Why all Ugandan financial institutions should enlist for SSCI

By Emmanuel Partaker

Sustainability as regards to financial institutions can be defined as being resilient and value driven by considering the needs of the current generation and society in which they operate without compromising the needs of the future generations.

Sustainability Standards were developed by the European Organisation for Sustainable Development (EOSD). According to Mr. Arshad Rab (CEO, EOSD, and Chairman, International Sustainability Council), “Sustainability standards are the business imperative for any financial institution that is thriving to survive and thrive in this new world which is characterised by frequent shocks and high uncertainties.”

The history of EOSD dates to 2007, while its Europe-wide activities started in 2010 when institutional partners from Belgium, England, France, Germany, Ireland, and the Netherlands united under an EU-funded initiative to stimulate the innovation capacity of SMEs and support the transition to a low-carbon and sustainable economy.

SSCI is the first and only initiative worldwide enabling financial institutions to embrace sustainability holistically, across the board in their organizations. SSCI delivers a holistic, robust, evolving, and locally sensitive set of standards to make value-driven financial institutions resilient and profitable.

Many Banks world over have been certified by EOSD and in Uganda, Uganda Development Bank and Pride Microfinance Ltd have received the Sustainability Certification. In pursuit of this important certification is the regulator of financial institutions in Uganda i.e, Bank of Uganda. Other candidates are PostBank (U) Limited and Housing Finance Bank Limited.

 Noteworthy, only reputable financial institutions around the globe are pre-qualified for SSCI certification program and are required to have demonstrated a strong commitment to sustainability.

Financial Institutions that apply for SSCI are assessed on eight (8) principles referred to as the Octagon Value Creation Model. These principles cover areas of Governance, Management, Technology, Business Models, Operations, Products, Stakeholders’ Relations, and Human Capital.

Although Sustainability has been widely misconstrued to mean ESG (Environmental, Social & Governance), the two are mutually exclusive. ESG refers to a set of criteria used to assess a company's environmental, social, and governance impact while sustainability is the capacity to maintain or endure, focusing on the interplay of environmental, social, and economic factors.

The Sustainability Standards & Certification Initiative (SSCI) is of great importance to financial institutions and will definitely turn their current and emerging challenges into historic long-term success because; it  enables institutions to be highly competitive in an increasingly crowded financial sector and clearly distinguishes them from those institutions that have not fully embraced sustainability or are practicing (often unintentionally) green and social “washing”; SSCI promotes institutional sustainability, which is, the proper working/functioning of an entity.

When a financial institution is strong and resilient, it makes the country’s economy strong while at the same time protecting its natural environment and promoting inclusivity within the workplace.

These standards make social sustainability a part of the innovation strategy and thus provide the certified financial institutions a competitive advantage in the increasingly unpredictable market environment; SSCI is a major enabler for accelerating impact investments and moving sustainability centric investments from niche to mainstream and closing the funding gap for achieving the Sustainable Development Goals (SDGs). Impact Investing is a type of sustainable investing strategy where an investor seeks financial returns alongside a measurable positive impact on society.

Resultantly, sustainability enables Financial Institutions to finance investments that have a positive impact on society and environment; SSCI enables financial institutions to seize market opportunities arising from disruptive technologies.

It makes the technological transformation a major source of success and makes certified institutions some of the most relevant players in the market. This compels financial institutions to become sustainability certified.

Technologies for sustainability are today considered critically important for addressing social, environmental and economic challenges. Financial Institutions will be able to create new income streams and thrive for the long-term in an ever-volatile world; lastly, SSCI is designed to be highly responsive and adaptable, and it promotes organizational agility and resilience to crises such as the coronavirus crisis which required a targeted response to ensure business continuity.

Unlike common crisis management procedures, or mechanisms, SSCI deals with crisis management holistically, in line with its core philosophy. This lays the foundation for creating robust institutions, which are crisis-resilient and crisis-ready.

A such, Sustainability Standards establish an emotional bond between financial institutions and all their stakeholders.

SSCI therefore is an enabler for growth and achieving the UN Sustainable Development Goals (SDGS) and Uganda’s Vision 2040. Suffice to note is that all these can only be achieved through proper financing hence the need for all financial institutions to enlist for SSCI.

The writer is the head of legal services at Post Bank