Thorunn Egilsdottir
Corporate Communication Manager
15th July 2024

Collaborative efforts between banks and NGOs and how to drive positive social impact

When working together, banks and NGOs can ensure a real-world impact. Banks provide financing for sustainable projects, while NGOs raise awareness and propose projects for funding. In this interview, Nicoletta Centofanti, CEO at LSFI, explains how banks and NGOs should collaborate together to drive positive social impact.

How can banks and NGOs work together to identify key social issues and develop sustainable initiatives that address community needs while driving positive social impact?

Banks play a crucial role in the transition towards sustainability by financing sustainable projects through their lending and portfolio activities. Similarly, NGOs are key in raising public awareness and identifying the needs of our society and planet. They are also key at proposing projects or enterprises for banks that could be financed. The collaboration between these two entities is essential: on the one hand it ensures that appropriate products are developed, and impactful projects or enterprises are funded, on the other hand it fosters the monitoring of the impact on the real economy investments. In addition, NGOs and banks can work together to identify the best practices and develop methodologies for the transition towards sustainability. For example, several existing methodologies and tools to transition towards sustainability have been developed by non-profit organisations and are now used by financial institutions to decarbonise their portfolios or to integrate sustainability criteria into investment decisions.

What are the benefits of forming partnerships between banks and NGOs to support social causes, and how can these collaborations be structured to maximise their impact?

The transition towards sustainable finance requires the involvement of all actors, from governments and financial institutions to the civil society and general public. Forming partnerships among these different players, is essential to ensure that the transition is as effective and efficient as possible, as each actor brings unique and complimentary expertise. For example, when NGOs and banks collaborate, they reach larger communities, finance necessary (but maybe less “mainstream”) projects, assess societal needs, and cover the existent gaps.

In the realm of sustainable finance, the ultimate objective is shared. It is crucial for all parties to understand and embrace this common goal. Instead of working in isolation or opposition, leveraging each other's strengths can significantly advance the transition. Collaboration is key to drive progress and ensure sustainable finance advances further and at speed.

How can LSFI support capacity building to foster sustainable finance?

The LSFI supports capacity building both within the financial sector and among the general public. For the financial sector, we host working groups that address key challenges such as education and training, climate measurement and reporting, and ESG data. These working groups provide the financial sector with practical tools to overcome current challenges and enhance skills.

Additionally, we produce reports and studies on sustainable finance, offering in-depth assessments and quantitative data crucial for understanding the current state and future needs of sustainable finance. We also organise technical webinars and events. For example, on September 18th and 19th, we are hosting our first LSFI Summit, which will include masterclasses to help financial professionals gain in-depth knowledge on critical topics such as human rights, private investment mobilisation, biodiversity, and stewardship.

For the general public, we organise regular awareness sessions targeting universities, fintech companies, school students, and others to explain what sustainable finance is and how it involves everyone.

What are some examples of successful collaborative projects between banks and NGOs that have led to meaningful social change?

Probably one of the first example in Luxembourg, among others, is the etika – Spuerkeess collaboration. etika and Spuerkeess created in 1997 the Alternative Savings Account, the first sustainable banking product in Luxembourg, including strict criteria of transparency and sustainability and whereby their deposit customers enable funding of social and ecological projects at favourable interest rates. In this context, every year, etika organises the Velotours, a way to get to know the projects supported by the two partners via an ecological means of transport.

What are your five tips for banks and NGOs that aim to collaborate & how to measure the success of this collaborative effort in driving positive social impact?

  1. Explore synergies across sectors and fields of expertise to identify mutual interests to benefit from.
  2. Ensure sustainable projects are funded and innovative products are developed by leveraging your complementary expertise.
  3. Develop quantitative and qualitative objectives and a clear strategy to guide your activities and ensure alignment with your respective sustainability goals.
  4. Establish clear, measurable targets to track progress and drive accountability.
  5. Measure the impact of your investments using existing standards and tools to ensure positive environmental and social outcomes.

About the blog:

There is an urgent need for rapid transition to global sustainability. Business and industry have enormous social and environmental impacts. "Why does it matter?" is a bi-monthly blog that aims to elucidate this important topic through the eyes of our experts. 


Don't miss out our experts' practical tips for your daily life and be part of the positive change. 

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