Guide To Holisitic Impact Analysis Oct 20
Guide To Holisitic Impact Analysis Oct 20
Guide To Holisitic Impact Analysis Oct 20
October 2020
IMPACT
Acknowledgements
UNEP FI would like to acknowledge the members of the Portfolio Impact Analysis Working Group, whose work and user expe-
riences are reflected in the present Guide:
◾ ABSA ◾ BNC ◾ Handelsbanken ◾ Shinhan Financial Group
◾ AIB ◾ BOI ◾ Julius Baer ◾ Société Générale
◾ Banco Machala ◾ BPNB ◾ Jyske Bank ◾ Sparebank 1 BV
◾ Banco Pichincha ◾ CaixaBank ◾ KB Financial Group ◾ Sparebank 1 SR-Bank
◾ Bancolombia ◾ CIB ◾ KCB Group ◾ Standard Bank
◾ Banque Misr ◾ CIMB ◾ La Banque Postale ◾ Sumitomo Mitsui Financial
◾ Barclays ◾ Citi Banamex ◾ Land Bank Group
◾ BBVA ◾ Commerzbank ◾ LHV ◾ Swedbank
◾ BCEE ◾ Credit Suisse ◾ National Australia Bank ◾ TD Bank Group
◾ Beneficial State Bank ◾ DBG Financial Group ◾ Natixis ◾ UBS
◾ BGR ◾ Deutsche Bank ◾ Nordea ◾ Vancity
◾ BMCE Bank of Africa ◾ Diners Club Ecuador ◾ Piraeus Bank ◾ Yapikredi
◾ BMO ◾ GLS Bank ◾ Produbanco ◾ YES Bank
◾ BN Bank ◾ Golomt ◾ RBS
◾ Hana Financial Group ◾ SB1 Ostlandet
Content Overview
A. Introduction................................................................................................. 2
B. Getting Started............................................................................................ 6
C. Using the Tool.............................................................................................. 8
1. Phase I – Impact Identification.................................................................. 8
1.1 Bank Cartography..................................................................................................... 8
1.1.1 Indicating the Bank’s Business Activities...............................................................9
1.1.2 Review per Business Line........................................................................................9
1.2 Mapping of Country Needs......................................................................................16
1.2.1 Framework for Assessing Country Needs...........................................................16
1.2.2 Country Need Scores.............................................................................................18
1.3 Review of Portfolio Impact Profiles & Determination
of Most Significant Impact Areas........................................................................... 20
1.3.1 Profile Worksheets.................................................................................................20
1.3.2 Most Significant Impact Areas Worksheet...........................................................26
D. Reporting................................................................................................... 30
List of Figures
Figure 1: Impact Analysis Workflow & Key Terms...................................................................... 3
Figure 2: The 22 Impact Areas of the UNEP FI Impact Radar & the SDGs................................ 5
Figure 3: Overview of Banking Activities.................................................................................... 7
Figure 4: Performance levels and criteria...........................................................................................28
Figure 5: PRB Reporting Requirements & Corresponding Portfolio Tool Components........... 31
Scope
The tool currently enables analysis of the following portfolios:
◾ Consumer banking
◾ Business banking
◾ Corporate banking
◾ Investment banking
Housing
Education
Employment
Energy
People, planet, prosperity: Integrated and indivisible
Mobility
Information
Justice
Soil
Resources efficiency/security
Climate
Waste
Practical Tips
You will need support from the corresponding departments in the bank to compile the
necessary data. Identify and involve these as you are defining the scope of your analy-
sis. This is also an important opportunity to communicate the strategic objectives of the
analysis and to ensure uptake and continuity once the analysis is completed and actions
need to be taken to implement strategies and meet targets.
Collect raw data in a separate file, before inputting into the tool.
Note the period covered and the date of completion of the analysis for reference for
future updates.
1 unepfi.org/positive-impact/tools-frameworks-for-holistic-impact-analysis/unep-fi-impact-analysis-tools/
portfolio-impact-tool/
2 Market share information is typically provided via league tables, which are issued by data providers such
as Bloomberg, Dealogic and Thomson Reuters. These are typically available to research teams and capi-
tal markets teams. Banks’ market intelligence departments typically track their market share directly.
For the purpose of this tool, banking activities have been categorized as per the table below. Items in red indicate business activities not currently
within the scope of the tool.
Investment Provision of Corporates, Primary capital markets - debt (bond issuances) | Primary
Banking access to capital multinationals capital markets - equity (IPOs) | Advisory services (e.g.
markets & raising M&A, ratings, project finance, etc.) | Other (e.g. Custodian
of capital on capi- banking
tal markets and
related services Sovereigns Primary capital markets - debt | Other
Investment
Insurance
Philantropy/
Foundations
*customers/clients that may be serviced both by consumer and business banking departments.
8 | Impact identification and assessment for bank portfolios | Using the Tool
1.1.1 Indicating the Bank’s Business Activities
In this segment you are requested to indicate what the main business lines of the bank are and
what their respective size is in terms of gross income. There is a drop down menu which provides
the following options: Consumer banking, Business banking, Corporate Banking, Investment bank-
ing, Other.
Please refer to the description of banking activities in Figure 3 above (also available directly in the
tool under the ‘Key Concepts’ Worksheet) to accurately capture your business activities. Note that
following lines of business are not currently covered by this tool: Capital Markets, Asset Manage-
ment, Insurance. For these lines of business please select ‘Other’.
Impact identification and assessment for bank portfolios | Using the Tool | 9
a. Bank’s countries of operation
In this segment you are requested to indicate the bank’s countries of operation, i.e. those where
the bank is incorporated or has an otherwise registered presence. You are required to select from
a drop down menu which allows you to select any country. You can select up to 15 different coun-
tries per business line. You are also required to indicate the portion of business per country; as a
percentage of total number of customers in the case of Consumer banking, and as a percentage
of drawn outstanding loans, outstanding loans, or alternatively, exposure at default (depending on
available information), for Business, Corporate and Investment Banking.
Q. Some of my Corporate and Investment Banking clients are active in additional countries to those in which my bank
is incorporated – how does this affect my impact analysis and what can I do about it?
A. The involvement of your clients in additional countries may indeed be material to your impact analysis and ultimately
to your impact management strategy. Thus, in addition to your countries of incorporation, over time you are encour-
aged to reflect, as applicable, any additional countries in which your biggest clients are significantly involved. Signif-
icant involvement means that the country is either a major market (country of sales), site of production and/or of
sourcing. The cartography section of the UNEP FI Corporate Impact Analysis Tool can be used to identify additional
countries as per the above. See the insert p.xxx for further guidance.
10 | Impact identification and assessment for bank portfolios | Using the Tool
b. Bank’s sectors of operation
In this segment, for each country of operation (see previous step), you are required to select
sectors/activities from a drop down menu. You can select up to 15 different sectors/activities per
country.
Sector classification
For the purpose of this tool, sectors are areas of activity as per the ISIC industry classifica-
tion. For ease of reference the ISIC list can be viewed in a dedicated worksheet (ISIC List).
Note that the ISIC list has been expanded to cover close to 50 additional sectors/activi-
ties. These additions were made as part of the tool development process in 2019, based
on practitioner feedback on gaps in ISIC. Additions are highlighted in yellow in the ‘ISIC
List’ worksheet.
Practical Tips:
*An industry code converter (for NAICS, NACE and ANZIC) is available here: isumo.cloud/
codeverter/
*To look for ISIC codes through keywords, click here: siccode.com/isic-code-lookup-directory
You are also required to indicate the percentage of the bank’s portfolio each of the sectors/activ-
ities represent as a percentage of drawn outstanding loans, outstanding loans, or alternatively,
exposure at default (depending on available information).
Further guidance is provided below business line by business line.
Consumer Banking
Consumer banking is first and foremost about delivering products and services to individuals, not
businesses. While a number of customers may be exercising liberal professions (e.g. doctors,
consultants, etc.) or running a small business (e.g. an individual consultancy, a small restaurant,
etc.), these will tend to be a small part of the overall portfolio). For this reason, the tool requires
selection from the ISIC list exclusively in terms of the products and services rendered by the
bank, i.e. from the ‘Financial services’ section of ISIC. It complements this by requesting infor-
mation on the type of client.
Impact identification and assessment for bank portfolios | Using the Tool | 11
Q. Do all products and services need to be accounted for?
A. Services such as current and savings account holding, may be thought of as having less impact associations than,
say, home mortgages and car loans. However, these have a key role to play in terms of access to finance and the
promotion of healthy and inclusive economies—by virtue of this fact users are indeed encouraged to include all major
products and services in their analysis.
Q. How does one account for the ‘hidden’ impacts associated with consumer loans and credit cards?
A. If these are a major part of your business, you may wish to get a closer understanding of what such products and
services serve to acquire and do. This may be something your credit department is tracking / can track directly. In
the specific case of credit cards indexes of merchant codes may be offer a means of tracking. Alternatively, in some
cases GDP consumption allocation statistics may be referred to, based on the assumption that the consumption
pattern of the bank’s customers, in a specific country, follows the overall consumption pattern of the corresponding
country.
Additional impacts identified should be captured in the open dialog box in the ‘Consumer Banking Profile’ worksheet
so as to be taken into account in the definition of the bank’s most significant impact areas.
Q. What about customers who’s accounts, loans, deposits and transactions are in reality linked to a business activity?
A. If you are able to track such cases as well as the sectors/activities they are associated with, you can obtain a more
granular and accurate representation of impacts by capturing this part of your business via the ‘Business Banking’
section of the Cartography worksheet. Consider doing this if you find a significant portion of portfolio is made up of
such cases.
12 | Impact identification and assessment for bank portfolios | Using the Tool
Business, Corporate & Investment Banking
Business, Corporate and Investment banking is first and foremost about delivering products and
services to enterprises: small and medium enterprises in the case of Business banking, larger and
international enterprises in the case of Corporate and Investment banking. These enterprises will
operate across a multitude of sectors. For this reason, the tool requires selection from the whole
of the ISIC list, except the individual financial products and services included in the ‘Financial
services’ section of ISIC. Volumes are captured via outstanding loans.
Q. Do all clients and deals need to be accounted for? There are only 15 slots available per country; the business bank-
ing portfolio is extremely diverse, and the corporate and investment banking portfolios are also diverse – how can I
appropriately capture the impacts associated to the portfolio?
Business banking portfolio
Please prioritise on the basis of two factors:
i. the size / portion of your business in the different sectors/activities
ii. the systemic importance of the different sectors/activities. Please refer to the ‘Key Sector Mapping’ worksheet to
this effect. This mapping provides insights as to which sectors and activities are key in terms of achieving and/or
undermining the different impact areas. Sectors or activities that do not show on the mapping could be omitted in
favour of others that do feature on the mapping, especially if they feature on multiple front (e.g. agriculture).
Corporate banking portfolio
Please prioritise on the basis of two factors:
i. the sectors of the bank’s biggest clients. Note, some sectors may rapidly dwarf others (e.g. oil & gas, metals &
mining) in terms of revenue by virtue of the sheer size of the clients, but not it terms of number of clients or other
indicators of volume. Select at less granular levels of ISIC to avoid creating blind spots in your impact identifica-
tion. See also the following question on ISIC selection.
ii. the systemic importance of the different sectors/activities. Please refer to the ‘Key Sector Mapping’ worksheet to
this effect. This mapping provides insights as to which sectors and activities are key in terms of achieving and/or
undermining the different impact areas.
Investment banking portfolio
Please prioritise on the basis of two factors:
i. the sectors of the biggest deals in the portfolio.
ii. the systemic importance of the different sectors/activities. Please refer to the ‘Key Sector Mapping’ worksheet to
this effect. This mapping provides insights as to which sectors and activities are key in terms of achieving and/or
undermining the different impact areas.
Impact identification and assessment for bank portfolios | Using the Tool | 13
Q. At what level of ISIC should I be selecting?
A. This will be dictated by the type of sectors and activities that are present in your portfolio. E.g. if a specific subset of a
sector is predominant in your portfolio as opposed to the sector as a whole, you should select at a more granular level.
If you are involved in activities across a sector (e.g. crop production/animal raising, forestry, and fishing/aquaculture,
and/or you also have a number of other sectors and activities to capture, you will need to select at a less granular
level.
Note that less granular selection may result in impact associations being reflected that do not apply to you; this
should be reviewed and commented on in the Profile worksheet so as to facilitate better decision-making regarding
the most significant impact areas.
Q. How do I convert from the industry classification used in my bank to ISIC and vice versa?
A. A conversion tool is available online3 with NACE, NAICS and ANZIC. Correspondence tables exist between most
national classification systems and ISIC. However, your internal classification system is likely to be unique to your
bank.
NB. You should be classifying and converting based on the sector of the client, not on type of financial product or
service provided. For instance, mortgage amounts are likely to be a readily available data set; they should not be
translated as ‘Real Estate’ or ‘Construction’, but broken down by the sectors of the clients benefiting from the mort-
gages.
3 isumo.cloud/codeverter/
4 unepfi.org/publications/positive-impact-publications/corporate-impact-tool/
14 | Impact identification and assessment for bank portfolios | Using the Tool
Additional investment banking considerations
Q. How do I account for the fact that I am one of several banks involved in the bond issuances and IPOs?
A. Amounts / volume of finance provided through bonds and equities can be calculated using league table methodology,
i.e. by aggregating deals for which the bank is a Mandated Lead Arranger (MLA), each of which should be divided by
the total number of MLAs per deal.
Q. Where do I find information on the sectors and countries of the companies/entities whose bonds and equities are
being issued?
A. Ideally sector and country breakdown should be derived directly from your internal client intelligence. Notices can be
another source of information (these are widely used in the US, less extensively in Europe, and are generally not in use
elsewhere).
Deep-diving on clients with multi-sector profiles and/or clients with significant involve-
ment in countries beyond the bank’s countries of operation: Which clients should I
review?
Deep-diving doesn’t necessarily mean reviewing every single client. Make a selection
based on the following criteria:
i. The sectors of the bank’s biggest clients. A small number of clients is likely to
account for a large part of the portfolio. Note, some sectors may rapidly dwarf others
(e.g. oil & gas, metals & mining) in terms of revenue, but not it terms of number of
clients or other indicators of volume. To address this, consider the clients that make
up the greater part of the book in each sector you are servicing. Also bear in mind the
next two criteria.
ii. The systemic importance of the companies’ sectors/activities. You should prioritise
clients from sectors that are key to one or more impact areas. The more impact areas
a sector is key for the more relevant it is to include them in your selection. Please
refer to the ‘Key Sector Mapping’ worksheet to this effect. This mapping provides
insights as to which sectors and activities are key in terms of achieving and/or under-
mining the different impact areas.
iii. the systemic importance of the client: prioritise clients that are leading companies in
their sector and/or top tier companies in a given country.
5 unepfi.org/publications/positive-impact-publications/corporate-impact-tool/
Impact identification and assessment for bank portfolios | Using the Tool | 15
1.2 Mapping of Country Needs
In this tool, Country Impact Needs are the environmental, social and economic needs of the coun-
tries in which the bank operates. Understanding these is an integral part of impact identification
and assessment, because banks are expected to prioritise impact areas where this the highest
level of needs as regards their countries of operation.
This part of the process is covered over 2 worksheets in the tool:
◾ Country Need Scores, which is the worksheet in which you perform your assessment – all
inputting should be done here (see details below)
◾ Country Need Overview, which extracts from the Country Need Scores worksheet to show you
just the specific sub-set of countries relevant to your bank (as established in the Cartography
worksheet) and the outcomes of your assessment for each country. This worksheet is for
reference only.
16 | Impact identification and assessment for bank portfolios | Using the Tool
Country Needs Assessment Framework (extract)
Impact identification and assessment for bank portfolios | Using the Tool | 17
1.2.2 Country Need Scores
Underneath the framework there is a table to capture the level of need of each country per impact
area, based on the framework and in the form of scores going from 1 to 4. Use the listed resources,
the scoring range and further guidance in the framework to fill out the table. This should be done
for all countries selected in the Cartography worksheet - for ease of reference all selected coun-
tries are displayed automatically in dark yellow.
NB. There are two lines per country:
◾ The ‘Default values’ line, where you will see the scores for any needs already previously
assessed.
◾ The ‘My values’ line, which is made to capture your assessment of the country’s needs
For each applicable country:
i. See if needs have already been assessed (see ‘Default values’ line)
ii. If the needs for a given impact area have already been assessed: you can choose to use
the default values and replicate the proposed scoring in the line beneath (‘My values’ line). It is
recommended that you double-check the default values as these are taken from the assess-
ments of existing users ‘as is’. You may also decide to consult additional resources and topic
experts to refine the assessment beyond the resources in the framework; this may result in a
different score to the default score. Either way, input the score obtained in the table and share
the references of the additional resources that you used with the UNEP FI Secretariat so that
these can be considered for the next update of the framework and table (see more below).
iii. If the needs haven’t been mapped yet: Access the resources provided for each of the impact
areas (use the links), identify the status of the indicator/s (as per the scoring range and thresh-
olds provided) and capture the score in the dedicated space in the table.
18 | Impact identification and assessment for bank portfolios | Using the Tool
Q. What if there is more than one resource per impact area? Should I average out the scores?
A. Where there are two or more resources for an impact area, the highest score (i.e. highest level of needs) between
the two should be retained. Scores should not be averaged as this will make specific needs areas less visible; the
purpose of the needs assessment is not to establish a ranking between countries but to help you identify opportuni-
ties to reduce negative impacts and increase positive impacts.
Q. What if the resource provided does not cover a country I wish to assess? Or there is no resource provided for a
given indicator?
A. Some countries may be missing from certain indices and maps. Users are invited to seek equivalent resources (e.g.
from local or regional sources) for these cases. Similarly, there are a couple of indicators for which currently no global
resource has been identified and where users are invited to seek information locally. Some guidance is provided in the
‘Notes’ section of the framework.
NB. All new resources should be captured in the empty table provided beside the framework and signalled to UNEP FI
so that they can be considered for the next update of the framework and table (see more below).
Q. Will the framework and the table of scorings be updated? What is the process?
A. Yes. These are updated by the UNEP FI Secretariat on a regular basis, based on user experiences and any stakeholder
feedback received. Updates include: scorings for additional countries, adjustments to existing scorings as a result
of more in-depth assessments, adjustments to the framework to ensure resources are up-to-date and/or to provide
additional resources and guidance. The tool with the updates is made available on the UNEP FI website where it can
be freely downloaded. These updates are intended to take place every six months.
Impact identification and assessment for bank portfolios | Using the Tool | 19
1.3 Review of Portfolio Impact Profiles & Determination
of Most Significant Impact Areas
This is the final step in the impact identification phase and is covered in two parts within the tool:
1. ‘Profile’ worksheets, which show the impacts associated with bank’s activities as captured
under the ‘Cartography’ section.
2. The ‘Most Significant Impact Areas’ worksheet, in which the user identifies and explains the
bank’s most significant impact areas.
Click here to watch a demo of the impact profiles and the process to determine most
significant impact areas
20 | Impact identification and assessment for bank portfolios | Using the Tool
Example of a summary view of impact associations (Business banking/global view):
For the Consumer banking portfolio, the global view is also shown as a spider chart. The country
views, however, are shown in the form of a bar chart, where the product and client types associ-
ated with the different impact areas are represented by different colours within each bar and with
each bar representing a different impact area. The size of each colour is based on the number of
clients associated with each impact area. Positive and negative associations are shown in two
separate bar charts. In addition, a yellow line indicates the level of need of the country vis a vis
each impact area (as captured under the Country Needs worksheets). The Y axis on the right
represents the scoring range (1-4) used to this end.
Impact identification and assessment for bank portfolios | Using the Tool | 21
Example of a summary view of impact associations (Consumer banking/country view):
Note that the associations shown are based on sector and location data only at this point: they are
therefore potential rather than actual associations (see below).
ii. a detailed view: this is a table that shows where the impact associations shown in the
summary view come from.
For the Business, Corporate and Investment banking portfolios, all the sectors/activities
supported by the bank (as captured in the ‘Cartography’ worksheet), as well as the correspond-
ing percentage of the portfolio, are listed vertically. The 22 impact areas of the Impact Radar
are listed horizontally and you can view which sectors/activities are associated with which
impact areas. The figures inside the table simply replicate the percentage of the portfolio asso-
ciated with each sector/activity. Where the figure is bolded, this means that the sector is a ‘key
sector’ for the said impact area (see more below).
22 | Impact identification and assessment for bank portfolios | Using the Tool
Example of a detailed view of impact associations (Business banking/country view):
For the Consumer banking portfolio the product and client types of the bank (as captured in the
‘Cartography’ worksheet), as well as the corresponding percentage of clients, are listed vertically.
The 22 impact areas of the Impact Radar are listed horizontally and you can view which products
and clients are associated with which impact areas. The figures inside the table simply replicate
the percentage of clients associated with each sector/activity.
Example of a detailed view of impact associations (Consumer banking/country view):
Impact identification and assessment for bank portfolios | Using the Tool | 23
The global view shows an aggregated view per country. The countries of operation of the bank, as
well as the corresponding percentage of the portfolio (both as captured in the ‘Cartography’ work-
sheet), are listed vertically. The 22 impact areas of the Impact Radar continue to be listed horizon-
tally. Inside the table the values for each impact area have been weighted by the portfolio share of
the corresponding country. The calculations can be viewed on the far right hand side.
Example of a detailed view of impact associations (Business banking/global view):
iii. a ranking: this is a table that lists the impact areas with which the bank’s portfolio is associ-
ated, with those impact areas associated with the largest portion of the portfolio listed first
and those associated with smallest portion of the portfolio listed last. The impact areas are
ranked twice, to reflect both positive and negative impact associations.
For the country views within each profile, the table also shows the level of country need for each
of the impact areas. Wherever the level of need is level 3 or 4 (high or very high), the impact area
shows in bold.
For the Business, Corporate and Investment banking portfolios, the list includes only those impact
areas where the portfolio contains sectors/activities that are ‘key’ for the said impact areas (see
more below).
Example of a ranking of impact associations (Business banking/country view):
The rankings do not provide you directly with the most significant impact areas. They are, however,
intended to act as a stepping stone for the establishment of most significant impact areas (next
worksheet).
iv. a space for open comments & observations: this space is enable users to signal any applicable
caveats or qualifications. These should serve to reflect any gaps in the data inputted to the
tool and/or gaps or divergences in or with the in-built mappings (see more below). Please be
specific when using this section.
24 | Impact identification and assessment for bank portfolios | Using the Tool
Q. *How are the profiles drawn, where do they come from?
A. The profile charts and tables all pull from the following sources:
◾ the data inputted into the ‘Cartography’ worksheet (e.g. the percentage of the business banking portfolio associ-
ated to a given sector/activity).
◾ the ‘Country Need Overview’ worksheet (i.e. the 1-4 ranking of the level of need per impact area for the bank’s
different countries of operation, as shown under ‘my values’)
◾ the ‘Sector/Impact Map’ worksheet. In this worksheet, positive and negative impacts associated with the sectors
and activities in the ISIC industry classification code are mapped out for the 22 impact areas of the Impact Radar.
This mapping builds on the IFC’s EHS Guidelines, as well as UNEP FI’s Risk Briefings. When a sector/activity is
associated with an impact area, a ‘1’ shows in the corresponding cell or cells (one cell if there is only a positive
or only a negative association, two cells if there is both a positive and a negative association). If the sector is ‘key
sector’ for the impact area, a ‘2’ shows. The list of ‘key sectors’ per impact area, along with the justification and
supporting research can be seen in the ‘Key Sector Map’ worksheet. The maps will be further refined and updated
over time based on engagement with experts, as well as to take into account user experience.
Impact identification and assessment for bank portfolios | Using the Tool | 25
Q. Do the profiles show my bank’s actual impacts?
A. No. The profiles illustrate your bank’s potential impacts, not its actual impacts. At this point of the analysis only
descriptive data and set impact mappings have been used; no performance data has been involved yet – this is what
happens next, in the second, ‘Assessment’ phase.
NB. The listing of most significant impact areas is based on the bank’s judgement and cannot be
attributed to UNEP FI.
26 | Impact identification and assessment for bank portfolios | Using the Tool
2. Phase II – Impact Assessment
Up to this point, the analysis has served to understand which impact areas the bank should
concern itself with based on the contents of its portfolio and countries of operation. It remains to
be seen what the bank’s actual impacts are - i.e. what is its performance? Once the most signif-
icant impact areas of the bank have been determined, the next step is to understand what the
status of performance is, so as to further prioritise impact areas, and to help decide what targets
and actions to take. This second phase is called ‘assessment’ in the tool.
The assessment phase is covered in two parts within the tool:
1. ‘Performance’ worksheets, in which the user will collect data on the bank’s performance vis a
vis its Most Significant Impact Areas (as determined in the Identification Phase).
2. The ‘Priority Impact Areas’ worksheet, which provides a mark-up of the ‘Most Significant Impact
Areas’ worksheet based on the conclusions of the user in the ‘Performance’ worksheets.
Four questions are then asked to derive a sense of the bank’s actual impacts, i.e. its performance,
vis a vis the different impact areas.
i. What are the bank’s actual impacts in relation to its most significant impact areas? The aim
here is to collect any available quantitative or qualitative data illustrating the bank’s perfor-
mance. To fill this section you will therefore need to provide specific indicators. An example of
a quantitative indicator for the ‘healthy economies’ impact area might be the number of new
SMEs banked, while an example of a qualitative indicator might be the existence of specific
processes to facilitate on-boarding of new SMEs.
Impact identification and assessment for bank portfolios | Using the Tool | 27
ii. How does the bank’s performance compare with that of its peers? This is intended as one way
of contextualising and interpreting the performance information previously collected, though
ultimately what matters most is how the performance data compares with internationally
recognised, science-based targets and thresholds. Note that benchmarks may not always be
available and/or directly pertinent to the impact areas (see more below).
iii. Where this can be assessed: is the bank’s performance aligned with policy goals and targets
(e.g. Climate Agreement, EU taxonomy, etc.)? Ultimately this is what matters most; when
performance data aligns with such goals and targets, impact needs will start to be fulfilled and
the SDGs will start to be met.
iv. Has the bank faced any controversies in relation to any of the impact areas? In the absence of
performance data, this data point can act as a partial proxy.
Once the above questions have been responded to, users should select the appropriate perfor-
mance status for each impact area. The table below summarises 7 possible levels of performance
based on 4 criteria: availability of data, peer benchmarking, policy alignment and controversies.
Figure 4 below provides the combination of factors per criteria for each level of performance.
Performance Peer
Availability of data Policy alignment Controversies
level benchmarking
No peer No policy No recent or
Unknown No quantitative or qualitative data available benchmarking benchmarking significant
available available controversies
Data (quantitative and/or qualitative) available No recent or
Within or above Aligned with policy
A priori good for a limited number of indicators, hence a priori significant
peer averages targets
status could be determined controversies
Data (quantitative and/or qualitative) available No recent or
Within or above Aligned with policy
Good for several indicators hence status could be significant
peer averages targets
determined controversies
Data (quantitative and/or qualitative) available No recent or
Within peer Aproaching policy
A priori fair for a limited number of indicators, hence a priori significant
averages targets
status could be determined controversies
Data (quantitative and/or qualitative) available No recent or
Within peer Aproaching policy
Fair for several indicators hence status could be significant
averages targets
determined controversies
Data (quantitative and/or qualitative) available Not aligned nor Recent and
Below peer
A priori poor for a limited number of indicators, hence a priori approaching policy significant
averages
status could be determined targets controversies
Data (quantitative and/or qualitative) available Not aligned nor Recent and
Below peer
Poor for several indicators hence status could be approaching policy significant
averages
determined targets controversies
Q. What are examples of policy/regulatory targets? What if there are none to refer to?
A. The EU Taxonomy, with its collection of sectors, activities, indicators, metrics and thresholds is a prime example. The
Taxonomy currently only covers climate change and is of course geographically specific. While similar efforts are
underway for a number of impact areas and geographies, many gaps remain. Where there are no policy/regulatory
targets to refer to, science-based research can be used as an alternative, if/when available.
28 | Impact identification and assessment for bank portfolios | Using the Tool
Q. What are examples of peer benchmarks? What if they don’t cover the impact areas I need?
A. The DJSI, CDP, Corporate Knights are a few examples but there are many others. Many focus on governance aspects
of sustainability, or on a single impact area – not all impact areas are tracked. Where peer benchmarking does not
exist this part of the ‘Performance’ worksheet should be left void.
Impact identification and assessment for bank portfolios | Using the Tool | 29
D. Reporting
Reporting on impact analysis in the context of the Principles for Responsible Banking
The Portfolio Impact Analysis Tool for Banks was designed specifically to support signatories to
the Principles for Responsible Banking (PRB) in achieving Principle 2:
“We will continuously increase our positive impacts while reducing the negative impacts on,
and managing the risks to, people and environment resulting from our activities, products
and services. To this end, we will set and publish targets where we can have the most signifi-
cant impacts.”
Specific PRB requirements as regards impact analysis are outlined in the following documents:
i. Key Steps to be Implemented by Signatories 6
ii. PRB Reporting Template7
The PRB Key Steps state that signatories should:
“Analyse where your bank has significant positive and negative impacts on society, the environ-
ment and the economy. Then identify where your bank can realize the greatest positive impacts
and reduce significant negative impacts.”
The reporting template specifically requires:
“Show that your bank has identified the areas in which it has its most significant (potential)
positive and negative impact through an impact analysis that fulfills the following elements:
Scope, Scale of exposure, Context and Relevance, Scale and intensity/salience of impact.”
Based on the above requirements and following the structure of the PRB reporting template, Figure 5
below is a mapping between the Tool components and specific PRB reporting requirements.
6 unepfi.org/wordpress/wp-content/uploads/2019/07/Key-Steps-to-be-Implemented-by-Signatories.pdf
7 unepfi.org/prb-reporting-and-self-assessment-template/
Show that your bank has identified the areas in which it has its most a. Scope: The Tool workflow specifically includes a review of the
significant (potential) positive and negative impact through an impact bank’s different business areas and countries of operation (see
analysis that fulfills the following elements: ‘Cartography’ segment of phase I – Identification); this ensures
that the analysis is focused on the bank’s core business.
a. Scope: The bank’s core business areas, products/services across
b. Scale of Exposure: The Tool workflow specifically requires users
the main geographies that the bank operates in have been as
to capture the industries, technologies and geographies that the
described under 1.1. have been considered in the scope of the
bank is exposed to and the scale of that exposure (see ‘Cartogra-
analysis.
phy’ segment of phase I – Identification).
b. Scale of Exposure: In identifying its areas of most significant
c. Context & Relevance: The Tool workflow specifically requires
impact the bank has considered where its core business/its major
users to capture the most relevant challenges and priorities
activities lie in terms of industries, technologies and geographies.
related to sustainable development in the countries/regions in
c. Context & Relevance: Your bank has taken into account the most
which it operates (see ‘Country needs’ segment of phase I – Iden-
relevant challenges and priorities related to sustainable develop-
tification).
ment in the countries/regions in which it operates.
d. Scale and intensity/salience of impact: In identifying its areas of The impact analysis as a whole is directly dependent on the identifica-
most significant impact, the bank has considered the scale and tion of the bank’s core business activities, it’s different exposures, and
intensity/salience of the (potential) social, economic and environ- the context in which it operates.
mental impacts resulting from the bank’s activities and provision d. Scale and intensity/salience of impact: The Tool methodology
of products and services. singles out areas where the scale/ intensity/salience of impacts
(Your bank should have engaged with relevant stakeholders to help is highest. This is done vis a vis sectors/technologies via the
inform your analysis under elements c) and d)). ‘Sector/Impact map’ and ‘Key sector mapping’, which single out
sectors and activities that are ‘key’ to different impact areas/
topics. Such ‘key sectors’ are prioritised in the identification of
most significant impact areas. Scale/salience/intensity is also
captured vis a vis the bank’s countries of operation (based on
the level of income of the country) and vis a vis the typology of
the bank’s clients (see ‘Client/Impact map’). Finally, the scale of
the bank’s actual impacts are reviewed in the second phase of
the analysis (“Impact Assessment”), where the bank assesses
its performance vis a vis its most significant impact areas (see
“Performance” worksheets).
Stakeholder engagement: It is expected that relevant stakeholders
be engaged as part of the process of completing the analysis; for
instance public authorities and civil society organisations, including
academia, can be called on to consolidate the determination of coun-
try impact needs, while industry and topic experts might be called on
in finessing users’ assessment of their impact performance.
Availability, accessibility, affordability and quality (degree to which a set of inherent characteristics
fulfils needs) of…
Water Population’s accessibility to sufficient, safe, acceptable and affordable water for
personal, domestic and economic uses. Safe water is water free from micro-
organisms, chemical substances and radiological hazards that constitute a
threat to a person’s health.
International source:
United Nations Office of the High Commissioner for Human Rights (OHCHR),
UN-Water
Food Population’s accessibility, physical, social and economic, to sufficient, safe and
nutritious food which meets their dietary needs and food preferences for an
active and healthy life.
International source:
Food and Agriculture Organization of the United Nations (FAO)
Health and Population’s ability to live in a state of physical, mental and social well-being,
sanitation including but not limited to the absence of disease or infirmity. This includes the
ability to access quality essential health-care services and effective, quality and
affordable essential medicines and vaccines. It also includes sanitation, which
refers to population’s accessibility to facilities and services that ensure privacy
and dignity, ensuring a clean and healthy living environment for all.
International source:
World Health Organization (WHO), UN-Water
Employment Population’s accessibility to full and productive employment and decent work,
which delivers a fair income, security in the workplace, social protection for
families, and involves prospects for personal development and social integration,
freedom for people to express their concerns, organize and participate in the
decisions that affect their lives and equality of opportunity and treatment.
International source:
The International Labour Organisation
Information Population’s accessibility to information and ideas through any media regardless
of frontiers. This includes universal and affordable access to information and
communications technology.
International source:
Universal Declaration of Human Rights, UNESCO, United Nations General
Assembly
Culture and Population’s ability to access and participate in cultural life, to enjoy the arts
heritage and to share in scientific advancement and its benefits. This includes the
safeguarding and promotion of cultural heritage in all its forms: tangible and
intangible, cultural and natural, movable and immovable.
International source:
UN General Assembly, Universal Declaration of Human Rights, UNESCO
Integrity and Population’s ability (read as ability of the person) to enjoy freedom from injury
security of to the body and mind; freedom from torture and cruel, inhuman or degrading
person treatment or punishment; freedom from slavery and servitude. It also includes
data security, data privacy and protection.
International source:
United Nations General Assembly, Universal Declaration of Human Rights, United
Nations Human Rights Committee, United Nations Development Group
Quality (physical and chemical composition and properties) and/or efficient use of…
Soil Composition of soil and its ability to deliver ecosystem services, in terms of
food production, as biodiversity pools and as a regulator of gases, water and
nutrients. Exposure to pollutants and factors that may interfere with this ability
and soil stability.
International source:
United Nations Glossary, FAO, European Environment Agency
Biodiversity Variety of living organisms from all sources including, terrestrial, marine and
and aquatic ecosystems and the ecosystems they are part of. This includes diversity
ecosystems within species, between species and of ecosystems.
International source:
United Nations, Convention on Biological Diversity
Climate Composition of the global atmosphere and its exposure to greenhouse gas
(GHG) emissions as a direct factor contributing to climate change.
International source:
Intergovernmental Panel on Climate Change
Waste Ability to manage waste, including the control, monitoring and regulation of
the production, collection, transport, treatment and disposal of waste, and the
prevention of waste production through in-process modifications, reuse and
recycling during a project lifecycle. This includes waste reduction.
International source:
United Nations Glossary, United Nations General Assembly
Economic value creation for people and society as a means for meeting human needs within the
confines of our environment
Inclusive, Development and creation of sustainable, diverse and innovative markets, that
healthy add value to society and the economy. This includes under-served social groups’
economies full and fair accessibility to labour markets, finance and entrepreneurship and,
more generally, economic opportunity. It also includes, but is not limited to,
access to affordable, effective and safe financial services for individuals as well
as micro-, small and medium-sized enterprises.
International source:
European Bank for Reconstruction and Development, OECD, United Nations
Special Advocate for Inclusive Finance, United Nations Development Programme,
SDGs
Economic Ability of countries to reduce inequality at the level of average per capita income.
convergence International source:
United Nations Department of Economic and Social Affairs