Engaging With Emerging Market Banks on Climate Risk
Barings developed an industry tool focused on climate risk.
Why we engaged: Barings continues to engage with banking sector issuers in emerging markets in order to improve their disclosure around corporate governance, financial inclusion, social responsibility and climate risk management. Barings has developed a framework (in the form of a questionnaire) which it has rolled out to the issuers and used this as a basis for deeper issuer engagement and encouraging improved behavior. Alongside this, Barings is part of the EMIA Financial Sector Working Group, an industry initiative for asset managers to collaborate and engage with issuers in emerging markets. Barings is driving greater engagement with emerging markets banks focusing especially on climate change and financial inclusion. Barings has taken the lead in developing an industry tool (EMIA Banking Sector questionnaire) focusing specifically on climate risk which is being used by EMIA members as a basis of sector engagement.
How we have engaged: We have engaged with senior management of emerging markets banks, including in Slovenia and South Africa, based on their response to the climate risk questionnaire. This has included conversations related to reporting their financed emissions disclosure and setting up credible SBTi vetted targets for reduction in the carbon footprint disclosed.
Outcome: As a recent engagement initiative, responses from banks in completing the questionnaire and participating in follow-up dialogue is a positive initial outcome. Going forward, Barings will work with the EMIA group to increase scope of banks engaged, to encourage improved data collection on carbon footprint, as well as evidence of building climate risk analysis into its new loan underwriting in order to pursue engagement objectives. Barings will also continue to engage with banks on an individual basis (outside of the EMIA platform).
