Responsible thinking becomes a building block for competitiveness
Viktor Bolbat, Chairman of the Management Board of Baltic International Bank
Co-chair of the Finance Latvia Association Strategic Development Committee
Two major political events have marked this year’s spring. In April 2019, the European Banking Authority and the European Banking Federation emphasized the willingness of EU supervisors, regulators and banks to move forward on the various challenges related to sustainable finance and engage in a structured dialogue for incorporating sustainability into EU banks' frameworks and risk management. Great Britain’s and Ireland’s parliaments decided to stick to climate change commitment. In May, MPs passed the largely symbolic motion to declare a climate emergency. The step followed a series of street protests by the Extinction Rebellion environmental campaign group. This notable novelty reflects a change in mind-sets. We stand away from pursuing only our self-interest in terms of comfort, safety, and wellbeing. We have gradually shaped our ability to think ahead, about the world our children and grandchildren will inherit tomorrow and the quality of their life. Businesses, including those in Latvia, transformed their mind-sets to see and do things differently.
What are the main environmental and sustainability issues included on the agenda of the Latvian society? According to Baltic International Bank Latvian Barometer (a monthly survey of public opinions and attitudes in Latvia), the key priorities include waste sorting (75% respondents), refusal to use plastic bags (46%), recycling and reuse of package and other materials (43%), and choices to walk or cycle more / to favour collective or public transport rather than use of personal cars (42%). The survey shows that people regularly and daily practice those activities. However, the number of respondents is well lower because awareness of environmental and sustainability has grown while practical measures are insufficient overall.
These statistics are indicative of that people actually need an extra boost or spur. Employers could undertake such roles and become setters of a good example. It sounds so reasonable, doesn’t it? Responsible action of a business gives a fillip to the employees, then to its clients, and thereafter to the families of the employees and to the people related to the clients. I strongly believe that businesses can achieve a better scale effect that normally is required to get a new idea to take root in society or to catalyze action.
In 2017, we decided to base our further development on an internationally proven ESG approach (ESG is an approach that aims to incorporate environmental, social and governance factors). It was immediately clear that the transition would considerably change Bank’s day-to-day business. Be it making strategic decisions on Management Board-level or holding talks with our client on the potential involvement of Bank in an investment project, we now view all of those aspects through the prism of environmental sustainability, social responsibility, and good governance. The three main pillars on which our organizational business model rests gradually change the worldview of our employees, clients, and partners. For this reason, the involvement of businesses in raising awareness on sustainability issues is so important because businesses exert impact on the public agenda and pinpoint issues of concern.
One year and a half after Bank has embarked on incorporating ESG considerations in its daily activities, I can say that we have set quite an ambitious goal, far from being confined to a mere formulation of messages and strategies, as it may seem to an outside watcher. For organization, this implies the implementation of specific steps and actions, including employee training, raising awareness of clients on ESG approach, defining measurable goals and objectives of environmental protection (CO2 emissions, energy and water consumption, waste management, and others), promoting and upholding the principles of good governance, and everyday organisation-level integration of social issues. Further, we analyze those aspects with respect to our partners and potential clients. To what extent do they adhere to the values to which we are committed on a daily basis? From this point, we start talking with our colleagues and peers from other organizations. The new mindset already manifests itself explicitly, rather than ‘’I’m not interested in his viewpoints, they pay, that’s good... “. I intend to cooperate with you, therefore let me tell you why sustainable attitudes and behaviors are of paramount importance for me.
The bottom line, therefore, is as follows: “Make today decisions that will not make you feel ashamed tomorrow.” I am not a convinced supporter of drastic initiatives proposed by some British politicians who weigh up delisting of firms from the London Stock Exchange if they fail to tackle climate change. However, it is imperative to raise awareness on sustainable attitudes and behaviors, including in a business environment where people make long-term investment decisions. In the light of the fact that our ability to assume responsibility affects the future of ourselves and of our children, I firmly believe that a “component of responsibility” will become one of the building blocks for competitiveness among businesses. Getting prepared timely is worth the effort.