Banking on Financial Sector Sustainability Regulations

Abstract

Based on their influence as going concerns and financial intermediaries that are essential to the growth of economies, some banks, through the oversight role of their Central Banks and other regulatory bodies are seen to be adopting sustainability regulations and are beginning to address respective principles of each regulation for better performance as it relates to sustainable development. These financial sector sustainability regulations encompass issues pertaining to both banks’ operations and business activities, addressing the need for banks to engender sustainable strategies, products and services as well as practices in order to drive solutions to diverse sustainability issues which include but are not limited to climate change, environmental pollution, eco-efficiency, poverty and human rights. Financial sector regulatory authorities in China, Nigeria and Bangladesh led the way in the establishment of mandatory guidelines in 2012 although guidelines have existed since 2007 and 2011 for China and Bangladesh respectively. However, oblivious of the effect of these regulations on the performance of banks in these countries in addressing the principles of their country-specific regulation, this research, on one hand, examines the impact of the Chinese Green Credit Guidelines (GCG), Nigerian Sustainability Banking Principles (NSBP) and the Bangladeshi Environmental Risk Management (ERM) Guidelines on banks within the territory of respective regulatory establishment by carrying out empirical analysis of their annual, sustainability and corporate social responsibility reports. On the other hand, consideration is given to banks in countries similar to the aforementioned to analyze their performance in addressing the regulatory principles of their mandated peers.