Commercial Banks and Micro Finance Institutions
The role of financial institutions has always been key to development and progress providing much needed debt facilities to enable growth, development of companies and the economy. These institutions are varied in approach to the market often focusing on the support to specific demographics. The commercial banking sector focuses on the middle-and upper-income earners in society and larger corporate’s, including micro finance focus on supporting the previously underbanked, currently unbanked and the SMME sector.
The management of ESG risks in the financial services sector will continue to gain importance as society, regulators and governments better understand the linkages between an institution’s financing activities and social and environmental impacts to society. Financial institutions have traditionally always focused on managing risks (reducing their non-performing loan book), and many studies on the subject have shown that high levels of ESG performance strongly correlate with good financial performance in this regard. Additional focus on articulating external social returns to society are being proposed with a growing need to provide access to banking solutions to the wider society.
The SMART Campaign is a global effort to work with financial service providers from around the world to provide stakeholders with the tools and resources they need to deliver transparent, respectful, and prudent financial services for all clients. EBS, as an accredited certification body, is able to provide training, conduct assessments, and provide an independent, third-party evaluation to publicly recognize financial institutions that meet adequate standards of care in how they treat customers. Institutions that have obtained SMART accreditation have observed that it has helped them better understand customer risks, prioritise customer protection, and improve company culture and relationships with customers. EBS is Africa’s first SMART accredited certification body. This allows us to combine our knowledge of international best practice standards relating to customer protection principles, with our deep local insight of financial intuitions in Africa.
As with all of EBS’ work, the articulation of the strides made in enhancing ESG performance is key to attracting further investment and reducing the cost of capital. The strategic communications team within EBS is well-placed to communicate the efforts and results of the work undertaken by financial institutions in a manner that is well received by all of their stakeholders.