Many financial institutions are taking action and demonstrating leadership on climate change, by developing or updating climate strategies, and making public commitments. For example, a number of development finance institutions and private financial institutions have made commitments to allocate capital and steer financial flows toward more low-carbon, resilient activities or to align their operations with climate objectives.
Principle 1 recognizes that bottom-up, organic approaches to addressing climate change may not alone be sufficient to integrate climate change across strategies, policies and operations. It recognizes that senior level commitments to address climate change can have a positive influence throughout all layers of management and operations. It emphasizes the importance of building climate change considerations into the strategic direction and vision of a financial institution, as well as through institution-wide actions.
Implementing Principle 1 may include the following actions:
- Integrating climate considerations in a financial institution’s strategy
- Integrating climate considerations in the overarching core strategy
- Integrating climate considerations in sector, country and business line strategies
- Developing climate-related targets
- Adopting a target to increase investments in activities with positive climate impacts
- Adopting a target to reduce investments in activities with negative climate impacts
- Adopting targets to align activities with the Paris Agreement goals
- Implementing climate change strategic objectives
- Developing institutional architecture and internal guidance and processes to support the implementation of strategic climate goals
- Linking climate performance to key performance indicators and internal incentives
- Building the internal capacity of management and operational teams