13th June 2017

Global change, World Heritage and why it matters for the banking system

Written by Iris Kapelouzou, Retail Policy Adviser

The financial sector has progressed its thinking around corporate responsibility, conduct and culture in recent years, moving from concepts of ‘giving’ and ethical investments to broader societal and environmental considerations around sustainability. One such consideration is that of global change and its impact on world heritage.

You may be thinking, “So how do these ideas link to banking?”

Well the Global Risk Institute has highlighted a number of potential risks to banking operations and lending portfolios as a result of global change. For example, extreme weather events link to physical damage to corporate assets, mortgage portfolios in geographical areas at high risk may face higher default rate and finally, mass migrations may threaten economic and societal stability both at regional and national levels.

The risks of climate related phenomena have been recognised at national and international levels before. For example, UNESCO has identified a list of World Heritage Sites – places including natural sites of special significance for humanity and in need of protection from commercial exploitation.

The issue of global environmental change drew wider attention when the impact of this change on present and future generations was realised. The 1992 United Nations Earth Summit agreed the first ever international voluntary action plan (Agenda 21) to ensure protection of environmental pores, encapsulating both flora and fauna.

While these risks may be considered long-term from an operational perspective, there is an increasing recognition among banks that at the end of the spectrum of all functions of the banking system is an ‘ultimate consumer’, whose future well-being is important for banks to consider.

So what can banks do?

A newly published WWF report How Banks can Safeguard our World Heritage, outlines the role banks can play in protecting heritage sites, particularly before they are flagged as “in danger” by UNESCO.

Man-led activities are a main contributing factor to the harm inflicted upon our unique ecosystems, and banks need to be alive to the long term consequences of activity that threatens their integrity and stability further.