The sustainable finance revolution – your questions answered

Our expert on why banks must help safeguard the future of our planet

World Environment Day (5 June) is a rallying call to people and companies all over the world to help protect our planet. In honour of the day, we caught up with Daniel Hanna, our Global Head of Sustainable Finance, to get answers to some of your most frequently asked questions on sustainable finance, how banking is helping the environment and more.

What are banks doing to tackle air pollution?

Air pollution is a big issue in much of Standard Chartered’s footprint, especially emerging markets, and there is growing awareness of the impact it can have people’s health and mental wellbeing. We and other banks are looking at how we align to the Paris Agreement that aims to keep global warming well below two degrees. For instance, we’re looking for ways to measure and ultimately reduce the emissions from the activities we finance. We’re involved in developing new products that can help the transition to a low-carbon world, such as blue bonds to raise money for protecting the oceans. We’re also restricting what we will fund, so stopping our financing of new coal-fired power stations anywhere in the world, while increasing financing of renewable energy and clean technology.

What is ‘sustainable finance’?

There is a lot of technical jargon that gets used but I think it can be summarised in two parts: do no harm and do some good. This means we’re saying no to financing activities such as deforestation and arctic drilling, while financing more clean tech, such as wind farms and solar panels. I mentioned blue bonds already, but we’ve also introduced products such as sustainable deposits, where the money companies deposit with us is only used for financing that aligns to the UN’s Sustainable Development Goals, which focus on addressing global challenges such as poverty, inequality and prosperity.

Could we see the emergence of sustainable-only banks?

Why not. As the expectations of individuals and companies evolve, so too will banking. We’ll see far more products with an emphasis on sustainability. For example, future generations may only want to invest in funds that are deemed sustainable and make a positive impact on the planet, or take out a banking product that is aligned to helping make the world more climate friendly. We could start to see ‘green mortgages’ or ‘green current accounts’. Meanwhile, companies may start to insist that their surplus cash is used for sustainable purposes only. We’ve just launched a ‘sustainable deposits’ for our large corporate clients for this very reason. Just as banks have had to evolve in the digital era, they will also be transformed by the sustainability revolution.

What’s your personal view on all of this?

As a father, I want to make sure we have a planet that’s fit for our future generations. Whether it’s lowering emissions or increasing financial inclusion, these are global issues I care passionately about, so to be in charge of creating products and services that could help the markets where Standard Chartered operates to become more sustainable, is something I see as a huge opportunity and responsibility. I believe banks can and should play a leading role in bringing about a more sustainable future for our planet.

What changes have you made yourself to help protect the environment?

I believe innovation in finance can play a powerful role in protecting the environment but we all need to do something as individuals – I cycle to work, am cutting down on eating meat and using reusable water bottles – small steps and I know that it is not enough, but small changes can add up to big ones if we all take them at the same time.

Jargon buster – your most searched for sustainable finance related questions answered…

  • What is a green bond? Proceeds raised from a green bond are used to fund climate-friendly projects, such as wind farms and solar panels. They are typically issued by governments and multi-lateral institutions and large companies. Investors in green bonds are typically known as ‘impact investors’ or ‘socially responsible investors’.
  • What is the blue economy? The blue economy refers to ocean life. Preserving the health of the ocean ecosystem is essential to the future of our planet – it absorbs 25 per cent of all CO2 emissions and generates 50 per cent of the world’s oxygen. New financial products such as ‘blue bonds’ are emerging to raise money for protecting marine life.
  • What is impact investing? It’s putting your money into activities that benefit society and the environment. For instance, as an individual you could invest in a ‘green fund’, which is an investment vehicle that only invests in companies considered environmentally and socially responsible. Across the world, investors are increasingly looking for investments that help make our planet more sustainable.
  • What is sustainable investing? Similar to impact investing, ‘sustainable investing’ is about making investments that benefit society and the environment. Increasingly, these investments are closely linked to the UN’s Sustainable Development Goals (SDGs), described by the UN as a blueprint to achieve a better and more sustainable future for all.