “Sustainability is critical to securing our future growth.

We therefore, seek to build the condition for our own success by focusing on the convergence of interests with society, promotion of community prosperity, improving skills and enhancing health.

“We recognise that finance has the power to change lives, transform societies and deliver shared value for all of our stakeholders. Generating profits cannot be the only goal of a responsible bank.

“We are advocates of responsible banking practices, support individuals and organizations in achieving their financial goals, with our risk appetite prudently managed and invest in customer relationships.

We empower communities and now provide employment for 13,000 employees.   “We have maintained our position as a leader in the sustainability space, attested by the World Finance UK, which named Access Bank the ‘Most Sustainable Bank in Nigeria’.

“Our approach to sustainability gets stronger as we continue to use the power of business to fight the scourge of diseases in society and champion innovative health initiatives.

“Through our ‘W’ initiative, we have driven financial inclusion by promoting the empowerment of women in Nigeria. We instituted the Maternal Health Support Scheme, access to a comprehensive range of loan products and credit facilities and access to the ‘W’ community with helpful advice on family and financial matters.

“We have, therefore, put the strength of our business resource and people to institute the Access Leadership Conference, convened out of a corporate desire to arouse the consciousness of Africans to be agents of change, presenting outstanding success stories from a variety of internationally recognized speakers.

“Looking ahead, we do not rest on our oars as we continue to seek new opportunities for progress. This we believe is important to reaffirm our bank’s leadership as a sustainable organisation and the realisation of our corporate vision,” he added.

The Head of Product Management, Trade Services and Issues at Commerzbank, Rüdiger Geis, said:  “There should be a business case for sustainability: You can make money and be more sustainable at the same time. We have to raise awareness in society and that’s what we are trying to do with that report.

“As a sector, banks have to create new products and follow the demand from corporates. We might not be able to give a better price for sustainable transactions, but longer tenors for example can help to enable companies to change towards a more sustainable way of doing business.”

The Secretary-General of the Berne Union, Kai Preugschat, said: “For a long time, banks have been involved in commercial project finance of sustainable energy projects, often becoming partners in developing sustainable energy markets.

More recently, the banking sector (and financial institutions more generally) has been taking an even more proactive role on sustainability issues.

“Most significantly, trade finance has started to focus increasingly on how goods and services are produced and delivered. Many banks today place a lot of pressure on themselves to check trade-related transactions for environmental, social, governance and ethical considerations.

Such considerations have become part of day-to-day practice in many leading banks. They have become almost as important as assessing the credibility of the borrower.”

However, the GTR report also points out that the lack of uniform metrics in sustainability reporting across banks could slow progress, including regulatory competition and protectionism, among others.