These were the words of Nigel Baptiste, Group President and Chief Executive Officer, Republic Financial Holdings Limited (RFHL) in his opening remarks at the Caribbean ESG and Climate Financing Summit (November 2022.)
Environmental, Social and Governance (ESG) integration and mainstreaming as an overarching global finance strategy has emerged as the most effective tool in business sustainability to date. Through the data-driven and sciencebased foundations of ESG, organizations can optimally achieve key business priorities such as risk management, opportunity maximization, reputational value and the creation of a strong moral compass.
ESG as a value creator is now entrenched in the entire global financial system. The European Union is leading the way in this with the following ESG specific legislation/regulation:
Climate Benchmarks Regulation (EU 2019/2089 – to enhance the transparency and comparability of benchmark methodologies relating to ESG metrics aimed at providing investors with clarity on the sustainability focused aspects of their investments.
Sustainable Finance Disclosure Regulation (EU 2019/2088) – to reorient capital flows towards sustainable investments by increasing transparency by financial market participants and advisers on sustainability risks, whilst ensuring a more uniform protection of end investors.
Taxonomy Regulation (EU 2020/852) –to establish a harmonized taxonomy to classify financial products as sustainable at EU Level, further promoting investments in sustainable activities while addressing “greenwashing” concerns.
Others on the way: Corporate Sustainability Reporting Directive (CSRD), EU Green Bonds Regulation (EUGBR), Corporate Sustainability Due Diligence Directive (CSDDD).
Perhaps the most critical for Caribbean exporters is the EU Carbon Tax, which will be phased over the next four years and will require importers to report emissions embedded in imported goods and those emissions would be taxed by 2026. Additionally, countries around the world are following suit, with the USA and Canada expected to put forward tougher ESG legislation in 2023 and most stock exchanges already asking for varying degrees of ESG disclosure for listed and newly listed companies.
The way human activity is affecting the planet is real. More responsible accounting for resources and impacts is, therefore, necessary. The recent devastating flooding in Trinidad and Tobago left many communities isolated with many losses. Tisha Marajh, recently hired Group Sustainability Officer at Republic Bank, said “Trinidad and Tobago saw these losses during an abnormally intense wet season, however, the disasters which follow will be unfortunately common, unless there is access to capital to build climate resilience in the country. Banks have a unique role to play in not only providing capital but also as influencers and lobbyists for change.”
RFHL understands that every company and industry will be impacted and stands to be transformed by ESG and the race to Net Zero. The Group has set its sights on leading in the sustainability space to serve the 14 unique countries within its sphere of influence. ESG and sustainability are fundamental to financial security for ourbank, region, and planet. Although these countries are not significant contributors to greenhouse gas emissions, they are among the most susceptible to climate change, and therefore financing for climate adaptation strategies is of utmost importance.
Principles for Responsible Banking
At the same time, the company is cognizant, flexible and progressive regarding Diversity, Equity and Inclusion among staff and stakeholders and continues to strive to attain the highest standards of governance, accountability and transparency at Board and Executive Levels.
In 2020, RFHL became the region’s first and only (to date) indigenous bank to sign the United Nations Environment Programme Finance Initiative’s Principles for Responsible Banking along with 300 other global banks, comprising more than half of the global banking system. The Principles for Responsible Banking (PRB) are a framework for ensuring that signatory banks' strategy and practice align with the vision society has set out for its future as expressed in the Sustainable Development Goals (SDGs) and the Paris Climate Agreement. To this end, UNEPFI approved RFHL’s first compulsory selfassessment - which can be found on our website.
