SUSTAINABLE BANKING NETWORK SBN GLOBAL PROGRESS REPORT FEBRUARY © International Finance Corporation [2018], as the Secretariat of the Sustainable Banking Network (SBN). All rights reserved. 2121 Pennsylvania Avenue, N.W. Washington, D.C. 20433 Internet: www.ifc.org The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. IFC and SBN encourage dissemination of its work and will normally grant permission to reproduce portions of the work promptly, and when the reproduction is for educational and non-commercial purposes, without a fee, subject to such attributions and notices as we may reasonably require. 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Additionally, “International Finance Corporation” and “IFC” are registered trademarks of IFC and are protected under international law. The global SBN activities have been supported by the Government of China through the Ministry of Finance, the Government of Denmark, and the Government of Japan through the Ministry of Finance since 2012. Partners and donors supporting IFC’s regional environmental and social risk management (ESRM) projects include: the government of Switzerland through the State Secretariat for Economic Affairs (SECO), the government of the United Kingdom through the Department for International Development (DFID), the government of Japan through the Ministry of Finance, and the government of Canada through the Department of Foreign Affairs. Government of People’s Government of Republic of China, through Denmark the Ministry of Finance Government of Japan, through the Ministry of Finance Government of Canada, through the Department of Foreign Affairs Government of United Kingdom through the Department for Government of Switzerland through International Development the State Secretariat for Economic Affairs (SECO). SUSTAINABLE BANKING NETWORK SBN GLOBAL PROGRESS REPORT FEBRUARY Table of Contents ACKNOWLEDGMENTS III FOREWORDS V ABBREVIATIONS AND ACRONYMS IX EXECUTIVE SUMMARY X I. INTRODUCTION 1 Country Initiatives in Sustainable Finance 1 Sustainable Banking Network (SBN) 1 Trends in Sustainable Policy/Principle Development Compared with Income Level 3 SBN Measurement Working Group and This Report 5 II. METHODOLOGY: SBN MEASUREMENT FRAMEWORK 7 III. E&S RISK MANAGEMENT PILLAR 13 Methodology 13 Overall Results 14 Results by Component 16 IV. GREEN FINANCE FLOWS PILLAR 23 Methodology 23 Overall Results 24 Results by Component 26 V. ENABLING ENVIRONMENT PILLAR 31 Methodology 31 Overall Results 32 VI. NEXT STEPS 37 ANNEX 39 i Figures, Tables, Maps, and Charts EXECUTIVE SUMMARY, FIGURE 1: SBN MEASUREMENT FRAMEWORK xi EXECUTIVE SUMMARY, FIGURE 2: SBN PROGRESSION MATRIX WITH ASSESSMENT RESULTS xii EXECUTIVE SUMMARY, FIGURE 3: ASSESSMENT RESULTS BY BANKING ASSETS xiIi FIGURE 1: SBN MEASUREMENT FRAMEWORK 7 FIGURE 2: E&S RISK MANAGEMENT PILLAR 8 FIGURE 3: GREEN FINANCE FLOWS PILLAR 9 FIGURE 4: QUANTITATIVE ASSESSMENT FORMULA 11 FIGURE 5: OVERALL RESULTS FOR E&S RISK MANAGEMENT  15 FIGURE 6: OVERALL RESULTS FOR GREEN FINANCE FLOWS 25 TABLE 1: SUSTAINABLE FINANCE POLICIES/PRINCIPLES (AND GREEN BOND GUIDELINES) BY INCOME LEVEL 3 TABLE 2: ENABLING ENVIRONMENT PILLAR 10 & 32 TABLE 3: SBN MEMBER LIST 39 TABLE 4: MAIN DOCUMENTS UPON WHICH NATIONAL POLICIES/PRINCIPLES ARE BASED 41 TABLE 5: MAIN DOCUMENTS UPON WHICH NATIONAL POLICIES/PRINCIPLES ARE BASED 47 TABLE 6: SCOPE OF FINANCIAL ACTIVITIES COVERED BY THE BANKING POLICIES/PRINCIPLES 48 TABLE 7: PARTICIPATION IN MAIN INTERNATIONAL INITIATIVES 49 MAP 1: SBN COUNTRY MEMBERS 2 MAP 2: GREEN BONDS ISSUANCE FROM FINANCIAL INSTITUTIONS ACROSS SBN MEMBERS 51 MAP 3: SUSTAINABILITY-RELATED INDICES ACROSS SBN MEMBERS 52 CHART 1: TRENDS IN SUSTAINABLE FINANCE POLICIES/PRINCIPLES DEVELOPMENT COMPARED WITH INCOME LEVEL 4 ii SUSTAINABLE BANKING NETWORK | GLOBAL PROGRESS REPORT Acknowledgments The Sustainable Banking Network (SBN) Global Progress Report was prepared under the guidance of SBN’s Measurement Working Group members, including Bangladesh Bank, Banking Association of South Africa (BASA) and National Treasury of South Africa, Brazilian Federation of Banks (FEBRABAN), Central Bank of Nigeria, China Banking Regulatory Commission (CBRC), Colombia Banking Association, Indonesia Financial Sector Authority (OJK), Kenya Bankers’ Association, Latin America Banking Federation (FELABAN), Mongolia Bankers’ Association (MBA), State Bank of Pakistan (SBP) and State Bank of Vietnam (SBV). The Global Progress Report and the 15 Country Progress Reports benefited from guidance and input provided by Edi Setijawan (Indonesia Financial Services Authority), Yanfei Ye (China Banking Regulatory Commission), Franklin Ahonkhai, Dr A’isha Mahmood (Central Bank of Nigeria), Rodrigo Pereira Porto (Central Bank of Brazil), Reshma Sheoraj (National Treasury of South Africa), Manoj Kumar Biswas, Asif Iqbal (Bangladesh Bank), Isabel Mantilla Naranjo, Andres Rojas (Asobancaria of Colombia), Muhammad Saleem (State Bank of Pakistan), Tumurkhuu Davaakhuu, Nomindari Enkhtur (Mongolian Bankers Association), Nuru Mugambi (Kenya Bankers Association), Jose Humberto Alarcon (Asociación de Bancos de México), Ngan Bui Thi Kim, Duong Pham Thuy (State Bank of Vietnam), Paul Collazos, Gabriel Mauricio Gallo (Superintendencia de Banca y Seguros of Peru), Nadia Khatib, Mouna Naana, Ghita Tahiri Joutei Driss Hassani (Bank Al-Maghrib of Morocco), Berk Mesutoglu (Banking Regulation and Supervision Agency of Turkey), Giorgio Trettenero, Daniel Gonzalez (FELABAN), Mario Sérgio Vasconcelos, Beatriz Stuart Secaf (FEBRABAN), Pierre Venter (Banking Association South Africa) and Cecilia Villacis (Asobanca of Ecuador). The production of the Global Progress Report and Country Reports was managed by IFC’s Environmental, Social and Governance (ESG) Department led by Morgan Landy, and in particular the Sustainability Leadership Team, which hosts the SBN Secretariat on behalf of IFC and is led by Jamie Fergusson, Rong Zhang, and Wei Yuan. The SBN Secretariat was supported by Louise Gardiner and by a team from Ernst & Young, including Marie-Gabrielle de Drouas-Duault and Antoine Hélouin. The Leadership Team and the department thank Ethiopis Tafara, Vice President and General Counsel Legal, Compliance Risk & Sustainability, for his leadership and strategic guidance. Piotr A. Mazurkiewicz (IFC ESG), Peer Stein (IFC Financial Institutions Group), Aditi Maheshwari (IFC Climate Business), Samuel Munzele Maimbo, Tanya Konidaris and Martijn Regelink (World Bank Finance & Market Global Practice) provided valuable input throughout the process, iii Acknowledgments (cont.) leveraging IFC and World Bank knowledge and resources. The team appreciates the constructive feedback provided by the peer reviewers including Zhengfang Shi, Emiola Abass, Mujgan Oladi, Felipe Abertani, Sandra Abiola, Merima Zupcevic, Afifa Raihana, Lalit Bhandari, Debra Sequeira, Atiyah Curmally, Juan Carlos Mendoza. IFC’s regional ESRM advisory team, Huong Thien Nguyen, Claudia Marcela Ponce, Rahajeng Pratiwi, Damilola Sobo, Batmunkh Batbold, and Rong Zhou contributed to country information and coordinated with members throughout report development. The outreach and communications strategy was led by Irina Likhachova and Alexandra Hergesell Harris, with support from Joseph Rebello. The report design was led by Greg Wlosinski, with support from Yiran Li and Yi Yang. Carollyne Hutter provided editorial support. The report website design was led by Rashanikka Hayley Fowler. iv SUSTAINABLE BANKING NETWORK | GLOBAL PROGRESS REPORT Foreword from the SBN Secretariat FROM MEASURE TO TREASURE: EXPANDING SUSTAINABLE FINANCE Up to $7 trillion in yearly financing is needed between now and 2030 to achieve the Sustainable Development Goals—a