By Rotimi Ajayi

THERE is no doubt any longer about the challenges and threats of climate change to humanity. One issue that has however continued to impede speedy progress among nations towards combating the threats and putting in place adequate adaptation and mitigation measures is finance. Finance in the developing countries especially Africa nations has posed major obstacle.

In Nigeria, the finance sector of the economy has shied away from touching any climate project that could bring about adaptation and mitigation succor to Nigerians.

However, recently, the Bankers Committee appear to have started seeing the enormous benefits that could accrue to the country from climate financing by announcing the readiness of Nigeria banks for voluntary sustainable banking principles.

This will gravitate to Banks lending  to or co-implementing adaptation and mitigation projects especially the renewable and green projects. In the following contribution by an climate finance expert Prince Lekan Fadina,  a practical analysis is given to the Sustainable Banking Principle should take.

The recent announcement by the Bankers Committee that Nigerian Banks have committed themselves to voluntary sustainable banking principles cannot come at a better time than now when there is movement globally from a pledge based system to a system with definite and reliable funding for climate and sustainable investments.

It is also the view in different High Level Panel Reports and Reviews by various experts, that Development Countries, Multilateral Development Banks and “green business” investors will play significant role in sustainable financing.

Global pattern

The role of the Bankers Committee is commendable. It is following the global pattern of considering economy, social and environmental issues holistically. The Bankers Sustainable Banking Principles cover oil and gas, power (with a focus in renewable energy) agriculture and related water resources issues, commitment to raising awareness  as well as  developing meaningful and lasting local capacity building to manage emerging environmental and social risks.  It also provides opportunities for their operators, government agencies, learning institutions and service providers.

It is noted that the Bankers appreciates the risks in adopting these principles especially having an approach that provides for appropriate level of transparency, accountability and self assessment, creating enabling environment, incentives and enforcement mechanism required for successful implementation of the sustainable principles. We however would need to know the extent to which identification of risk is either an impediment or driver of change towards a company’s own sustainability and success.

The need for integrating environmental and social considerations into economic development has become necessary in Nigeria especially since few Nigerian banks took cognizance of the Equator Principles signed in Washington in 2002.

The world has become a global village and most organization now has to adopt strategies to pursue sustainability as a corporate goal. This strategy can directly enhance profitability through lower operating costs, efficiency and stronger relationship with stakeholders.
Sustainability in the business context relates to creating “triple bottom line” value which consists of positive financial, environmental and social impacts. We submit that one of the greatest challenges that emerging markets like Nigeria will face is how to address “the needs of the present without compromising the ability of the future”.

The Banks must realize that they must move from the traditional straight forward “return on investment” concept to considering other intangible factors. There can be no development without peace and security, the recent events in our country clearly proves this. Conversely, sustainable development is a precondition for long time peace and security. To avoid disruptions and damage of projects, there is need for changing course in our approach to financing and project management. We must put people at the centre of development.

•Prince Lekan Fadina is an International Negotiator on Climate Change and Sustainable Development.