3 Minutes to Read by 3 Minutes to Read by 3 Minutes to Read by 3 FILE PHOTO: On January 27, 2017, the logo of Swiss bank UBS is visible at a branch office in Zurich, Switzerland. REUTERS/File Photo/Arnd Wiegmann LONDON/ZURICH (Reuters) – On Wednesday, a consortium of banks, including UBS and DBS in Singapore, revealed plans to develop a new means of monitoring the environmental and social impact of their lending. The Banking for Impact group, which comprises ABN Amro and Danske Bank, will collaborate with Harvard Business School on the project, which aims to aid in the transition to a more sustainable economy. The new reporting criteria will be the first time in the financial sector that such measurements have been tried on this scale. Harvard’s Impact-Weighted Accounts Initiative was established in 2019 and has examined over 1,800 public firms to demonstrate a “significant link” between negative environmental consequences and lower stock prices. The new group’s goal is to create a new reporting system that tracks the impact of loans that standard financial reporting misses. This may reveal, for example, whether money granted by banks was eventually used in a way that polluted the environment or aided in the creation of jobs. In a statement, UBS Chief Executive Ralph Hamers said, “The world economy requires a market-based system where social and environmental repercussions are as clear as financial performance indicators.” Several companies have attempted to value such “externalities” in dollars and cents, but there is presently no standardised way, which would be essential for investors to compare companies in the same industry. By the end of 2022, the group intends to have established a new industry norm, including regulations on how to measure customers’ impact in dollar terms. These measurements can then be used with financial metrics to help banks make decisions. ABN AMRO’s chief executive, Robert Swaak, said: “We undoubtedly have an impact on our stakeholders as a bank. If we measure and report our impact, we will be able to see where we can have the most good influence while reducing our bad impact.” Jane Merriman did the editing. Continue reading