In Karachi, recent policy evaluations of five major commercial banks reveal disconcerting inadequacies in their commitments to critical areas such as climate change, human rights, gender equality, and labor rights. Remarkably, none of these banks openly divulges policies on nature and tax when extending financial support to enterprises.
During the unveiling of the report titled “Benchmarking the sustainability policies of banks in Pakistan” by Fair Finance Pakistan on December 5, 2023, Senator Farhatullah Babar expressed profound concerns about the banks’ subpar scores, especially regarding human rights criteria. He questioned the lack of transparent policy disclosure by these financial institutions. The comprehensive assessment by Fair Finance Pakistan encompassed Habib Bank Ltd (HBL), Allied Bank Ltd (ABL), National Bank of Pakistan Ltd (NBP), Meezan Bank Ltd (MBL), and MCB Bank Ltd (MCB) across 10 thematic areas.
Among the assessed themes, the highest average scores were attributed to financial consumer protection, corruption, gender equality, and transparency and accountability. However, across the remaining criteria, the average scores for these banks were below one out of ten, signifying a significant absence of public policies on crucial sustainability matters. The assessment methodology, adopted from Fair Finance Guide International (FFGI) and employed in 21 countries, formed the basis for this evaluation, conducted with the collaboration of the Lahore University of Management Sciences (LUMS) and Profundo.
According to Fair Finance Pakistan Country Programme Lead Asim Jaffry, the absence of any scores for the top five banks on nature and tax highlights a lack of priority given to these domains by banks and regulatory bodies. Jaffry emphasized the urgent need to realign financial strategies to address societal challenges, particularly in ensuring clean air, clean water, and preserving a habitable planet for future generations.
Remarkably, on a scale from zero to ten, the five banks attained an average score of only 0.5 for addressing climate change, lacking any publicly disclosed policies aligned with the Paris Agreement.
Moreover, the banks scored an average of 0.72 out of 10 in human rights policy ratings, revealing a lack of disclosed human rights policies linked to their investments or financing, a deviation from the UN Guiding Principles on Business and Human Rights.
Labor rights policies also fell short, with the top five banks scoring less than one out of ten due to the absence of commitments to international labor rights standards or compliance with national laws for worker welfare.
Gender equality measures were equally dismal, with an average score of 1.48 out of 10. None of the banks reported initiatives for equal participation and access to senior positions, and the representation of women on boards remained notably lower than the global average.
Tax policies also displayed limited commitments due to the dearth of public disclosures on tax transparency, particularly evident in global operations where profits, revenues, subsidies, or taxes in countries outside Pakistan remain undisclosed.
Transparency and accountability practices were insufficiently disclosed by the assessed banks. Documentation regarding risk control and grievance mechanisms was notably lacking across all five commercial banks, as highlighted in the report’s assessment.