ISLAMABAD, Feb 18: International Finance Corporation (IFC), a member of the World Bank Group, and the Pakistan Banks Association agreed to help Pakistani banks adopt sustainable banking principles that encourage expanded access to finance to under-served populations and more socially and environmentally responsible financing decisions.

According to an IFC press release, the corporation and the PBA will develop guidelines, tools, and checklists to help Pakistani banks evaluate social and environmental risks, and develop innovative products, such as loans to women entrepreneurs, or insurance for those without access to financial services.

The sustainable banking guidelines will cover international best practices for sustainability management, including the Equator Principles, a globally recognised banking industry framework for addressing environmental and social risks in project financing.

“More and more banks are recognising that sustainability is a way of developing strong brand value and building new business lines,” Aftab Manzoor, chairman of the Pakistan Banks Association, said while commenting on the agreement, adding that “IFC has a long experience in this field and we look forward to working with them.”

Kaiser Naseem, the IFC Programme Manger for Bank Advisory Services in the Middle East and North Africa, said; “Integration of social, environmental, and corporate governance objectives into financial institutions’ strategies can help them batter manage risks and create new investment opportunities.”

Sustainable banking encourages banks to develop products in new areas, including renewable energy, energy efficiency, microfinance, financing targeted to women, and low-income housing.

Sustainable banking also refers to greater transparency and promoting sustainable development, which can bring sizable business benefits and help banks in emerging markets differentiate themselves from their competition.

As part of this initiative, IFC is planning a conference in April, 2009 to discuss growth opportunities in sustainable banking.

The conference, to be held in Pakistan, will bring together senior representatives from the central bank, commercial banks, international experts and IFC experts to discuss sustainable banking trends and share lessons learnt from around the world. —APP