Case study: How BIL works with its clients and customers to encourage sustainable practices

Stakeholder identification and consultation

Please describe which stakeholders (or groups/ types of stakeholders) you have identified, consulted, engaged, collaborated or partnered with for the purpose of implementing the Principles and improving your bank’s impacts. This should include a high-level overview of how your bank has identified relevant stakeholders, what issues were addressed/results achieved and how they fed into the action planning process.

Stakeholders play a crucial role at BIL. They are defined as any individual or group that has a direct or indirect impact on the Bank’s operations or can influence its ability to meet its objectives. To ensure their voices are heard, BIL maintains regular dialogue, engagement, and consultation with stakeholders, incorporating their inquiries and perspectives to enhance the Bank’s operations.

Stakeholder engagement occurs through the Materiality Assessment process. In 2023, BIL undertook a double materiality process that considered both impact and financial materiality. The Bank employs a comprehensive approach to identify, consult, engage, and sustain ongoing communication with stakeholders, selecting them based on their level of dependence and influence. The relevant stakeholders identified include:

• clients (retail, wealth, and corporate),
• BIL employees,
• suppliers,
• shareholders,
• non-profit associations,
• rating agencies, sustainability experts, and consultants,
• governments and regulators,
• supranational sustainability-linked organizations,
• communities and non-profit associations.

Feedback from these stakeholders is consistently integrated into BIL’s decision-making processes. An ILRES survey is conducted annually among individual and corporate clients to assess their satisfaction with the Bank’s products, services, and operations. Similarly, BIL circulates an e-NPS survey among its employees to gather insights on their expectations and opinions. The outcomes of these surveys are discussed internally, and meaningful feedback is used to inform decision-making. BIL also holds regular consultations with shareholders to maintain transparency about company performance, results, risk management, and to address external inquiries.

These communication methods help identify and prioritize the material issues that matter to both the Bank and its stakeholders. The key material issues identified include: the offering of responsible products and services, data protection and ethical use of personal data, financing for green innovation and infrastructure projects, responsible business practices, minimizing environmental impact, ensuring the health, well-being and development of employees, and facilitating technology transition and digitalization.

BIL maintains regular engagement with regulators such as the ABBL through expert meetings and participation in conferences focused on sustainability topics. The Bank also engages with supranational sustainability-linked organizations, including the United Nations Global Compact and UNEP FI Principles for Responsible Banking (PRB), through annual reporting. Additionally, BIL actively interacts with rating agencies regarding ESG performance assessments.

Going forward, BIL is committed to actively engaging with its stakeholders to foster collaborative partnerships, enhance transparency, and address their evolving needs, ensuring a sustainable and mutually beneficial relationship in the long term.

How did BIL work with its clients and customers to encourage sustainable practices and enable sustainable economic activities?

In its 2023 Sustainability Report BIL reports that it works with its clients and customers to encourage sustainable practices and enable sustainable economic activities as follows:

Client Engagement

BIL regularly consults with its clients and customers to understand their preferences, assess satisfaction, resolve complaints, and reflect on suggestions for the Bank’s future strategic initiatives. The aim of these interactions is to ensure that BIL actively listens to its clients and meets their needs through its product offerings, services, and personalized advice, all with the highest level of transparency. BIL’s relationship managers and advisors possess the expertise to provide tailored advice based on each client’s specific needs and level of awareness. With multiple branches located throughout Luxembourg, clients can easily meet with their relationship managers for discussions. Additionally, BILnet, BIL’s banking application, allows clients to access their accounts digitally at any time and from anywhere. Other digital platforms include BIL’s website, www.bil.com, and its social media channels (Facebook, LinkedIn, Instagram, TikTok, and Twitter). Furthermore, BIL hosts various client events and conferences throughout the year to engage with its diverse clientele.

In line with the European Regulation (EU) 2019/2088, known as the Sustainable Finance Disclosure Regulation (SFDR), financial market participants and advisors in the EU are required to disclose how they integrate sustainability risks and consider any adverse sustainability impacts in their investment processes.

BIL addresses these sustainability risks through a comprehensive approach outlined in its Sustainability Risk Policy.

On June 30, 2023, as mandated by Article 4 of the SFDR, BIL published its inaugural Principal Adverse Impact report.

This report details how the Group assesses the Principal Adverse Impacts (PAIs) of its investment decisions on sustainability factors, and summarizes its investment due diligence policies and associated processes.

The MiFID II Directive sets out rules and guidelines concerning governance, products, investor protection, and information disclosure. Since August 2, 2022, banks are required to gather information about clients’ sustainability preferences and consider them in the advisory process.

In 2023, BIL continued to collect ESG preferences from clients through the initial version of its MiFID questionnaire. Alongside this, the Bank is refining its MiFID questionnaire to capture more detailed data, which will be launched in 2024. On the product side, BIL has implemented a sustainability investment framework to provide a standardized approach for defining why and how financial instruments are deemed sustainable. In 2024, BIL will further enhance its offerings and approach as the market and available data evolve.

Employee Training

As one of the largest employers in the banking sector in Luxembourg, BIL recognizes its crucial role in raising awareness among its workforce. A key part of this is training employees who directly interact with its clients.

In September 2023, all 40 of BIL’s Housing Advisors and their direct management attended four in-person training sessions focused on ESG issues. These three-hour sessions clarified the Housing Advisors’ responsibilities as the first line of defense in evaluating physical and transition risks associated with real estate. They are now equipped to advise clients on renovation options and guide them to the relevant bodies for accessing various subsidies and support available.

Additionally, over 250 employees from different departments received training on ESG investment topics. This training encompassed ESG awareness and client preferences, BIL’s Sustainable Investment Solutions, ESG client conversations, and SFDR-related disclosures. Training investment advisors in ESG is essential, as it equips them with the necessary knowledge and skills to navigate the changing landscape of sustainable finance. Understanding ESG factors enables advisors to better evaluate the risks and opportunities linked to socially responsible investments, aligning with regulatory requirements while empowering them to meet the rising demand from clients with sustainability preferences.

Client Awareness

In 2023, through the myLIFE blog, BIL published around 90 new pieces of content, including 14 articles specifically focused on sustainability and ESG-related services and products, as well as 10 covering broader ESG themes. Special features were also created on topics like “Auto,” “Loans,” “Budget,” and “Money and Happiness,” addressing subjects such as electromobility, responsible financing, and budgeting pitfalls.

In April 2023, BIL organized a conference for its corporate clients titled “Net Zero Together: Challenges, Issues, and Strategies for Embarking on the Energy Transition.”

Looking ahead to 2024, one of BIL’s key priorities will be to further enhance client awareness of ESG issues.

UN Principles for Responsible Banking: Accelerating a positive global transition for people and the planet

With over 300 signatory banks representing almost half of the global banking industry, the Principles for Responsible Banking are the world’s foremost sustainable banking framework. Through these Principles, the banking community takes action to align core strategies, decision-making, lending and investment with the UN Sustainable Development Goals and international agreements such as the Paris Climate Agreement.

FBRH Principles for Responsible Banking (PRB) Assurance:

First class PRB assurance services: The result of solid, hands-on ESG/ Sustainability experience

• • • FBRH is a GRI Certified Training Partner (Global), ISEP Training Centre and a member of CPD.
    • FBRH builds trust. Over 200 reviews from top professionals from around the world demonstrate our ability to build strong, trusting business relationships.
    • FBRH possesses a unique skill set that combines ESG/sustainability certified training, experience in advisory services and report preparation, and ESG/sustainability report assurance.

The combination of all the above empowers FBRH to provide first class Principles for Responsible Banking (PRB) assurance services.

References:

This case study is based on published information by BIL, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link:

https://www.bil.com/Documents/brochures/Sustainability-report-2023.pdf

Note to BIL: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.