RESPONSIBLE

WEALTH

2023

BUILDING SUSTAINABLE BUSINESS

MODELS IN PRIVATE BANKS:
A PATHWAY TO A BETTER FUTURE
WWF-SINGAPORE SUSTAINABLE PRIVATE BANKING AND WEALTH
MANAGEMENT (SPRING) PILOT STUDY
 © MidJourney

ACKNOWLEDGMENTS CONTENTS
Authors: Akshat Garg, Michelle Loi
CHAPTER 1: EXECUTIVE SUMMARY 5
WWF-Singapore would like to thank the following WWF contributors for their valuable and
insightful inputs for this report and the SPRING framework: CHAPTER 2: INTRODUCTION TO THE SUSTAINABLE PRIVATE BANKING
Kristina Anguelova, Aveline Chan, Nicolle Chan, Gabriel Chng, Amandine Favier, Benoit Goye, AND WEALTH MANAGEMENT (SPRING) FRAMEWORK 8
Regula Hess, Anders Nordheim, Rachel Ow, Nicolas Poolen, Pina Saphira, Ashish Sharma

WWF-Singapore would also like to express our sincerest appreciation to the Center for CHAPTER 3: ABOUT THE PILOT STUDY 10
Sustainable Finance and Private Wealth at the University of Zurich for their contribution in the
development of the SPRING framework.
CHAPTER 4: FINDINGS 12
Contacts:
Akshat Garg, Assistant Vice President, Asia Sustainable Finance - WWF-Singapore: FINDING 1: INTEGRATING SUSTAINABILITY INTO PRIVATE BANKS’
agarg@wwf.sg
OPERATIONS AND POLICIES IS A NECESSITY 12
This report is part of:
Asia Sustainable Finance Initiative FINDING 2: PRIVATE BANKS NEED A COMPREHENSIVE RISK
MANAGEMENT STRATEGY. 15
FINDING 3: NEED FOR BETTER ORGANISATIONAL CULTURE,
AND GOVERNANCE 17
FINDING 4: CLIENT ESG INTERACTION APPROACHES TO DRIVE
Production and design: Raphael Albinati
Published in June 2023 by WWF-Singapore (World Wide Fund for Nature Singapore)
POSITIVE REAL WORLD IMPACT 19
Any reproduction in full or part must mention the title and credit the above-mentioned publisher
as the copyright owner. FINDING 5: NEED FOR LEVERAGING VOTING AND ENGAGEMENT
The World Wide Fund for Nature (WWF) is one of the world’s largest and most respected TO MEET CLIENT SUSTAINABILITY NEEDS 20
independent conservation organisations, with over 5 million supporters and a global network
active in more than 100 countries. WWF’s mission is to stop the degradation of the planet’s
natural environment and to build a future in which people live in harmony with nature. WWF
CHAPTER 5: RECOMMENDATIONS 22
has worked with the finance sector for more than a decade via innovative collaborations that
seek to integrate ESG risks and opportunities into mainstream finance so as to redirect financial CHAPTER 6: LOOKING AHEAD 28
flows to support the global sustainable development agenda. Our approach to sustainable finance
leverages WWF’s conservation expertise as well as our partnerships with companies on key
issues such as water, energy, climate, and food to drive sustainability. Positioned at the cutting APPENDIX: WWF-SINGAPORE SUSTAINABLE PRIVATE BANKING
edge of sustainable finance internationally, WWF contributes directly to leading initiatives, AND WEALTH MANAGEMENT (SPRING) FRAMEWORK 29
including the European Commission’s Platform on Sustainable Finance and the development
of an international green bond standard. WWF also works directly with some of the largest
asset owners in the world on decarbonising investment portfolios. This has allowed us to
strengthen lending and investment criteria for key industry sectors, provide insights and data on
environmental and social risks, fulfil critical research gaps, help unlock innovations in sustainable
finance products, and convene key stakeholders to progress the sustainable finance agenda.

Text © WWF 2023

 CHAPTER 1
EXECUTIVE
SUMMARY

THE LATEST INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE

(IPCC) 6th Assessment Report (AR6) revealed that despite
advancements in climate mitigation legislation and policy, “it is likely
that warming will exceed 1.5 °C during the 21st century.” However,
with concerted action, the 1.5°C increase can still be avoided. There
is a need for rapid and far-reaching transitions in energy, land, urban
and infrastructure systems, and industrial processes. In addition, we
need to prioritise energy conservation and efficiency as well as promote
greater integration throughout the energy system. The AR6 report
provides evidence that the available pathways and solutions can help
people develop resilience and prevent the devastating effects of climate
change. We need to act quickly, as time is running out to tackle the
climate crisis.

With the recent Global Biodiversity Framework (GBF) agreed in

Montreal, there is a clarion call on the need to scale up finance,
progressively aligning all financial flows with the goals and targets of
the GBF. Financial institutions must develop the capacity to identify
material nature-related risks, create nature-related transition plans,
and disclose their impact and reliance on biodiversity.te-induced
natural disasters, water shortages, and lower agricultural yields.

4 |NAME
REPORT BUILDING
YEARSUSTAINABLE BUSINESS MODELS IN PRIVATE BANKS: A PATHWAY TO A BETTER FUTURE 5 5
Further, the ongoing energy crisis and geopolitical
uncertainties are leading to increased complexity
organisations like the Task Force on Climate-Related
Financial Disclosures (TCFD), the Task Force on
IN THIS REPORT, WE OUTLINE THE FOLLOWING OBSERVATIONS
in many markets. In these unprecedented times, Nature-Related Financial (TNFD) Disclosures, FROM WWF-SINGAPORE’S PILOT STUDY:
private banks are well-positioned to engage and the Sustainability Accounting Standards
proactively with clients and partners, guiding them Board (SASB) offer clarity on climate metrics and
through the market’s complexities with high-quality material factors, enabling private banks to integrate MAKE SUSTAINABILITY A STRATEGIC PRIORITY: We are encouraged
advice and insight. sustainability more effectively. The Principles for to see that private banks are making commitments to integrate
Responsible Banking (PRB) also provide guidance sustainability, albeit at the group level. Private banks need to integrate
According to Capgemini’s World Wealth Report
to banks in aligning their business strategies with sustainability into their activities, including setting science-based targets
2020, the wealth of the world’s HNWI reached $74
society’s goals as expressed in the United Nations and increasing their focus on climate and nature-related risks.
trillion in 2019. Furthermore, private banks need to
Sustainable Development Goals (SDGs) and the
prepare themselves for an upcoming disruption, the
Paris Climate Agreement.
Great Wealth Transfer. It is forecast that by the end
of 2045, $84 trillion in wealth will transition from This report introduces a framework for a NEED FOR STRONGER RISK MANAGEMENT: There are some green shoots
one generation to the next. This change will have a comprehensive approach to sustainable investing for with private banks undertaking ESG risk assessments and scenario
huge impact on the wealth management industry. private banks and inspires action towards promoting analysis, using multiple data sources for due diligence at the group level,
Importantly, 27% of overall HNWIs express interest transparency, accountability, and alignment with but it needs to be an integral part of the private banks’ processes.
in sustainable investment products. The trend is planetary boundaries to foster resilience and bring
stronger among HNWI under 40, with nearly half about concrete changes in the economy.
(49%) being interested in sustainable investments.
Following the development of the Sustainable
The younger generation of beneficiaries increasingly
prioritises sustainability and social responsibility,
Private Banking and Wealth Management (SPRING) DEVELOPING BETTER GOVERNANCE STRUCTURES CAN BE HELPFUL:
framework, WWF-Singapore conducted a pilot Most private banks primarily rely on group-level oversight for their ESG
leading to a growing demand for sustainable
study with a small group of private banks based on strategies and execution. Appointing dedicated sustainability officers for
investment options among private banking clients.
the framework questions to assess environmental, private banks and integrating sustainability into board audit or nomination
With the growth in Asia’s wealth management social, and governance (ESG) integration efforts. procedures, could help private banks improve their sustainability governance.
revenue expected to reach $90 billion by 2025,
private banking in Asia is expected to display
significant growth in the coming years as the number
of ultra-high net worth individuals (UHNWIs) in the THE IMPORTANCE OF ESG CONSIDERATIONS IN CLIENT DUE DILIGENCE AND
region increases. It is therefore more relevant than THE CUSTOMER JOURNEY: Using ESG approaches can aid private banks’
ever to stress the importance of sustainable practices understanding of a client's risk profile and investment preferences. Nonetheless,

in private banking and wealth management. private banks are currently lacking in both client profiling and reviewing for ESG
preferences. This leaves banks vulnerable to increased reputational and regulatory
Further, this is in line with the journey of the risks, which may result in missed sustainable investment opportunities.
financial sector. Principles for Responsible
Investment (PRI) has grown to include a network of
5090 signatories, representing over $120 trillion in OPPORTUNITIES TO DEVELOP ENGAGEMENT AND VOTING STRATEGIES TO MEET
assets under management. Regulatory drivers, such CLIENT PREFERENCES. Private banks can play a significant role in promoting
as the EU Action Plan and the Sustainable Finance sustainability by supporting their clients with ESG-focused strategies, exercising

Disclosure Regulations (SFDR), have encouraged the delegated voting and engagement rights, and advocating for better business

financial sector to develop and improve sustainable practices among investee companies.

investing solutions. Guidelines provided by

6 | BUILDING SUSTAINABLE BUSINESS MODELS IN PRIVATE BANKS: A PATHWAY TO A BETTER FUTURE 7

CHAPTER 2 THE SIX-PILLAR FRAMEWORK

INTRODUCTION TO THE The SPRING framework is built on six fundamental

pillars that emphasise the importance of
It evaluates various areas of the private banks’
business, including investments (discretionary

SUSTAINABLE PRIVATE BANKING

sustainability in achieving long-term portfolio portfolio management (DPM), investment advisory,
growth. These pillars underline the role of private and execution), wealth planning, and philanthropy.

AND WEALTH MANAGEMENT

banks in financing sustainable development, No weights have been applied to the indicators,
connecting to the real economy, and protecting and no scores have been assigned to

(SPRING) FRAMEWORK
natural capital. Along with the framework’s 48 the private banks.
sub-indicators, it measures the robustness of
The SPRING framework and the
ESG integration in the private banking sector and
full list of sub-indicators can be
encompasses the private banks’ policies, practices,
found in Appendix 1.
client-related activities, processes, and policies and
commitments.

FOR THE PAST DECADE, WWF-SINGAPORE HAS framework tailored to the needs of private banks
Private banks need to recognize that sustainability is a necessary condition
partnered with banks, investors, regulators, and in addition to the assessment frameworks for PURPOSE for resilient long-term portfolio growth and that they have a crucial role to
play in financing sustainable development.
stock exchanges in Asia to integrate ESG into commercial banks and asset managers. The

mainstream finance and build more resilient and assessment hopes to enable and encourage private

sustainable financial systems. We have developed banks to implement effective strategies to advise

several sustainability frameworks that assess the clients with the right incentives and information
to invest sustainably. To enable this, PBs would
POLICIES Private banks need to develop and publicly disclose policies that outline their
approach to and scope of sustainable investing.
ESG integration practices, policies, and products
of banks (SUSBA), investors (RESPOND), and require distinct governance structures, policies,

financial regulators and central banks (SUSREG). incentive structures, and human capital from those
of the group. To guide the integration of ESG into internal processes and due diligence.
Private banks (PBs) act as advisors to their clients, PROCESSES
and unlike commercial banks or asset managers, Furthermore, scaling up private sector investment

they may have a customised mandate or limited will be crucial for achieving global biodiversity and

discretion in the management of wealth. Due to climate goals, in line with the Paris Agreement
It is necessary to have well-trained individuals with clearly defined roles
their distinct business models, PBs have different and the Global Biodiversity Framework. Private
PEOPLE and responsibilities, along with robust governance structures that ensure
accountability at the board and senior management levels.
strategies they follow to engage, inform, and banks must strive to make a tangible difference on

encourage clients to invest sustainably. the ground in support of the SDGs through their
portfolios. Therefore, the framework also explores
The Sustainable Private Banking and Wealth
PRODUCTS
private banks’ provision of thematic or solution- Sustainable investing is not solely focused on managing risks; it also entails
Management (SPRING) framework builds on the focused investment products to address specific
seizing opportunities by offering the appropriate products and services.

existing frameworks by integrating WWF’s science- ESG issues, as well as their tracking of the overall
based insights and experience, ensuring relevance contribution of their portfolios towards generating
to private bank operations. Keeping this aspect in positive ESG impacts. To ensure that the private bank’s business model is resilient and effectively
mind, WWF-Singapore developed an assessment PORTFOLIO incorporates sustainability, it is crucial to have a strategic overview and set targets
at the portfolio level, enabling the management of risks, impacts, and opportunities.

8 | BUILDING SUSTAINABLE BUSINESS MODELS IN PRIVATE BANKS: A PATHWAY TO A BETTER FUTURE 9 9

 © Jason Houston WWF US

CHAPTER 3
ABOUT THE
PILOT STUDY

SEVEN PRIVATE BANKS WITH A PRESENCE IN The objectives of the pilot are:

Singapore volunteered to participate in the pilot

study during the period of October 2022–February
1 To assess the ESG integration maturity levels
across the above-mentioned six pillars within
2023. The participating private banks have the private banks
headquarters in the US (1), Europe (2), and Asia (4).

We have collected responses from the participating

2 Foster
banks.
deeper working relationships with private

private banks through an online questionnaire,

which comprises questions from the SPRING 3 To identify and support private banks in
areas such as capacity building, training, and
framework sub-indicators. Thereafter, the
respondents were engaged by WWF-Singapore’s enhancing ESG integration

Sustainable Finance team through calls and email Through our study, we recognise that DPM may
exchanges to discuss, review, and understand the currently represent only a small portion of the
private banks’ responses. private bank’s business. However, for this first

The responses are collated and analysed by WWF- version of the SPRING framework, we have

Singapore’s Sustainable Finance teams, and the considered a private bank’s own DPM products

summary results are presented anonymously in the and third-party asset managers’ products. WWF-

next chapter. Singapore assesses global asset managers under our

RESPOND framework.

10 | BUILDING SUSTAINABLE BUSINESS MODELS IN PRIVATE BANKS: A PATHWAY TO A BETTER FUTURE 11

CHAPTER 4
FINDINGS
ALL SEVEN PRIVATE BANKS HAVE MADE PUBLIC COMMITMENTS IN LINE WITH THE OBJECTIVES OF THE
PARIS AGREEMENT TO LIMIT GLOBAL WARMING TO 1.5°C AT THE GROUP LEVEL.

5 OUT OF THE 7 PRIVATE BANKS REFERENCE OR MAP THEIR STRATEGY AND ACTIVITIES TO THE UNITED
NATIONS SUSTAINABLE DEVELOPMENT GOALS (SDGS).

FINDING 1: INTEGRATING SUSTAINABILITY INTO PRIVATE BANKS’ OPERATIONS There is an increasing recognition that climate In our study, 5 out of the 7 private banks integrated

AND POLICIES IS A NECESSITY

change poses significant risks to financial stability sustainability into their private banking activities,
and long-term value creation. The World Economic with commitments and objectives such as meeting
Forum (WEF) 2023 Global Risk Report identifies a set of Sustainable Development Goals (SDGs),
Pillar / Indicator: Purpose / Relevance Of Sustainability In Organization’s Strategy and Vision
biodiversity loss, ecosystem collapse, and human- inclusion of ESG factors in investment decisions,
1.1 Explicit integration of sustainability into private banking activities made environmental damages as top risks. Nature- and a dedicated sustainability-focused committee
1.2 Referencing/mapping of strategy and activities to sustainable development goals (SDGs) related risks can have significant financial impacts or body. All seven private banks have made public
on companies and industries, which in turn can commitments in line with the objectives of the Paris
Pillar/Indicator: Purpose/Industry Collaboration and Participation affect the portfolios of private banks and their Agreement to limit global warming to 1.5°C at the

1.3 Participation in sustainability-related collaborative initiatives clients. For example, extreme weather events such group level. 5 out of the 7 private banks reference
as droughts or hurricanes can disrupt supply chains or map their strategy and activities to the United
Pillar/Indicator: Policies/Responsible Investment Policies and cause physical damage to infrastructure and Nations Sustainable Development Goals (SDGs).
assets, leading to financial losses.
2.1 Sustainability policies covering private banking activities (investments, lending, wealth planning, and
philanthropy) available to the public
Table 1: Ways in which some private banks are currently integrating sustainability considerations
Pillar / Indicator: Policies / Issue-Specific Policies

2.5 Issue-specific policies (palm oil, fisheries and seafood, agriculture) incorporated into investment 1 2 3
decision-making Having a dedicated Focus on expanding Helping clients increase and
2.6 Expectation for investee companies to set science-based targets sustainability planning sustainability offerings and manage sustainable investing
and oversight body AUM under Sustainability, portfolios, tracking portfolio-level
Pillar/Indicator: Portfolio / Metrics and Targets
including ESG factors into carbon footprints, and improving
6.5 Science-based targets for decarbonisation and activities calibrated on low overshoot 1.5C scenarios investment decisions.+ the quality of the reporting on the
and global reduction in CO2 of approximately 50% by 2030 sustainable investing offering

*Finding 1 is established based on the findings from these indicators.

12 | BUILDING SUSTAINABLE BUSINESS MODELS IN PRIVATE BANKS: A PATHWAY TO A BETTER FUTURE 13

 Table 3: Voluntary industry initiatives and frameworks banks are signatories of/aligned with

Initiative Number of banks

Task Force on Climate-related Financial Disclosures (TCFD) 7
Principles for Responsible Banking (UN PRB) 4
Net Zero Banking Alliance 4
CDP 4
Principles for Responsible Investment (UN PRI) 3
Taskforce on Nature-related Financial Disclosures (TNFD) 3
FURTHER, MOST (4 OUT OF 7) OF THE BANKS HAVE YET TO SET THEIR SCIENCE-BASED TARGETS FOR Equator Principles 3
DECARBONISATION, WHILE THREE PRIVATE BANKS HAVE DONE SO. Global Reporting Initiative (GRI) 3
UNEP FI 3
Others (22 initiatives) -

Table 2: Current policy maturity among surveyed banks

FINDING 2: PRIVATE BANKS NEED A COMPREHENSIVE RISK MANAGEMENT STRATEGY
Exclusion Policies Proxy Voting Policies Issue-specific policies Pillar / Indicator: Processes / Research, Stock Monitoring And Risk Management

Yes: 5/7 Yes: 3/7 Yes: 2/7 3.3 ESG investment due diligence in its private banking activities
• Fossil Fuels (Coal, O&G): 2/7
• Others (such as palm oil and tobacco): 3/7 Pillar / Indicator: Portfolio / Risk Assessment

6.1 Continuous monitoring of the portfolio for E&S risk incidents (e.g., deforestation, water scarcity, or
No: 2/7 No: 4/7 No: 5/7
human rights violations)
6.2 Periodic review and disclosure of portfolio exposure to climate-related risks using scenario analysis
6.3 Strategy to manage and mitigate climate-related risks across portfolios
In general, we observe that exclusion policies Among the industry initiatives, all participating
formed the first step for most banks. Banks further private banks are supporters of the Task Force on
ahead in their sustainability journey additionally Climate-related Financial Disclosures (TCFD), *Finding 2 is established based on the findings from these indicators.

had proxy voting policies and issue-focused policies, with Principles for Responsible Banking (NZBA)
catering to specific challenges or scenarios. It is and CDP seeing greater uptake among the private The recent bank failures have highlighted the holistic business and risk management mindset
encouraging to see that, apart from climate, nature banks. Notably, the signing entity for these industry importance of risk management. Trust and a are critical. When the board and top management
and biodiversity policies are being developed, initiatives for all seven private banks is at the group strong culture of transparency drive the conduct or prioritises a culture of ethics and compliance, it helps
indicating the recognition of the rising materiality of level. behaviour of its employees. As the risks private banks people at all levels of the company break down the
biodiversity loss. face become more complex, the design, assessment, many existing silos and collaborate. This crisis offers
and approaches to risk management and mitigation the perfect opportunity for all financial institutions,
must be adapted accordingly. As such, having including private banks, to refocus on good business
effective corporate governance and adopting a more and risk practices.

14 | BUILDING SUSTAINABLE BUSINESS MODELS IN PRIVATE BANKS: A PATHWAY TO A BETTER FUTURE

15
 FINDING 3: NEED FOR BETTER ORGANISATIONAL CULTURE, AND GOVERNANCE
Graphic: Current risk management of surveyed banks

Pillar / Indicator: People/Governance

RISK MANAGEMENT
4.1 Clearly defined E&S strategy structure, roles, and responsibilities for individuals, teams/committees
4 of 7 private banks reported that they continually check their 4.3 Internal control system with three lines of defence to manage E&S issues
portfolios for environmental and social risk events, such as 4.4 Sustainability as terms of reference for the board’s nominating committee or director appointment
deforestation and violations of human rights, 4.5 Sustainability as a term of reference for the board’s audit committee
● ‌Two do not currently do so, and one is setting up the monitoring 4.6 Commitment to increase diversity (e.g., gender) at the board/senior management level
procedures.

● Additionally, 4 out of 7 private banks indicated that they have a * Finding 3 is established based on the findings from these indicators.

strategy to manage and mitigate climate-related risks across their

portfolios.
The principle of governance is crucial for advancing the quest in
meeting sustainability goals. While group-level supervision exists,
private banks could benefit from having specialised structures due to

FORWARD-LOOKING RISK ANALYSIS their distinctive business model. From the private banks surveyed,
only one employs a dedicated sustainability officer for private banking.

5 out of the 7 banks are using forward-looking risk analysis methods, Enhancing integration at board level appointments could aid in

such as scenario analysis, to review their ESG risk profiles. achieving this objective. On a positive note, most banks are showing
commitments to enhance diversity within their organisations.
● The scope of scenario analysis varies across the banks, with
two focused on discretionary portfolio management (DPM),
investment advisory, and wealth planning.

● Three others are conducting analysis at the group level, excluding

wealth management and/or focused on the credit book.

DATA FOR DUE DILIGENCE

● All of the banks surveyed are using at least one data type for ESG
investment due diligence in their private banking activities, while
5 out of 7 banks use two or more data types.

● Raw data from external providers: 4

● External ESG rating: 4
● In-house ESG analysis/ESG scoring methodology: 3

16 | BUILDING SUSTAINABLE BUSINESS MODELS IN PRIVATE BANKS: A PATHWAY TO A BETTER FUTURE 17

Graphic: Current governance maturity of surveyed banks
FINDING 4: CLIENT ESG INTERACTION APPROACHES TO DRIVE POSITIVE
REAL WORLD IMPACT
GOVERNANCE
Pillar / Indicator : Policies / Responsible Investment Policies

All seven private banks have board-level responsibility for the 2.1 Bank’s sustainability policies, covering private banking activities (Investments, lending, wealth
implementation of the bank’s ESG strategy. planning and philanthropy)
● ‌Only one bank has a dedicated sustainability officer in private 2.2a. Client onboarding policy to review the sustainability preferences of newly onboarded clients
banking. 2.2.b. Actively asking existing clients about their sustainability preferences when providing
● The remaining six are being led by a group chief sustainability officer. investment services and during client reviews

● ‌All private banks in the study have established the fundamental

Pillar / Indicator : Processes / Client Monitoring & Engagement
requirement of an internal control system with three lines of
defence to manage environmental and social (E&S) issues. 3.8 Activities or trainings to raise clients’ awareness on ESG topics
3.9 ESG factors during client onboarding and in regular client profile reviews

BOARD APPOINTMENT *Finding 4 is established based on the findings from these indicators.

3 out of 7 banks include the terms of reference of the board’s audit The private banking and wealth management and factor in the challenges of a complex world,
committee or the criteria used to cover a requirement to consider industry is at an inflection point, with the scope of while ensuring long term wealth creation for their
sustainability. investment advice broadening. This has resulted clients. Yet, the majority (5) of the private banks
in a shift from product-centric strategies to client- in the study do not include ESG factors as a part of
● ‌1 out of 7 banks include the terms of reference of the board’s
centric advisory services, as clients’ demand for client onboarding and regular client profile review
nominating committee or the criteria used in appointing new
comprehensive advice and growing interest in processes. In addition, five banks do not proactively
directors cover a requirement to consider sustainability.
sustainable investing has prompted a change in inquire about the sustainability preferences of their
emphasis. This offers private banks an opportunity existing clients when providing investment services
to create business models that are centred on clients or conducting client reviews.

BOARD DIVERSITY
5 OF THE PRIVATE BANKS IN THE STUDY DO NOT INCLUDE ESG
6 out of 7 banks have the commitment to increase diversity at the
board/senior management level, and/or for portfolio managers/
FACTORS AS A PART OF CLIENT ONBOARDING AND REGULAR
investment teams, primarily in terms of race and gender. CLIENT PROFILE REVIEW PROCESSES.
IN ADDITION, FIVE BANKS DO NOT PROACTIVELY
INQUIRE ABOUT THE SUSTAINABILITY PREFERENCES OF THEIR
EXISTING CLIENTS WHEN PROVIDING INVESTMENT SERVICES OR
CONDUCTING CLIENT REVIEWS.

18 | BUILDING SUSTAINABLE BUSINESS MODELS IN PRIVATE BANKS: A PATHWAY TO A BETTER FUTURE 19

The ESG framework, above all, not only provides exposure to AML/CFT”. Verifying customers’ Chart: Current status of engagement and voting
a set of guidelines that help banks manage risks sources of wealth and funds, instituting a sound
and identify opportunities related to ESG factors performance management framework to foster
but also enables banks to track risks that may a strong risk culture, and exercising active
be brought upon by high-risk accounts, non- senior management oversight were some of
performing assets, or weak governance/oversight the key recommendations of this study. These
structures. For instance, in 2020, the Monetary recommendations are an inherent part of the ESG
Authority of Singapore (MAS) undertook a series process. ESG screening, understanding client ESG ONLY 1 OUT OF THE 7 BANKS VOTES ON THEIR CLIENT’S BEHALF FOR DPM, ADVISORY AND CUSTODIAL
of inspections to strengthen anti-laundering and preferences, and conducting regular reviews are MANDATES.
countering the financing of terrorism (AML/CFT) some of the key elements of a sound risk framework.
in private banks, which have an “inherently higher

FINDING 5: NEED FOR LEVERAGING VOTING AND ENGAGEMENT TO MEET CLIENT

SUSTAINABILITY NEEDS NONE OF THE PRIVATE BANKS HAVE A PROCESS OR GUIDELINES THAT DEMONSTRATE HOW THE
BANK PRIORITISES ISSUES AND COMPANIES FOR ENGAGEMENT OR MECHANISMS FOR ESCALATION IF
Pillar/Indicator : Processes / Active Ownership
ENGAGEMENT FAILS (E.G., SHAREHOLDER RESOLUTIONS, DIVESTMENT).
3.10 Active ownership services in wealth management
3.12 Processes or guidelines for prioritising issues and companies for engagement.
3.13 Bank mechanism for escalation if engagement fails (e.g. shareholder resolutions, divestment)
3.14 Participation in any collective engagements on ESG issues in the last reporting year

*Finding 5 is established based on the findings from these indicators. NONE OF THE PRIVATE BANKS PARTICIPATED/DISCLOSED IN ANY COLLECTIVE ENGAGEMENTS ON ESG
ISSUES.
Historically, the stewardship role has been By understanding their clients’ sustainability
predominantly restricted to institutional investors, criteria, private banks can develop custom mandates
with minimal engagement from private banks. and systematically use delegated voting and
However, there is a rising interest among individual engagement rights to advocate for better business
investors as well, and interventions by prominent practices in investee companies and progressively
investors have demonstrated that individuals can promote a more sustainable and responsible
influence investee companies through exercising financial ecosystem. NONE OF THE PRIVATE BANKS EXPECTS ALL INVESTEE COMPANIES UNDER THEIR DISCRETIONARY
voting rights and engagement. PORTFOLIO MANAGEMENT TO SET SCIENCE-BASED TARGETS.

20 | BUILDING SUSTAINABLE BUSINESS MODELS IN PRIVATE BANKS: A PATHWAY TO A BETTER FUTURE 21

CHAPTER 5
RECOMMENDATIONS
2 A STRONGER EMPHASIS ON CLIMATE AND NATURE-RELATED RISKS IS NEEDED:
Our assessment found that only two private banks nature considerations into their financial and
have clear policies on issues such as palm oil, investment decision-making processes. While
fisheries, and seafood, while others have broad data for nature is currently limited and would
statements and frameworks. Private banks are still develop gradually , there exist a number of
in the early stages of considering nature-related guidelines that can support private banks, such
risks in their business activities. While we recognize as TCFD, TNFD’s Leap Framework, and WWF’s
1 SUSTAINABILITY NEEDS TO BE AN INTEGRAL PART OF PRIVATE BANKS’ BUSINESS MODELS AND DRIVE that challenges might exist in the measurement of guide to managing deforestation and conversion
CLIMATE SOLUTIONS THROUGH COLLABORATIONS WITHIN INDUSTRY COALITIONS: nature-related financial risks, it is prudent to start risks for financial institutions.
soon to be prepared to manage nature-related risks
While private banks tend to be part of a larger We recognise that while industry-wide frameworks ● Adopt and execute ambitious policies that
and opportunities and be best positioned to support
banking group/entity, their business models, are essential, regional discrepancies in regulatory are grounded in the latest climate science
and advise their clients.
operations, and clients are significantly different structures should be accommodated. for the sectors and industries most at risk
from commercial banking or the asset management Furthermore, only 2 out of 7 private banks have from climate and nature-related risks:
We recommend private banks consider participating
business. With a strong focus on wealth preservation coal and/or oil and gas exclusion policies. More
in industry initiatives, promoting best practices, a. Fossil Fuels: Private banks can
for their clients, private banks tend to have a longer- than 80% of the combustion of fossil fuels emits
and exchanging knowledge. Collaborating with extend group-level exclusion policies to
term investment and financing horizon, which billions of tonnes of harmful carbon dioxide, which
relevant stakeholders such as industry peers, discretionary portfolio management services
aligns with sustainability considerations. is the biggest driver of climate change. Regardless
academic institutions, government entities, and and lombard facilities towards investments
of whether it uses fossil fuels or renewable sources,
Regulators are increasingly requiring financial non-governmental organisations can help advance in fossil fuels by immediately ceasing
the costs associated with the energy transformation
institutions to include sustainability factors in their efforts that are aligned with a 1.5°C pathway. It the construction of new coal, oil, and gas
have an impact on nature and communities that
operations. By doing so, private banks are better is also important to engage with policymakers to extraction and infrastructure projects, except
are close to energy production sites or involved in
placed to identify and mitigate ESG risks and drive advocate for stricter environmental and sustainable for those that are already committed.
manufacturing equipment for energy production.
sustainability integration within the bank. Hence, finance regulations in the jurisdictions where
— Stop investments in new coal plants and
private banks should embrace sustainability as a private banks conduct their business. As such, we recommend that all private banks move
phase out all coal mines, coal plants, and
crucial aspect of building sustainable investment swiftly to:
coal infrastructure from investments and
and financing portfolios, which can enhance their
● Identify and integrate climate and nature- financing by 2030, in line with IPCC (P1
long-term business resilience and performance,
related risks: Private banks should identify, and P2) and IEA (Net-Zero Emissions by
while also reducing potential negative impacts on
understand, and map their asset risk profile (as 2050) pathways
the environment and society.
% of AUM) to identify possible risk hotspots
— Phase out all extraction, infrastructure,
and develop short-term, medium-term, and
trade, and financing related to oil and gas
long-term goals that incorporate climate and
from investments and financing by 2040.

22 | BUILDING SUSTAINABLE BUSINESS MODELS IN PRIVATE BANKS: A PATHWAY TO A BETTER FUTURE 23

 b. Agriculture, Forestry and Soft portfolios would assess the sustainability 3 ROBUST SUSTAINABILITY GOVERNANCE IS A KEY ELEMENT FOR THE SUCCESS OF EMBEDDING
Commodities: Engage with companies of their investments, taking ESG risks
SUSTAINABILITY WITHIN ORGANISATIONS:
(under DPM, with client consent provided) and opportunities into consideration.
and outline a well-defined objective, a Additionally, a sustainable rating/profile of For the successful integration of sustainability ● Private banks should create clear roles and
specified timeline, and intermediate targets investment options could help clients better across private banks, we believe that private responsibilities for individuals or committees
to monitor progress towards the objective. understand the impact of an investee company banks need to establish the foundation of good responsible for executing the sustainability
End investments and financing in companies on the environment and the ESG risks it faces. sustainability governance. An effective governance strategy and overseeing the management of
consistently linked to deforestation and land PBs can use the scores to price services and structure can enable better decision-making, environmental and social risks and impacts
conversions through their supply chains. lending, incentivizing sustainable investments. manage sustainability risks and opportunities, throughout the organisation.
Exercise proxy voting rights to support It would also help clients make more informed and drive value creation. A resilient governance
● Implement internal controls and audits using
resolutions that prioritise the eradication of investment decisions, promote sustainability, framework should ensure that the paths to change
the three lines of defence approach to ensure
deforestation and the conversion of activities. and lower financing risks. are feasible and promote the move from targets to
the effective implementation of sustainability
concrete ESG outcomes.
The involvement and education of clients, With nature-related risks slowly gaining attention policies. As sustainability is a transformational
especially in terms of risk awareness, is across the financial industry, market-led ● Board leadership in the form of sustainability process, having a strong governance structure
particularly important given the specific frameworks and initiatives such as the TNFD and committees, both at the executive and can ensure successful transformation and long-
Asian context and the distinctive character of Equator Principles are helpful in assessing and management levels, can help ensure effective term success for private banks.
the private banking sector for the successful managing environmental risks. These initiatives oversight and cross-divisional collaboration,
implementation of such policies. provide private banks with a best-practice which is essential for delivering against
framework for understanding and acting on nature- sustainability plans.
c. Develop “green scores” for clients’
related risks and opportunities. They also provide
portfolios and investment options:
an opportunity to collaborate with other financial
To promote sustainable investments and
institutions and governments in advancing best 4 SUSTAINABILITY-LINKED REMUNERATION CAN SUPPORT THE DELIVERY OF OUTCOMES
manage financing risks, private banks (PBs)
practices and insights, learn from others, and Sustainability-linked key performance indicators
can develop a system of “green scores”
contribute to the development of industry standards (KPIs) have the potential to support the
for both client portfolios and investment
and guidelines for sustainable finance. achievement of sustainability outcomes and
options. A “green score” for client
progress against sustainability objectives. Linking

CLIMATE AND NATURE-RELATED FINANCIAL RISKS FRAMEWORK specific components of executive compensation to
ESG performance metrics can highlight a private
Disclose and report on bank’s commitment to its sustainability goals and
Identify and integrate climate
climate-related risks and
and nature-related risks
opportunities
increase the focus of senior executives on their role
and responsibility in delivering on these ambitions.

With increasing regulatory action, investor

1 2 3 4
demands, and global awareness of sustainability,
private banks need to foster a strong sustainability
culture and ensure that their employees are truly
invested in building sustainable organisations to
drive progress towards their sustainability goals and
create long-term value for all stakeholders.
Conduct and monitor climate
and nature-related financial Engage and collaborate with
risks assessments multiple stakeholders.

24 | BUILDING SUSTAINABLE BUSINESS MODELS IN PRIVATE BANKS: A PATHWAY TO A BETTER FUTURE 25

5 D RIVE LEADERSHIP THROUGH ADVOCACY 7 ENHANCE THE CLIENT ENGAGEMENT PROCESS
AND EDUCATION It was surprising to find that 5 out of the 7 banks — Due diligence process that states the
According to the World Wealth Report 2022 bank respondents have begun to advocate for in the study neither perform ESG due diligence frequency of client reviews and how the
published by Capgemini, more than half (55%) sustainability and educate their clients, employees, during the client onboarding and client profile process is carried out to identify and assess
of high-net-worth individuals (HNWIs) consider and the public on these issues, from hosting review processes nor proactively seek clients’ ESG ESG risks and opportunities
environmental, social, and governance (ESG) factors sustainability events and conferences to engaging preferences. Incorporating ESG factors into the
● Offer sustainable financial products that align
as important investment objectives. The trend is clients and other stakeholders and raising client engagement process is an important aspect of
with the ESG profile of the clients, such as
particularly pertinent among individuals under 40 awareness of sustainability issues. risk management as it can help private banks better
impact investments, sustainable funds, etc.
years of age, with 71% agreeing. ESG concerns include understand and manage ESG-related risks, such as
We encourage private banks to continue to educate
environmental risks, corporate governance, and the regulatory changes, reputational risks, and supply ● Integrate ESG risks into decision-making when
their clients on the importance of sustainability and
need for robust risk and compliance frameworks. chain disruptions. deciding whether to accept a new client (e.g.,
provide clients with sustainable investment and
potential reputational risks).
Based on the pilot study, we are heartened financing options through favourable conditions, We recommend private banks include the following
to see that most (6 out of 7) of the private such as lower interest rates and reduced fees. steps as they improve the way they interact with and ● Include ESG preferences as part of the suitability
advise clients: assessment when providing investment advice
and products.
6 ACTIVE ENGAGEMENT CAN BE A KEY LEVER FOR CATALYSING CHANGE ● Create a client onboarding policy and share it
with relationship managers, investment staff,
As sustainability issues become more material, This is a business opportunity for private banks and clients for transparency. The onboarding
clients may look to take a more active stance to to onboard new clients who wish to leverage policy can include:
influence a company’s governance and practices. their power as shareholders to promote positive
— ESG client questionnaire, which seeks to
Private banks may develop and publicly disclose change and encourage investee companies to adopt
understand the client’s ESG preferences,
a clear active engagement approach to meet these sustainable practices through voting and engaging
values, and priorities, should include
emerging client needs. These include: with them on ESG issues.
questions on topics such as climate
● An engagement strategy with time-bound Lastly, participating in collective engagements and change, social responsibility, and corporate
expectations and targets clearly communicated disclosing the role they play in these collaborative governance. These preferences should be
and an escalation mechanism initiatives is an important step in fostering integrated into the client’s profile and know-
accountability and holding themselves and other your-customer process.
● Offer proxy-voting services for their managed
stakeholders accountable for meeting ESG targets
assets, vote on ESG resolutions, and disclose
and commitments.
their voting behaviour.

26 | BUILDING SUSTAINABLE BUSINESS MODELS IN PRIVATE BANKS: A PATHWAY TO A BETTER FUTURE 27

CHAPTER 6 APPENDIX: WWF-SINGAPORE SUSTAINABLE PRIVATE BANKING
AND WEALTH MANAGEMENT (SPRING) FRAMEWORK
LOOKING PURPOSE
AHEAD 1. RELEVANCE OF 1.1 Does the bank explicitly integrate sustainability into the private banking

SUSTAINABILITY IN activities? Please share the objectives and commitments that have been set
in the bank’s strategy and indicate if these objectives and commitments are
ORGANIZATION’S applicable to private banking activities.
STRATEGY AND — Reduce GHG emissions in line with the Paris Agreement to limit global
VISION warming to 1.5°C (AuMs)
— Expand AuMs invested in sustainable strategies
— Improve quality of existing sustainable investing offering
— Develop new sustainable investing offerings that cover more
geographical areas (e.g., emerging markets)
— Expand the sustainable investing offering w.r.t. more asset classes
— Expand the sustainable investing offering w.r.t. SI approaches
Finance is a lever for change that can help deliver Leading thoughtfully and progressing on climate — Strengthen the staff training on sustainable investing
an equitable, net-zero, nature-positive future, and mitigation and adaptation efforts, while also — Improve the quality of the reporting on the sustainable investing offering
financial institutions must make concerted efforts facilitating innovation, will help private banks in — Help clients with SI already in the portfolio to increase sustainable
to integrate ESG sustainability into their investment navigating evolving client needs and addressing investing
— Help clients without SI in the portfolio to invest in sustainable investing
and/or financing portfolios. According to estimates, some of the most critical sustainability challenges,
— Others
private financial institutions will be able to generate such as climate change,water scarcity, deforestation,
nearly $3.5 trillion in annual financing between
2022 and 2050 in a favourable environment.
and social issues.
1.2 Does the bank make reference/maps its strategy and activities to
sustainable development goals (SDGs)? If yes, please specify.
WWF-Singapore’s Sustainable Private Banking and
There is much more to be done. Private banks have Wealth Management (SPRING) framework, along
2. INDUSTRY 1.3 Which sustainability-related collaborative initiatives does the private bank
considerable potential, influence, and financial with other tools and industry guidelines such as
COLLABORATION AND participate in? Please describe your participation (founding member, part
of working groups etc.).
resources to augment their sustainability agendas, the ABS Sustainable Private Banking and Wealth
PARTICIPATION
facilitate the transition to a net-zero future Management Guidelines, aim to drive change in — Principles for Responsible — The Global Reporting Initiative
Investment (UN PRI) (GRI)
through the integration of ESG considerations private banking and wealth management, driving
— Principles for Responsible — Montreal Carbon Pledge
into their investment and financing decisions, and equitable and sustained positive impact for future
Banking (UN PRB) — SBTi
mobilise capital towards sustainable investments. generations.
— Task Force on Climate-related — Asia Investor Group on Climate
Furthermore, they play a crucial and multifaceted Financial Disclosures (TCFD) Change (AIGCC)
role in advancing sustainability through the Recommendations — CA100+
products, services, and advice that they provide to — Taskforce on Nature-related — UNEP FI
Financial Disclosures (TNFD) — Sustainable Blue Economy
clients and investors.
— Eurosif Finance Principles
— Poseidon Principles — Other international initiatives
— Net Zero Asset Managers (please specify)
— Net Zero Banking Alliance — Other national initiatives (please
— CDP - Carbon Disclosure Project specify)
— Equator Principles

28 | BUILDING SUSTAINABLE BUSINESS MODELS IN PRIVATE BANKS: A PATHWAY TO A BETTER FUTURE 29

 2. INDUSTRY 1.4 Does the bank advance the sustainability or ESG agenda by driving 3. RESPONSIBLE 2.3 Does the bank periodically review its sustainability policies? If yes, please

COLLABORATION AND awareness through thought leadership, events or research? If yes, please INVESTMENT specify how regularly the review is conducted.

PARTICIPATION
provide examples.
POLICIES
2.4 How do you monitor compliance with the following?
- Sustainability-related laws and regulations

POLICIES - Voluntary sustainability commitments of the bank (and specifically WM)

Please provide details and links.

3. RESPONSIBLE 2.1 What are the bank’s sustainability policies, covering private banking

INVESTMENT activities (Investments, lending, wealth planning and philanthropy) and are 4. ISSUE-SPECIFIC 2.5 Does the bank have a policy or statement explaining that the following

POLICIES
they available to the public? Please provide details and links. POLICIES issues are incorporated into investment decision making, for investment
activities? If yes, please provide details and links.
- Across its investment advisory activities
- Climate issues (Y/N)
> Sustainable investment policy (Y/N)
- Nature/ Environmental issues (Y/N)
> Asset class-specific guidelines on ESG in investment management (Y/N)
> Issue-specific policy (Y/N) [besides fossil fuels)
> Sector-specific guidelines on ESG in investment management (Y/N)
[ ] Palm oil
> Group-wide exclusion policy (Y/N)
[ ] Fisheries and seafood
[ ] Oil and Gas
[ ] Agriculture
[ ] Coal
[ ] Others, please specify
[ ] Others, please specify
> Engagement policy (Y/N)
[ ] Does the bank’s engagement policy include guidance (guidelines) on 2.6 Does the bank expect all investee companies under their discretionary
portfolio management to set Science-based targets? If yes, please provide
engagement with policymakers and on how alignment between its
details and links.
influence as an organisation is aligned with its position on sustainable

PROCESSES
finance?
Please provide details and links.
> Proxy voting policy (Y/N)
- Across its lending activities 5. RESEARCH, STOCK 3.1 Does the bank’s global and regional research include ESG considerations
- Across its Wealth planning and philanthropy activities MONITORING AND and identify how these can impact its investment and financing activities?

RISK MANAGEMENT
2.2 Does the bank : 3.2 How does the bank incorporate ESG integration into your investment
processes?
a. Have a client onboarding policy which reviews the sustainability
Examples:
preferences of newly onboarded clients? Yes/No
- using ESG information as a filter
b. Actively ask your existing clients on their sustainability preferences when
providing investment services and during client reviews? - using ESG as a first analysis before the financial analysis
If yes, how do you ask the client’s sustainability preferences? - financial projections also based on ESG
- Sustainable investing (Y/N) - other (please specify)
- Ask for E, S, G preferences (Y/N)
- Ask for SDG preference (Y/N)
- Ask for preferred sustainable investing approaches (e.g., exclusion, ESG,
impact) (Y/N)
- Ask for other thematic preference (please provide detail in “Comment”)
(Y/N)

30 | BUILDING SUSTAINABLE BUSINESS MODELS IN PRIVATE BANKS: A PATHWAY TO A BETTER FUTURE 31

 5. RESEARCH, STOCK 3.3 Do you use the following in your ESG investment due diligence in your 7. ACTIVE OWNERSHIP 3.10 Which active ownership services does the bank offer in wealth management

MONITORING AND private banking activities? for?

RISK MANAGEMENT
- raw data from external providers (Y/N) DPM mandates?
- one external ESG rating (Y/N) - Vote on behalf of client in the last reporting year (Y/N)
- more than one external ESG rating (Y/N) [ ] Climate change
- internal ESG rating (Y/N) [ ] Water risk
- direct requests to investee companies (Y/N) [ ] Deforestation
- in-house ESG analysis / ESG scoring methodology (Y/N) [ ] Human rights
- scenario-analysis / tools for integrating climate risk and opportunities [ ] Others, please specify
(Y/N) - Facilitate client voting (e.g., set up voting interface) (Y/N)
- Others, please specify - Educate on shareholder resolutions (Y/N)
- Engage with company management on ESG issues (Y/N)
3.4 What methods do you use to identify, manage and incorporate ESG risks
(climate change, biodiversity, water risk, etc.) in the following activities
- Employ client assets to help file or co-file shareholder resolutions (Y/N)
Advisory mandates?
(please provide examples):
- Vote on behalf of client in the last reporting year (Y/N)
> Portfolio/product construction and product approval
[ ] Climate change
> Environmental
[ ] Water risk
> Social
[ ] Deforestation
> Governance
[ ] Human rights
> Discretionary Port Management
[ ] Others, please specify
> Environmental
- Facilitate client voting (e.g., set up voting interface) (Y/N)
> Social
- Educate on shareholder resolutions (Y/N)
> Governance
- Engage with company management on ESG issues (Y/N)
> Credit Risk
- Employ client assets to help file or co-file shareholder resolutions (Y/N)
> Environmental
Custodian mandates?
> Social
- Vote on behalf of client in the last reporting year (Y/N)
> Governance
[ ] Climate change

3.5 Does the bank include ESG considerations in its lending activities? [ ] Water risk
[ ] Deforestation
[ ] Human rights
3.6 Does the bank proactively monitor and review the ESG performance of
portfolio companies? [ ] Others, please specify
- Facilitate client voting (e.g., set up voting interface) (Y/N)

3.7 Does the bank implement periodic audits to assess the implementation of
E&S policies and procedures?
- Educate on shareholder resolutions (Y/N)
- Engage with company management on ESG issues (Y/N)
- Employ client assets to help file or co-file shareholder resolutions (Y/N)
6. CLIENT MONITORING 3.8 Does the bank carry out activities or trainings to raise clients’ awareness on

& ENGAGEMENT ESG topics? If yes, how frequently are these activities carried out?
3.11 Does the bank conduct ESG due diligence on third-party service providers
and expect them to be bounded by the bank’s ESG policies?
3.9 Are ESG factors considered during client onboarding and in regular client
profile reviews? Please provide details.
> External asset managers
> External parties used for commercial banking operations
> Other external parties, please state

32 | BUILDING SUSTAINABLE BUSINESS MODELS IN PRIVATE BANKS: A PATHWAY TO A BETTER FUTURE 33

 7. ACTIVE OWNERSHIP 3.12 Does the bank have processes or guidelines which demonstrates how the
bank prioritises issues and companies for engagement?
10. INCENTIVES 4.9 Does the bank consider ESG metrics as part of the appraisal process and/
or integrated into their KPIs for the following personnel? Please provide
examples or details.
3.13 Does the bank have a mechanism for escalation if engagement fails (e.g.
shareholder resolutions, divestment)?
- Client advisors (front staff)
> KPIs (Y/N)
> Linked to remuneration (Y/N)
3.14 Did the bank participate in any collective engagements on ESG issues in the
last reporting year and disclose its role in the collective engagement which it
- Investment Staff (Y/N)
> KPIs (Y/N)
participates in?
> Linked to remuneration (Y/N)

PEOPLE - Senior Management (Y/N)

> KPIs (Y/N)
> Linked to remuneration (Y/N)
8. GOVERNANCE 4.1 Does the bank have a clearly defined structure, with roles and
responsibilities of the individuals, teams/committees involved in the
- Board Members (Y/N)
> KPIs (Y/N)
implementation and monitoring of the bank’s E&S strategy? Please share an
organisation chart on the teams and individuals involved on both the group- > Linked to remuneration (Y/N)
level and private banking arm level. - Other functions across the organisation (Y/N and please state)
> KPIs (Y/N)

4.2 Is there board level responsibility for the implementation of the bank’s ESG
strategy?
> Linked to remuneration (Y/N)

4.3 Does the bank have an internal control system with three lines of defence to PRODUCTS
manage E&S issues? Please provide details.
11. INVESTMENTS 5.1 Does the bank disclose publicly the sustainable investment approaches used

4.4 Do the terms of reference of the board’s nominating committee or the for the sustainable products/funds? Please provide details, the types of
criteria used in appointing new directors cover a requirement to consider investment approaches and products.
sustainability? - Exclusion (Y/N)
- ESG integration (Y/N)
4.5 Do the terms of reference of the board’s audit committee or the criteria used
cover a requirement to consider sustainability?
- Thematic investing (Y/N)
> If yes, how have the themes been selected?
> If yes, which themes are available?
4.6 Does the bank have a commitment to increase diversity at the board/senior
management level, and/or for portfolio managers/investment team? (e.g.
Renewable energy
Energy efficiency
gender)
Biodiversity

9. SKILLS 4.7 Does the bank have dedicated responsible investment/sustainability

specialists? This could be either in-house personnel or the use of specialist
Water
Healthcare
stewardship services. Please include details. Education
Affordable housing
4.8 Does the bank conduct training on ESG/sustainability topics for the
following personnel? Please include details.
Gender and racial equality
Other, please specify
- Client advisors (Y/N) - Impact investment (Y/N)
- Investment Staff (Y/N) > If yes, please provide a description of how your products bring about
- Senior Management (Y/N) positive E&S impact
- Board Members (Y/N) > If yes, do you disclose impact to the clients?
- Other functions across the organisation (Y/N and please state) - ESG screening (Y/N)
- Others (Please state)

34 | BUILDING SUSTAINABLE BUSINESS MODELS IN PRIVATE BANKS: A PATHWAY TO A BETTER FUTURE 35

 5.2 How does the bank track the AUM of sustainable investments? 14. METRICS & 6.4 Does the bank measure non-financial return/impact? Please indicate the
The AuM in SI is tracked in total.
TARGETS frequency of measurement (Monthly, Quarterly, Semi-annually, Annually,
On Request, Other (please specify in comment section. (Drop-down per
> Method (Absolute numbers /Relative numbers)
> Tracked number of AuM method)
The AuM in SI is tracked in WM. > Across aggregated investment portfolio
> Method (Absolute numbers /Relative numbers) - Carbon footprint (Y/N)
> Tracked number of AuM - Carbon emissions avoided (Y/N)
The AuM in SI is tracked in AM. - Water efficiency (Y/N)
> Method (Absolute numbers /Relative numbers) - Energy efficiency (Y/N)
> Tracked number of AuM - Disposal of waste (Y/N)
- Health and safety (Y/N)

12. WEALTH PLANNING 5.3 Does the bank provide philanthropic opportunities to clients? Please - Human capital management (Y/N)

& PHILANTHROPY provide examples or details. - Corporate conduct (Y/N)

- Other, please specify.
5.4 Does the bank take into account ESG factors while assisting clients who
wish to use their philanthropic funds in projects such as concessional
> Across aggregated lending portfolio (Y/N)
- Carbon footprint (Y/N)
finance mechanisms, blended finance projects, etc.? Please provide
- Carbon emissions avoided (Y/N)
examples or details.
- Water efficiency (Y/N)

PORTFOLIO
- Energy efficiency (Y/N)
- Disposal of waste (Y/N)
- Health and safety (Y/N)
13. RISK ASSESSMENT 6.1 Does the bank continuously monitor its portfolio for E&S risk incidents (e.g.
deforestation, water scarcity, or human rights violations)? If yes, please
- Human capital management (Y/N)n
- Corporate conduct (Y/N)
specify the types of risks the bank reviews.

6.2 Does the bank periodically review its portfolio exposure to climate-related 6.5 - Other, please specify.

physical and/or transition risks, using forward-looking scenario analysis,

and disclose the results and methodology used? If yes, please specify which 6.6 Has the bank set a combination of short-term targets and milestones?
mandate (s) is scenario analysis carried out for and what type of scenarios
are used:
- DPM
15. DISCLOSURE 6.7 Do you report or plan to report on climate-related risks and opportunities?
If yes, does the bank publish a TCFD report or align its public reporting
- Investment Advisory with the TCFD recommendations?
- Wealth Planning Please provide the link to the TCFD report and indicate if Wealth
- Others : Please specify Management (and the corresponding details) is included in the report.

6.3 Does the bank have a strategy to manage and mitigate climate-related risks
across its portfolio? If yes, please specify.

36 | BUILDING SUSTAINABLE BUSINESS MODELS IN PRIVATE BANKS: A PATHWAY TO A BETTER FUTURE 37

 6.8 Does the bank disclose the non-financial aspects of your sustainable
investments to your clients?
Drop-down per method:
GHG emissions / carbon footprint
% of excluded instruments from the investment universe
Number of engagements undertaken
Outcomes that resulted from engagement
Number of executed proxy voting
Outcomes that resulted from proxy voting
Realised impact
ESG rating on product level
ESG rating on portfolio level
Other, please specify in comment section below
Sustainability risk assessment (qualitative information)
Sustainability risk assessment (quantitative information)
Other (please specify below)

6.9 Does the bank report on your responsible investing or sustainability

investing actions in:
- a dedicated corporate and social responsibility (CSR) report
- the annual report
- Other (please specify)
Please provide the relevant website links.
Dropdown options for each row:
> Y/N
> Publicly available? (Y/N)

6.10 Does the bank conduct external assurance of its ESG-related disclosures? If
yes, please provide details.

6.11 Does the bank track and disclose progress towards 1.5C alignment at least
annually?

38 | BUILDING SUSTAINABLE BUSINESS MODELS IN PRIVATE BANKS: A PATHWAY TO A BETTER FUTURE 39

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