Fair Finance Pakistan has launched Fair Finance Asia’s latest consumer empowerment scorecard which shows assessed commercial banks – United Bank (UBL), MCB Bank, and the National Bank (NBP) – score low in the areas of financial literacy and education (3.3 out of 10) and accountability and engagement mechanisms (1.2/10).
In presence of other team members, Fair Finance Pakistan Communications Officer Hamail Imtiaz shared details during a press briefing in Lahore. It is pertinent to mention here that Fair Finance Pakistan is a member of Fair Finance Asia and Fair Finance International and seeks to strengthen commitment of financial institutions to social, environmental and human rights standards.
Asim Jaffry suggests banks to support pollution prevention technologies
During the briefing, she told journalists that the banks have scored better on average in financial inclusion (6.7 out of 10), and consumer protection (6.9/10). Empowering Consumers as Drivers of Sustainability in Asia’s Financial Sector, the scorecard benchmarks policies of 15 banks across Pakistan, Cambodia, Indonesia, the Philippines, and Thailand in four key areas: financial inclusion, consumer protection, financial literacy and education, and engagement and accountability mechanisms.
In the thematic area of financial literacy and education, MCB Bank scored 4.2 out of 10, the National Bank 5 out of 10 whereas the United Bank’s score is less than one. None of the assessed banks reported their participation in awareness-raising initiatives for consumers about the ESG impacts of the financial industry. “None of the banks appear to participate in awareness-raising initiatives about sustainable finance targeting young people like students,” it said.
Only the National Bank mentions providing specific training in entrepreneurship and business development for women. On engagement and accountability mechanisms, both the United Bank and the National Bank scored 1.4 out of 10 whereas MCB’s score was 0.9. Overall, the results in this theme indicate that the banks lack systems and channels to engage with consumers on sustainability topics.
It is interesting to note that none of the banks disclose strong processes or have channels in place to systematically collect information on their retail customers/MSMEs’ knowledge and expectations of ESG issues (sustainability profile). None of the assessed banks were able to explain how their sales staff and/or authorized agents communicate proactively with (actual or potential) consumers on their offer of sustainable finance investment products further highlighting a disconnect between banks and their stakeholders.
The three assessed banks do not disclose information regarding the companies or projects they finance. None of these banks disclose the composition of their sustainable investment funds, and do not provide information on the criteria/methodology used to develop them. In the thematic area of the financial consumer protection, both the National Bank and the MCB Bank scored 7.5 whereas score for the United Bank was 5.8.
The assessed commercial banks commit to disclosing the risks related to their products and services and to training their staff in the fair treatment of consumers, a topic that is also overseen by financial regulators. However, it is not always clear whether such trainings are also delivered to authorized agents who are legally empowered to act on behalf of the banks to sell its products and services. The findings revealed none of the assessed banks disclose information to prevent over-indebtedness.
On financial inclusion, the United Bank scored 8.3 out of 10, MCB Bank 5.6 and the National Bank 6.1. Results show all these banks offer products targeting unbanked or underbanked populations and enable customers to open a banking account without maintaining a minimum balance requirement, but do not publicly disclose measurable targets for financial inclusion. The assessed banks provided some information about the groups they target with their financial inclusion strategy, but did not explain the criteria applied to identify them.
Overall, Pakistani and Filipino banks achieved the highest consolidated average scores. Pakistani banks scored an average of 4.2 out of 10. The scorecard’s results show that Asian banks need to balance inclusion goals with financial literacy and consumer empowerment initiatives, ensuring that clients are meaningfully informed about their sustainability strategies and financing practices.
In a statement, Fair Finance Pakistan’s Country Program Lead Asim Jaffry said that addressing pollution requires a coordinated effort, with financial institutions playing a vital role in protecting the environment and promoting sustainability. “While banks fund various businesses, including those that pollute, they can also support pollution prevention technologies,” he said, adding that this enables them to encourage less polluting practices and foster sustainable alternatives.
Mukhtar Ali recommends banks to adopt clear policies on financial disclosure
Center for Peace and Development Initiatives (CPDI) Executive Director Mukhtar Ali strongly recommends the banks to adopt clear policies on financial disclosure in line with requirements of citizens’ right to information, as guaranteed through Article 19A of the constitution. He particularly emphasized the need of disclosing all policies related to investment, human resource, human rights, climate change, complaint mechanisms and financing on websites to ensure transparency and enable peoples’ right to information. “Fairness is possible only when maximum information freely flows in a society,” he said.
Network for Consumer Protection CEO Nadeem Iqbal said that the banking system lacks recognition of vulnerable consumers, necessitating evolution and incorporation of a comprehensive definition. “This definition should encompass not only the traditional vulnerable groups, including women, transgender individuals, and persons with disabilities, but also other marginalized communities that require special consideration,” he said.
Profitability and sustainability are not mutually exclusive. The banking sector is uniquely positioned to influence the global response to the triple planetary crisis, which encompasses climate change, biodiversity loss, and pollution. By integrating pollution considerations into their strategic frameworks, banks can not only mitigate risks but also seize opportunities to contribute to a healthier, more resilient planet. Pollution remains a critical but often overlooked challenge.
The Fair Finance Pakistan coalition highlights banking sector’s role in combating pollution is both a responsibility and an opportunity. By taking decisive actions and aligning with global efforts to address pollution, the banks can play a critical role in creating a more sustainable and resilient future. Fair Finance urges financial institutions to respect and enhance local communities’ social and environmental well-being and to integrate ESG criteria in their business operations.
