KARACHI: Policy rankings of five leading commercial banks show the lenders have low policy commitments to climate change, human rights, gender equality and labour rights while none discloses policies on nature and tax when lending money to firms.
Speaking at the launch of a report “Benchmarking the sustainability policies of banks in Pakistan” by Fair Finance Pakistan on Monday, Senator Farhatullah Babar raised concerns about low scores of banks on the human rights criteria and asked why these lenders do not disclose their policies transparently.
Fair Finance Pakistan assessed the sustainability policies of Habib Bank Ltd (HBL), Allied Bank Ltd (ABL), National Bank of Pakistan Ltd (NBP), Meezan Bank Ltd (MBL), and MCB Bank Ltd (MCB) across 10 thematic areas, including climate change, corruption, gender equality, human rights, labour rights, nature, arms, tax, transparency and accountability and financial consumer protection.
The highest average scores were observed for the themes of financial consumer protection (4.62/10), corruption (3.18/10), gender equality (1.48/10) and transparency and accountability (1.08/10). For all the other themes, the average score for the five banks was less than one out of 10, which reveals a lack of public policies on most of the sustainability topics assessed.
The ranking is based on the Fair Finance Guide International (FFGI) methodology used in 21 countries to assess financial institutions’ approach to sustainability. It was conducted with the support of the Lahore University of Management Sciences (LUMS) and Profundo.
Fair Finance Pakistan Country Programme Lead Asim Jaffry said zero scores of the top five commercial banks on nature and tax suggested these areas were not a priority for banks or the regulator. “Finance must be repurposed to address society’s challenges and must redouble efforts for clean air, clean water and save the liveable planet for our future generations,” he said.
On a scale of zero to 10, with zero being the least desirable policies, the five banks scored an average of 0.5 for addressing climate change. These banks have not publicly disclosed any climate policies aligned with the Paris Agreement.
All five banks scored an average of 0.72/10 in human rights policy ratings. None of the banks disclosed human rights policies related to their investment or financing, which is “not aligned” with the UN Guiding Principles on Business and Human Rights.
Pakistan’s top five assessed commercial banks scored less than one out of 10 on labour rights policies as they lack policy commitments to international labour rights standards or adherence to national laws for worker welfare, the report said.
None of the assessed commercial banks has formulated public labour rights expectations for their clients and investee companies. HBL, MBL, ABL, MCB and NBP have zero scores on nature and arms.
With an average score of 1.48/10 on gender equality, no bank reported measures for equal participation and access to senior positions, with the highest reported representation of women on boards at 12.5pc, significantly lower than the global average of 27.1pc. None of the banks disclosed how they applied a gender lens to their lending and investment activities.
The five banks demonstrated low policy commitments on tax policies, primarily due to the lack of public disclosure on tax transparency. HBL, MCB, ABL and MBL operate globally but have not disclosed any details regarding their profits, revenues, subsidies or taxes in countries other than Pakistan.
With an average score of less than two out of 10, none of the assessed banks disclosed transparency and accountability practices in the companies they invest in or finance. Risk control and grievance mechanism documentation were lacking in all five commercial banks assessed, the report said.
Published in Dawn, December 5th, 2023
