ISLAMABAD:Fair Finance Pakistan (FFP) has decided to assess the policies and impacts of commercial banks’ operations on consumers, society and the environment, in order to promote responsible banking in Pakistan.
The decision was announced at an annual two-day meeting of Fair Finance Pakistan (FFP), a coalition of over 20 leading civil society organizations, concluded on Friday in Lahore.
The assessment will be conducted in the wake of gapes found in a recent study of the network, said a press release issued here.
The study found that the Securities and Exchange Commission of Pakistan (SECP) has not yet introduced specific policies, measures to minimize environmental risks arising from the activities of investment banks.
Moreover, not yet banks have come up with the climate strategy.
At the meeting, Dr. Abid Burki, a renowned economist and professor at the Lahore University of Management and Sciences (LUMS) presented how 5 commercial banks in Pakistan including MCB, HBL, Meezan, Bank Alfalah and NBP have been sampled for the policy assessment.
There are currently 29 commercials in Pakistan, including 5 banks in public sector, 20 in private sector and four in foreign sector.
He said the sample include small, medium and large banks both from public and private sector including an Islamic Bank.
Policies will be assessed across different major themes, he shared, namely climate change, gender equality, human rights, financial inclusion, and transparency and accountability.
In its first annual face to face meeting the FFP members deliberated on how the financial institutions’ funding decisions in the region can respect the social and environmental well-being of local communities.
The meeting deliberated to align with achieving the objectives of the forthcoming COP-26, a global UN climate change summit where climate justice advocates will demonstrate their strength.
Leader for Fair Finance Guide, Swedish Consumer Association Jakob Konig shared how the civil society has been able to create an impact on the banking policies and brought about a huge change.
Banks in Sweden have been assessed since 2014, he said, and many reports were published assessing them whether they finance fossil fuel companies or governments linked with human rights violations, war crimes in Sudan and military in Myanmar.
Banks found financing companies committing such violations were failed in the assessment.
“The results were published online and people had access to information and were encouraged to ask questions from banks.
The impact was huge and it put a lot of pressure on banking sector to improve responsible banking and now investments are now fossil free.
Some 38000 depositors complained to the banks over their irresponsible investments, he said, which imply that people have been challenging banks to shift their policies towards responsible investment.
Deputy Chief Manager at State Bank of Pakistan, Mohammad Tahir said green guidelines introduced in 2017 are not mandatory but eventually they will become a policy to be implemented by the banks.
He said 16 banks have been facilitating green business and more initiatives are in the pipeline to promote climate friendly banking.
He admitted that there are some limitations and practical realities which the SBP has to take into account for the investment flow but the regulator is focusing to convert on renewable energy.
Earlier, FFP Programme Lead Asim Jaffry shared that only 20 percent Pakistanis have a formal bank account with only 5 percent of them women in the financial sector.
Micro, small and medium enterprises (MSME) are heavily under-financed as more of the lending goes to government and large scale industry.
Evidence suggests that common citizens, SMEs and the small scale private sector is lacking financial inclusivity.
The entire financial sector, he said, especially commercial banks, contribute to the infringement of human rights such as through discrimination in hiring or service provision, non-inclusion of women, and financing companies involved in land grabs, coal mining, child labour, and displacing indigenous people for the construction of dams.
Jawad Ahmed, singer, philanthropist and chief of Barabri Party, at a concluding session talked about the oppressive taxation and exclusive political and financial systems.
Indirect taxes have wreaked havoc in the third world countries and Pakistan is one of them, he said.
He emphasized that common people should be part of the financial and political systems rather than be ruled by the systems.
Currently, he said, 90 percent of the people are part of only sloganeering process and merely follow the ideas of ruling class.
Fair Finance Pakistan is part of Fair Finance Asia, a regional network of over 100 Asian civil society organizations, aims to ensure that financial institutions in Pakistan respect the social and environmental well-being of local communities and integrate environmental, social, and governance (ESG) criteria in their business model.
Further, Asian partners collaborate with Fair Finance International (FFI), an international civil society network of over 100 organizations and allies, initiated by Oxfam.